2006 grant w. howard company infor, inc (sx screens only) 1 “best practices” inventory...
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2006 Grant W. Howard Company Infor, Inc (Sx screens only)
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“Best Practices” Inventory Management
Grant W. Howard
(734) 428-0529
www.gwhco.org
ICSR
ICSPICSD
ICSL
ICAMM
ICAR
ICAI
ICSW
WTERR
POERA
POERR
ICAMUWTERAICRIS
ICRIG
Sx EnterpriseSetting it Up, Getting Good Data , How to Use it, and How to Get Results
ICRIR
ICRIF
ICRIT
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Sx.e - Getting Results Overview of the Replenishment Process How to Set it up, How to Use it, How to Get Results - 10 Steps:
– The Numbers:» Step 1: Parameters/Set up 9» Step 2: Data Accuracy 33» Step 3: Forecasting - OP, LP and EOQ 38» Step 4 : Stock Level Accuracy 42
– The Tools:» Step 5: Replenishment 47» Step 6: Timeline (Too Late and Too Early) 59» Step 7: Excess/Surplus Inventory 63
– Getting Better Results:» Step 8: Proactive Maintenance 71» Step 9: Monitoring and Measuring Results 91» Step 10: Controlled Replenishment 97
Final Thoughts
Through Step 8 Today. Steps 9 & 10 and Final Thoughts are Self Explanatory.
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Order Point:•Usage Buckets•Usage Method•Trending•Path/Roll up•LT Buckets•LT Method•Safety Method•OP AdjustersLine Point:•Target & Type•RC/OC/XF•Calc. or ManualEOQ:•“K” and “R” Cost•Min and MaxSurplus Points:•Internal (LP+EOQ)•External (X months)Misc:•Status•Freeze•Usage Method, Path•Replenishment MethodLevel:•On-hand•Committed•Incoming
Parameter Set-Up
Data Collection, Accuracy and Proper Use of Data
Forecasting
Stock Level Accuracy
Replenishment: When, What and How Much
Time Line: Too Late and Too Early
External Surplus
Maintenance
Measurement
Controlled Replenishment
To Be a Profitable Company Forever
Availability, BO Handling, Accuracy, OTD
Sales, Cogs, Freight, C to C, C to P
When to Replenish?
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Inventory Manager/Buyer’s Day “Smart” Continuos Parameter Set Up -
Daily Data Collection, Accuracy and Proper
Use of Data - Daily Forecasting: Safety, Order Point, Line
Point, EOQ - Daily/Monthly Stock Level/PNA Accuracy - Daily
Replenishment: Worthy Items Below Order Point - Daily
Timeline Analysis:– “Too Late” Report - 2X/Week– “Too Early” Report - 2X/Week
Surplus Inventory - 1X/Week Proactive Maintenance - Daily
– Good Proof Reports for Start Up– While doing Replenishment– Good Exception Control Center– Information from Other Sources (Internal,
Customers and Vendors)
Monitoring and Measurement - Continuos Improvement
Controlled Replenishment - Critical
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Inventory Management10 Step Process
The Numbers:1. Parameters/Setup:
– “Smart” - ICSR
– Company/Warehouse - ICSD
– Product Line - ICSL
– Product Master - ICSP
– Product Warehouse - ICSW
2. Data Collection:– Usage - OE/WT
– Lead Time - WT/PO
– Level: On-hand and Paperfloat - BIIS
– Purchasing History
3. Forecasting:– Rank - ICAI
– Replenishment Cycle - ICAR
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity - ICAMM
4. Stock Level Accuracy:– On-hand - CC’s
– Paperfloat - BIIS
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting - POERA– Purchases - POERR, POEAR– Transfers - WTERR, WTERA
6. Timeline Analysis:– “Too Late” - ICRIG– “Too Early” - ICRIG
7. Excess/Surplus:– Prevention– Disposition - ICRIS
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing - POERA– Exceptions and Mass Updates - ICAMU
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy - ICRIF– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E) - ICRIT/R
10. CONTROLLED REPLENISHMENT
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Inventory Management is at the Time of Replenishment - the
“When, What, and How Much”, Everything Else is Inventory
Correction.
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Data, Set up, and Generating the
Numbers
It All Starts Here
Better Numbers
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Inventory Management10 Step Process
The Numbers:1. Parameters/Setup:
– “Smart”
– Company/Warehouse
– Product Line
– Product Master
– Product Warehouse
2. Data Collection:– Usage
– Lead Time
– Level: On-hand and Paperfloat
– Purchasing History
3. Forecasting:– Rank
– Replenishment Cycle
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity
4. Stock Level Accuracy:– On-hand
– Paperfloat
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting– Purchases– Transfers
6. Timeline Analysis:– “Too Late”– “Too Early”
7. Excess/Surplus:– Prevention– Disposition
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing– Exceptions and Mass Updates
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E)
10. CONTROLLED REPLENISHMENT
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Step 1: The Set Up - Parameters “Smart” Parameters MaintenanceICSR Warehouse Maintenance ICSD Product Line Maintenance ICSL Product Maintenance ICSP/ICSW
At start up and as needed
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ICSR - IC Setup Replenishment
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ICSR - Ranking
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ICSR - Ranking
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ICSR - Usage Months
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ICSR - Usage Monitoring and Adjusting
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ICSR - Lead Time
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ICSR - Safety Stock and Analysis
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ICSR - Order Point Adjusters
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ICSR - Exceptions
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ICSR - BCC Priority
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ICSR - Transfer “Smart” Rounding
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ICSD - IC Setup Warehouse
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ICSL - Prod. Line Maint. (Order)
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ICSL - Prod. Line Maint. (Required)
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ICSP - Prod. Maint. Master (Req’d)
6” Disney Princess
Doll - Belle
Belle 6” Doll
A1 Toys
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ICSW - Required
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ICSW - Ordering
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ICSW (Ordering) - Usage and Hits
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ICSW (Ordering) - Trending
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ICSW (Ordering) - LT Maint
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ICSW (Ordering) - ASQ
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ICSW - Frozen
12” Aluminum Shovel
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ICSW - Seasonality (Trending)
12” Aluminum Coated
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Step 2: Data Collection Usage Buckets: Sales, Transfers, Lost Sales,
Exceptional Sales, and Manual/Automated Overrides
Lead Time Buckets: P/Os, Transfers, and Manual Overrides
Stock Level Accuracy: Onhands and Paperfloat - Will discuss in Step 4
Where Does Most of this Data Come From?
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Usage LT Saf RCCtoP
EOQCtoP
EOQCtoC
On-hand
Paper-float
SurpPrev/Disp
BOHand-ling
OTD Acc-uracy
IM X X X X X X X X XSales X X X X X X XBrch/Ware X X X X X X X X X X XOffice X X X XIS/IT X X X X X X X X X X X XMgt X X X X X X X X X X X X
Who’s Involved? - TEAM
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Usage/DemandThe Cornerstone
Sales/Transfer History
Lost Sales
Exceptional Sales/Xfer
Human Input
Usage/Demand
What is Demand Planning?
Lost Sales:– Ask what they want
– Canceled B/O’s
– Directs to fill in
– Substitutes
– Ship from another whse
Three Methods to Enter LS:1. While in Sales/Order Entry
2. Lost Sales open order
3. Sheet, then to LS open order
What about the fill rate report?
What is an Exceptional Sale/Transfer?
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OEET- Lost & Exceptional Sales
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Lost Sales Tracking- Usage Logging
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Step 3: Forecasting
Rank (Rank and Class) ICAI Review/Order/Xfer Cycle ICAR Usage, Safety, OP, LP, OQ ICAMM Exception Reporting* ICAMU
Monthly and as needed
* Discussed With Maintenance Section
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ICAI - Rank (and Class)
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ICAR - Review Cycle Min, Max, Exception RC Analysis & Basis
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ICAMM - Review Cycle Basis
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Step 4: Stock Level/PNAThe Other Cornerstone
On-hand Integrity WMS, CC Paperfloat Control BIIS
Daily
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Paperfloat Control - BIIS
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Paperfloat Control - BIIS
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Profitability, Asset Management, and
Efficiency
“Getting Results”
Better Tools
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Inventory Management10 Step Process
The Numbers:1. Parameters/Setup:
– “Smart”
– Company/Warehouse
– Product Line
– Product Master
– Product Warehouse
2. Data Collection:– Usage
– Lead Time
– Level: On-hand and Paperfloat
– Purchasing History
3. Forecasting:– Rank
– Replenishment Cycle
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity
4. Stock Level Accuracy:– On-hand
– Paperfloat
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting– Purchases– Transfers
6. Timeline Analysis:– “Too Late”– “Too Early”
7. Excess/Surplus:– Prevention– Disposition
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing– Exceptions and Mass Updates
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E)
10. CONTROLLED REPLENISHMENT
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Step 5: Replenishment “When” to Replenish - Order Point:
– Service: Below Order Point Trigger– Profits/Cost: Target and/or Timeframe Trigger
“What” to Replenish - Line Point:– Replenishment Options:
» Line Buy (Make Target/Review Cycle)» Fill In Transfer/Emergency Buy» Do Nothing
– Replenish all items that will go BOP before the next replenishment cycle (Balance the Line)
“How Much” to Replenish - Line Point/EOQ:– Up to Line Point/Remaining Cycle (Cycle Coverage - Freight/C
to P)– Compare to Suggested Order Quantity (EOQ/Class - CtoC and
CtoP)– Minimum Run– Vendor/Transfer Package Rounding
PNA/Level
Surplus Point
Line Point or Max/EOQ
Order Point or Min
EOQ
Order Cycle
Lead Time
Safety
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ReplenishmentBuying and Transferring
Generate RARR’s/Report POERRMerge P/O POERMEdit P/O POET
Generate RARR’s POERR*Review/Accept/Merge P/O POERA (BCC)* Schedule to run nightly if using the POERA. Setup to run to a file.
ERR - Generate RRAR - Print (ERM)/Online(ERA)
ERA - Review/Acceptance/Merge - Online RRAR (BCC)
ERM - Merge - Printed RRAR
ET - Edit
Recommended Replenishment Action Report (RRAR)
Warehouse Transfers follow the same except “WT”
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PO/WTERR
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POERA- Line Summary(Buyer’s Control Center)
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POERA - Item Summary (BLP/BOP/Suggest WT)
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POERA - Item Detail (Drill Down/Maint)
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Making Targets ProperlyGeneral rules of thumb: Days Dollars 1/2 way through OC/RC
Cost to Carry vs Freight, Price, and Service:
Key is Equal Days Supply Increase or Decrease Use for Meeting Targets and
Emergency Fill-ins
LinePoint
OrderPoint
Out ofStock
SafetyStock
xx
x
x
x
xx
x
x
x
x = Products in Product Line
New line pointafter adjustingreview cycle days
xx
xx
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POERA - Making Target
Header Tab - Increase/Decrease Tab
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$Dis
coun
t/In
crea
se$C
to C
$C to C
$Discount/Increase
Quantity
Negative
Positive
Break Even
Max. Potential
Discount/Price Increase versus C to C
Break Even (Days):(2 x Discount% / Monthly C to C) x 30
Maximum Potential Savings (Days):(Discount% / Monthly C to C) x 30
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Discount/Increase: 5% (This could also be Freight)
Cost to Carry “K” cost: 24%
Break Even (Days): (2 x Disc% / Monthly C to C) x 30 = 150 days
Maximum Potential (Days): (Disc% / Monthly C to C) x 30 = 75 days
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Price Increases/Discounts
Remember, this is total days supply to on the shelve, not necessarily buy. Use the “up to vendor target logic” (change order cycle days) to meet the days supply.**This method works well for periods less than 90 days supply (seasonal or large swing items - be careful).
Be aware of future freight, minimum considerations, fill ins, NS and OAN items. If targets are involved, be sure to fill in the entire line not just the fast movers or work a deal.
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Vendor Performance and Negotiations - It’s not just Price
Lower COGS Lower Freight Minimums Multiple Drops for Freight Combined P/O’s for Minimum Freight Paid Fill-ins
Fill Rates Consistent Lead Times and OTD Accurate Shipping (Blanket
Receiving) - Product, Quantity, Price
Good Backorder Handling
EDI/VMI/2-Way Information Flow - B2B
Automated Product and Pricing Updates
RGA’s on New Items Excess Inventory Returns
Win/Win - Partnership
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Step 6: Time Line Analysis
Identification and Prevention are the Key
Out
0-30 days
In Out
30/+ days
Too Early
Incoming and will be early or not needed
Out
Incoming and will be late
0/- days
Too Late
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ICRIG - Time Line Analysis
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ICRIG - “Too Late/Gap”
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ICRIG - “Too Early”
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Step 7: Excess/Surplus Inventory
Responsibility Coordination
Prevention
Identification
Disposition
Goals/Plan
CONTINUOUS
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ICRIS - “Smart” Surplus
Short Term/Internal (EB, GAP):
Surplus = Available > LP + EOQ Long Term/External (Take Action, Gone):
Surplus = Available > X Months Usage*Smart Logic:
1. Frozen or LP + EOQ > X Month Usage: Surplus = Avail > LP + EOQ
2. Order as Needed, N/S, Discontinued: Surplus = Avail
3. New Items: No Surplus
Must have Visibility and Utilization Monitoring
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ICRIS - Surplus
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ICRIS - Long Term Surplus
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Surplus Inventory Disposition
BOP/GAP - Put of the fire: Short or Long Term
BLP/Sugg Xfers - Use it where you can: Long TermTeach branches to use LT first. Don’t borrow stock and put branch in “need”.
1. Stock Balance: (“X” Months Supply) - With “To” branch approval/Before Buy
2. Sell Above Cost: Customer, Other Distributor
3. At Cost: Sell at cost, Return at cost with no charges (freight, restock)
4. Below Cost: Sell below cost, Return below cost and/or with charges
5. Sell Above “Write-off” Cost: Garage/Fire Sale, Flea Market, Auction House, Liquidation House
6. Dump at “Write-off” Cost: Donate, Scrap, Dump
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PNA/Level
Surplus Point
Line Point or Max/EOQ
Order Point or Min
EOQ
Order Cycle
Lead Time
Safety
Inventory Reductions - The Proper Way to Turns
Understand the Impact Areas: Excess and Defective:
– No one wants or needs
– Control the Feelings
– Let it Roll, Let it Go
– Be Careful - C to C/Mix
– Cost of Disposition
Line Point and Order Quantity:– “What” and “How Much”
– Be Careful - C to P Departments
Order Point - Safety Stock:– “When”
– Be Careful - Customer Service
Low Risk
High Risk
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Proactive Maintenance
Keeping it Working
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Inventory Management10 Step Process
The Numbers:1. Parameters/Setup:
– “Smart”
– Company/Warehouse
– Product Line
– Product Master
– Product Warehouse
2. Data Collection:– Usage
– Lead Time
– Level: On-hand and Paperfloat
– Purchasing History
3. Forecasting:– Rank
– Replenishment Cycle
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity
4. Stock Level Accuracy:– On-hand
– Paperfloat
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting– Purchases– Transfers
6. Timeline Analysis:– “Too Late”– “Too Early”
7. Excess/Surplus:– Prevention– Disposition
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing– Exceptions and Mass Updates
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E)
10. CONTROLLED REPLENISHMENT
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Step 8: Proactive Maintenance Good Proofing Reports (Pline, Product) - Get a Clean Start While doing the Inventory Management Functions:
– If Change a Quantity, Remove a Line, or Add a Line - Do the Maintenance
– If Items Go BOP or Gap Before Expected and Not an Exceptional Spike, Adjustment or PNA Change - Do the Maintenance
– If Items are Not at BOP or are on “Too Early” and Not a Return, Adjustment or PNA Change - Do the Maintenance
Good Exception Center/Reports are a Must! Good Company Understanding and Eyes and Ears with Communication Use Hits and Cost logic to Review, to Prioritize, and for Action
Order Point Line Point Stock Level Four More
1. AMD/U 4. OC/RC/XC 5. On-hands 7. SOQ/EOQ
2. ALT 6. Paperfloat 8. Status
3. Safety Stock 9. Paths
10. Freeze/Tmins
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Service and Profit - A Quick Method
Hits H H L L
Cost L H L H
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Spend your days reacting to the fires... you may be efficient, but
will you be effective?
Fire Prevention ...
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Product Line Proof Report
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Product Proof Report
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POERAWhile Replenishing - Be Proactive!
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How to Make it Work
Items Below Order Point Sooner then Expected Items Show on the “GAP”
Spike (customer or branch) - Teach Smart Selling/Transferring, Did you Expect to Cover (Safety, ASQ, 5HI, Tmin)
Stock Adjustment and/or Changed/Deleted Incoming (P/O or Transfer) Knocking Line Out of Cycle: Topping Truck Incorrectly, Special Buys on Fast Movers Not Putting Order/Transfer on when getting the Commitment Bad OP/LP/OQ/Level: Demand, Lead Time, Safety, Order/Review Cycle, Level Wrong Not Replenishing up to OP - Playing the Game Not Replenishing up to LP - Playing the Game
CHECK THE LEDGER INQUIRY - Spike or Adjustment
CHECK OLD P/O and TRANSFER - Changed Incoming
CHECK BAD DATA/PARAMETERS - Usage, LT or Safety Low
OTHERWISE - Playing the Game
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ICAMU
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ICAMU - Exception Selection
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ICAMU - OAN Products with Hits
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ICAMU - Tmin Low Activity
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ICAMU - Trending Exception
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ICAMU - Lead Time Exceptions
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ICAMU - 5HI ASQ
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ICAMU - Tmins to Expire
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ICAMU - Value Change Inquiry
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ICAMU - Mass Update
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ICAMU - Mass Update
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Monitoring and Measuring
Getting Results!
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Inventory Management10 Step Process
The Numbers:1. Parameters/Setup:
– “Smart”
– Company/Warehouse
– Product Line
– Product Master
– Product Warehouse
2. Data Collection:– Usage
– Lead Time
– Level: On-hand and Paperfloat
– Purchasing History
3. Forecasting:– Rank
– Replenishment Cycle
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity
4. Stock Level Accuracy:– On-hand
– Paperfloat
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting– Purchases– Transfers
6. Timeline Analysis:– “Too Late”– “Too Early”
7. Excess/Surplus:– Prevention– Disposition
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing– Exceptions and Mass Updates
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E)
10. CONTROLLED REPLENISHMENT
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Step 9: Measurement & Improvement
Customer Service: Fill Rates/Availability
(ICRIF) Accuracy - Product, Quantity,
Price (CM%) On-Time-Delivery - OTD Backorder Handling (ICRIN)
Profits and ROI: Surplus - Disposition (ICRIS)
and Prevention Safety Analysis (ICAMU) Review/Order Cycle:
– Freight Dollars - As Percentage of Sales
– Turns - Really CtoC and CtoP (ICRIT)
– Turn and Earn - ROI (ICRIR)
Replace Inventory with Information
Do better on both sides!
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If there is no measurement, then it is all hearsay. Data-free
conversations and decisions will cause lots of frustrations, cost lots
of money and result in lots of disappointments...
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Service - Fill Rates How well a business meets its customer’s needs - pulse of customer’s
happiness/loyalty. What to Measure:
Fill Rates = Shipped/Ordered
Quantity: 9 out of 10 = 90%
Line Item SC: 9 out of 10 = 0%
Order Ship Complete?
What Should Fill Rates Be? The Report is Broken - Look at “First Pass” Orders - EDI, Fax, Internet, etc for true
fill rates and backorder retention Only one way to better Fill Rates - The Right Inventory. Two ways to the Right
Inventory...
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Profits - Turns? ROI?
Cost to Carry, Cost to Purchase and Freight
C to P Turns
80’s $10.00 2-3
90’s $5.00 3-6
00’s $2-3.00 6-10
EDI/VMI $0.13 ?Many companies are increasing the turns, but the infrastructure does not support it;
bottom line, longevity and growth are all suffering! Customer Service, GM Improvement, Efficiency, Accuracy, Asset Management
Pro
fita
bili
ty
Turns
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Turns vs Bottom Line ContributionReturn
140
150
150
140
Turns
4
5
6
7
Margin
35
30
25
20
Customer Service Improvement - Availability, OTD, BO Handling
Gross Margin Improvement - Sell Service (Price) and COGS
Expense Reduction - Freight, Cost to Carry, Cost to Replenish
Inventory Management is Not Only Turns…
Inventory Management is Bottom Line, Longevity and Growth
7 Turns & 4% Bottom Line or 5 Turns & 7% Bottom Line
Velocity P
ricing?
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Return on Investment
GMROI:
= Turns CGM%
= COGS GMAve Inv COGS
= Sls Turns GM%
= Sales GMAve Inv Sales
= GMAve Inv
x
x
x
xx
x
Turns:= COGS + $TransferredAve Inv
T&E:
= Turns GM%
= COGS GMAve Inv Sales
No Directs, Non-Stocks or Pass-Throughs
How to Use T&E/GMROI
2006 Grant W. Howard Company Infor, Inc (Sx screens only)
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Step 10:
CONTROLLED REPLENISHMENT
Uncontrolled Replenishment Leads to Uncontrolled
Results
2006 Grant W. Howard Company Infor, Inc (Sx screens only)
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Final Thoughts
AWOA W
2006 Grant W. Howard Company Infor, Inc (Sx screens only)
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“Better Numbers and Tools” Top 10
Better Numbers:1. Hits based Ranking
2. Smart Set-Up and Maintenance
3. Usage: Lost Sales and Exceptional Sales, Seasonal Trending, and Roll Up
4. Customer Buying Habits
5. RC and EOQ Control and Depth
Better Tools:1. Paperfloat Control
2. Buyer’s Priority, Targets Properly/Equal Days Supply, and One-Stop
3. Timeline Analysis “Too Late” and “Too Early”
4. Long Term Surplus
5. Exception Control Center and Mass Update
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SX.enterprise Summary“Best Practices” Inventory Mgt
Better SKU Coverage - System and Buyers Improved Time Management Improved Priority Setting Balances Technology and Core Replace Inventory with Information Rifle Approach vs. Shotgun Approach Better Numbers and Better Tools Better Service and Better Profits Distributor of Choice: Owners, Customers, Employees
and Vendors
Now What? Go Back, Follow the 10 Steps, Execute and Get Results… The Door is Open!
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Inventory Management10 Step to Results
The Numbers:1. Parameters/Setup:
– “Smart” - ICSR
– Company/Warehouse - ICSD
– Product Line - ICSL
– Product Master - ICSP
– Product Warehouse - ICSW
2. Data Collection:– Usage - OE/WT
– Lead Time - WT/PO
– Level: On-hand and Paperfloat - BIIS
– Purchasing History
3. Forecasting:– Rank - ICAI
– Replenishment Cycle - ICAR
– Usage, LT, Safety, Order Point, Line Point, Surplus Point, Order Quantity - ICAMM
4. Stock Level Accuracy:– On-hand - CC’s
– Paperfloat - BIIS
The Tools - Inventory Management:5. Replenishment:
– Use Priority Reporting - POERA– Purchases - POERR, POEAR– Transfers - WTERR, WTERA
6. Timeline Analysis:– “Too Late” - ICRIG– “Too Early” - ICRIG
7. Excess/Surplus:– Prevention– Disposition - ICRIS
The Tools - Getting Results:8. Proactive Maintenance:
– Proofs– While Replenishing - POERA– Exceptions and Mass Updates - ICAMU
9. Measurement and Improvement:– Fill Rates, BO, OTD, Accuracy - ICRIF– Inventory Mix (Safety, Excess, Defective)– Turns and ROI (GMROI and/or T&E) - ICRIT/R
10. CONTROLLED REPLENISHMENT
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Back to Basics
Many distributors DON’T: Set the system up properly Feed the system good data Understand or Use the system properly Clean up bad processes and procedures Educate their people on the system or processes Help departments work together Help work towards common goals
Yet they think it will all just magically work
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The FoundationPlan of Improvement
Back to BasicsProactive versus Reactive
Replace Inventory With Information
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J D I
It’s too hard to log lost and exceptional sales
It’s too hard to keep the paper work clean
It’s too hard to keep the on-hand correct
It’s too hard to work excess inventory
It’s too hard ...
It’s too hard..., The system is broken or doesn’t have it…, We will never get them to do that…,
We don’t know how to do that… J D I !