Key Words you should know:
Supply chain – logistics – digital transformation – optimization – evolution – innovation
Inventory Planning Blog
Key Words you should know:
Tags: Inventory Planning
Signs of a slowly improving global economy are starting to become apparent but far from robust. Consumers have a pent-up need to spend the cash they have amassed. But, production in the Far East is trying to catch up to this demand. Then, there is the massive shipping backlog and serious shortage of truck drivers. Experts suggest these adverse conditions could last well into late next year and possible the following year as well.Read More
Customers are holding suppliers and retailers’ feet to the fire. They want items in-stock and shipped fast and on-time. Effective and efficient supply chain inventory planning teams are critical to meet the ever-increasing demands of customers. Teams are gearing up to meet the company goals and ways to achieve deliver service excellence. There is a dizzying array of solutions and methods companies employ to manage their supply chain hoping to manage their unique challenges.Read More
Tags: Inventory Planning
Your company has a mission to be the best supplier of your products on the market today. Most companies define what that means in terms of serving the customer. For example, your customers can send you an order and get a return confirmation promptly. You will ship all orders within 24 hours. You will offer a variety of products that is both broad and deep. All great goals to build and grow a business. Now, you go out and spend a ton of money on the inventory. To buy smart, you use economic ordered quantities (EOQ) and take advantage of your vendor’s special deals.Read More
New inventory planning technologies and the Cloud can provide just the right environment for better global planning.Read More
As the New Year begins, today’s challenging business climate is forcing managers to look for simple, yet effective ways to reduce waste and improve productivity to increase profitability and service. Finished goods, production materials and service parts inventory planning are prime candidates. With thousands of items to manage, sometimes at multiple locations, the lack of scientific automated tools has made the job almost impossible leaving companies with too many of the wrong items and not enough of the critical ones. The result is unnecessary inventory expense, while suffering service-limiting stock-outs.Read More
SAP Business One inventory management software offers inventory management, manufacturing, and purchasing capabilities that can help improve supply chain management. Now, available with multiple location capabilities it offers more for growing companies.Read More
Effective and efficient supply chain inventory planning teams are absolutely critical to meet the ever-increasing demands of customers. Teams are getting fired up to meet the company goals and deliver service excellence. There is a dizzying array of solutions and methods companies employ to manage their supply chain hoping to manage their unique challenges.Read More
The fall of SAP Anywhere, an e-commerce front end that arrived in the U.S. in 2016 with some fanfare, may have raised questions about SAP's commitment to SMBs. However, with SAP boasting 60,000 Business One customers and with no plans to sunset Business ByDesign, the end of SAP Anywhere may help clarify the SAP SMB message.Read More
Ease of Use is the Key to Successfully Using Advanced Inventory Planning Solutions
There are a lot of inventory planning solutions available from all types of companies around the world. Many are designed for large enterprise companies as they cost hundreds of thousands of dollars and are highly complex. Some so complex a math or science degree is required just to operate the system. Others at the low end may be just point solutions for just forecasting, as an example, or offer individual modules you need to buy separately.
Most of these solutions include a forecasting capability either their own or from an included third-party provider. They usually also offer min and max levels, safety stock and replenishment calculations. Most require you to manually set replenishment levels and have you select the appropriate forecast method.
But how many offer real inventory optimization and why is this important? There are many reasons why inventory optimization is critical for conducting business in today’s ever challenging economic climate.
First of all is the cost of carrying, holding and managing an inventory. The costs for most items are steadily increasing, real estate costs and taxes are up and shipping costs are through the roof. Inventory optimization provides a great balanced inventory to meet expected demand, while reducing costs and better controlling spend for additional stock purchases. Planning in a timelier manner reduces the need for expediting orders in from vendors, which in-turn reduces the need for expediting shipments to customers.
Secondly, optimization dramatically improves the financial performance of an inventory because buying and stocking are more in-line with expected customer demand. It helps to reduce and almost eliminate the future build-up of excess inventory and dead stock.
Third, there are too many known and unknown variables that can affect your inventory and subsequent customer service levels to manage properly. Just forecasting and planning your inventory leaves you wide-open to problems in meeting both your financial goals and customer expectations. Trying to plan with spreadsheets is even a worse situation that will eventually lead you to higher costs and lower service producing a higher level of customer dissatisfaction and lost business.
Investing in smart solutions that improve your inventory planning is an important business decision and necessary in today’s global and troubled economy. Sometimes the concept of spending money to save money is very hard to accept. There are no guarantees the investment will pay off, so there is some level of risk involved. But, is it any riskier to do nothing? To maintain the status quo?
The basic purpose of Material Requirements Planning (MRP) is determining how much of which products needs to be either manufactured or purchased based on it being a component or ingredient of another item. MRP also determines when the product is required. Every item can have either Independent Demand or Dependent Demand.
Comparison to Spreadsheets
Spreadsheets are manual, time consuming. They do not provide intelligent part mix management and part specific forecasts. In addition, spreadsheets are extremely difficult to update and maintain current data effectively, plus they normally cannot be interfaced directly with enterprise and customer relationship software. Conducting quality assurance on the calculations and models is also difficult and based on a study by a leading international consulting firms over 90% of spreadsheets they audited contained significant errors. These errors led to the loss of millions of dollars.
Comparison with Standard Inventory Management other or Control Systems
Almost every inventory solution is a transaction (accounting) type system. This means they keep track of the physical movement of items on and off the shelf. These are “dumb” systems, meaning they are static and cannot intelligently determine what to stock, project demand, or create a complete replenishment plan. These systems are based on 40 year old plus, methods using ABC as the only part classification technique. They do not have leading-edge Exception Management capabilities which provide "alerts" to the User for unusually occurrences.
What Inventory Management Software can do:
• keep basic part information like: part number, description, cost, dimensions, etc.
• track parts movement: received, on order, on shelf, removed from the shelf, etc.
• provide a basic reorder point and min/max settings
• record the different bin locations where parts are stored
• provide an order for new parts needed, using standard reorder point, min/max, and safety stock
What Inventory Management Software cannot do:
• provide a system generated forecast or offer multiple advanced forecasting methods
• manage repair parts and their repair cycle (reverse logistics)
• provide an optimal inventory mix to improve service level while reducing cost
• offer multiple stocking and reordering policies
• manage parts specifically required for PM (preventative maintenance) schedules
• help to reduce overstock and excess part inventory
• manage by exception and provide key user alerts.
What Advanced Inventory Planning Solutions CAN DO:
• forecast parts demand with multiple models appropriate for different demand patterns
• plan for unlimited part and location combinations (scalable)
• provide advanced calculations for calculating shelf stock and reorder points
• calculate the optimal mix based on dynamic demand changes
• provide time phased plans and order for both new and repair items
• manage by exception and provide alerts to the planner
• identify overstock and excess inventory and provide redeployment strategies
• plan parts for preventative maintenance schedules
• multi-echelon or theatre planning - can plan at every stocking level both real and virtual
(from master warehouse to stock kept with a field or service engineer)
• plan part life cycle, substitutes and supercedes, and end-of-life parts
Combining Transaction Systems + Advanced Planning Solutions
Advanced planning solutions do not replace the existing transaction systems. Instead, they are designed to complement and improve existing software. The best of all worlds is to add an advanced planning solution to an existing transaction system. This provides a more complete, robust system that dynamically plans based on what is happening now and projected for the future. Download our free whitepaper to find out more!