Inventory Planning Blog

Advanced Inventory Planning the Easy Way for SAP Business One

Posted on Mon, Oct 06,2014@10:00 AM

SAP Business One, inventory planning, inventory optimization, valogix, cloudSAP Business One includes an MRP module for planning needs in a manufacturing environment. retailers and wholesale distributors also use the on-board 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 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.

inventory optmization, inventory planning, Valogix, SAP Business OneBecause 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.

The user must create a scenario using a 6-step process for each item. If you have hundreds of items to plan every week, this process can be overwhelming much like using spreadsheets. Every time you need to change a parameter like lead time or location or service level, you need to start the process over again. Moreover, there is no optimization in the MRP module, so you do not get the cost savings and other benefits mentioned above.

Also, if you considering just adding custom reports and spreadsheets along with SAP Business One, consider the following.

inventory planning, consulting, valogix, SAP Business One, spreadsheets, reports, cloudAssume you use your outside IT (or Reseller) firm 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 the data suggests and what to do with the 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 is 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.

Valogix, inventory planner, inventory optimization, SAP Business, consulting, software

Tags: Inventory Planning, SAP, SAP Business One, cloud, inventory optimization