Inventory Planning Blog

Advanced Inventory Planning for SAP Business One

Posted on Tue, Mar 13,2018@07:05 AM

Valogix is an SAP Gold PartnerSAP Business One provides capabilities for planning mostly in a manufacturing environment. Many retailers and wholesale distributors also use the on-board MRP functionality. Discover an affordable, seamlessly integrated inventory optimization solution to SAP Business One from Valogix. Inventory planning solutions that forecast, plan and optimize an inventory are found in widespread acceptance in large enterprise companies but these solutions can cost between hundreds of thousands to millions of dollars, take months to implement and are generally not affordable or usable by SMBs. 

Using Valogix inventory planner helps eliminate manual work and guesswork to determine forecasts, replenishment plans, stocking levels and reorder points. Because the system handles these tasks automatically, you keep current as business conditions change. Alerts warn you of potential problems before they happen, giving you time to proactively resolve an issue before it becomes a customer service problem.

Because excess and obsolete inventory items are identified, you can maintain your inventory at an optimum level for your current business conditions. Optimization re-balances your inventory mix, which further reduces costs while increasing insight and control of your inventory. You get an added benefit of improving your positive cash flow quickly and with less time. 

With the integrated solution, there is no need to use the manually intensive MRP module in Business One. The MRP module is specifically designed to plan material requirements used in manufacturing and to a lesser extent for finished goods inventory. The module generates Production and Purchase Orders needed to produce a final product in the quantities and time specified by the product's schedule taking into consideration all the requirements for the product's child items. 

Bruder Toys works hard with Valogix Inventory PlannerAs the North American distributor for Bruder Spielwaren, an 89-year-old manufacturer of high-quality toys located in Fürth, Germany, Bruder Toys America strives to maintain a high level of customer satisfaction while keeping inventory costs as low as possible. With two distribution centers in the United States, Bruder’s objective is to stock their inventory as close as possible to their customers. 

Like many businesses, Bruder planned inventory with many complicated spreadsheets and intuition.  Achieving balance with an inventory of hundreds of items across two locations was a significant challenge. 

According to Beate Caso, President, “We are in the toy business and most of our business occurs in the last four months of the year, so it could be very slow during the summer months then demand suddenly picks up prior to the Holiday Season. If we don’t have enough inventory to fulfill all the orders just when needed, we will lose customers and our high standards for customer service.” 

Within a few months after implementing Valogix Inventory Planner, Beate noticed big improvements in the stock mix and the time it took to do planning. “Valogix Inventory Planner is extremely user friendly. It synchronizes data every night so you are working with updated information every day.” 

It was only a matter of months before Bruder Toys started to see results.  “In a very short time we were able to reduce overstocks and excess inventory by more than 10%, and planning time has been reduced by 90%” says Beate. “Freeing up valuable time allows us to work on other important areas of the business.” 

If you are considering just using custom reports and spreadsheets along with SAP Business One, consider the following. Assume you use an outside IT 1firm or your SAP reseller to build the custom reports. Assume it costs $5,000 to develop. Let us also assume it is refreshed, updated, each day. Now what? This is static data and yes, it is current but it just sits there and provides no efficiency for the planner. The planner must review and decide what all the data suggests and what to do with that data. 

However, the real cost is much higher than the cost to develop the report. Every report, like spreadsheets must be maintained. Much like a car, the purchase price is just the beginning. Hours of a planner’s time are spent pouring over the results to make decisions. You need to count those hours as an associated cost. So, if a planner is paid say $45,000 per year, plus taxes and benefits the total annual cost is over $50,000. If 35% of a planner’s time is spent reviewing just the reports to manage the inventory, then the first year cost is $5,000 + $17,500 = $22,500. That is some expensive report. Are you getting your money’s worth? You still may not be done. 

Now, a planner has consumed another up to 60% of their available time working with the spreadsheets. At 60%, the cost on an annual basis using the compensation listed above is 60% x $50,000 = $30,000.

The total cost of ownership for the $5,000 report is now a whopping $52,500. Not included in the number is the cost of:

  • Lost sales due to out of stocks
  • Carrying costs for excess inventory
  • Expedited shipping costs both inbound and outbound
  • Loss of customers because they are dissatisfied 

Make it easier to plan your inventory automatically with a solution that automatically tracks the changes in demand. Valogix Inventory Planner will free up your resources (including cash), reduce losses from obsolescence, and increase service levels. The tools you need to forecast, plan, and optimize inventory, manage your business more efficiently and meet the demands of customers and suppliers are powerful, affordable, and proven.

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Tags: Inventory Planning, SAP Business One