SAP Business One – Inventory Planning!
A prime concern of any supply chain management company is knowing What to Buy, When to Buy, and How Much to Buy. A successful organisation knows how to balance the replenishment requirements of having enough stock on hand with the expense of purchasing and warehousing unnecessary stock. In today’s economy, managing inventory is not just an advantage, it is a necessity. Let’s look at how Resolv Inventory Planning can help you be more efficient in knowing what to buy and when.
Inventory Planning offers two methodologies for inventory planning beyond SAP Business One’s MRP.
This method is based on formulas developed by Gordon Graham. It bases estimates of future demand on the averages of past usage, lead times, and other factors calculated by the system. This method assumes future demand can be predicted by past history.
Some advanced controls using this method include:
- Defining your procurement method – Buy, Make or Transfer from another warehouse
- Defining your safety stock percentage
- Setting the order quantity:
- EOQ – a formula used to determine order quantity as a ratio that balances the cost of warehousing (buying large quantities) against the cost of replenishment (buying frequently)
- Movement Class – an item’s relative position within the entire list of stocked items for the warehouse, based on (annual units sold x cost per item)
- Manual – a quantity set by the user
- Restocking based on min/max or order point/line point
- Defining the K (Carrying) Cost and R (Replacement Cost) to use in the calculations
- Number of lead times to automatically average
- Defining your vendor review cycles – how often you order from your vendors
- Assigning Movement Classes
Forecasting is based on a set of formulas developed by Effective Inventory Management, Inc.
These formulas incorporate various trends and weighted averages along with past usage to predict future demand. Beyond historical usage, these formulas incorporate factors such as seasonality and sales trends.
Some of the controls using this method allow you to:
- Choose a default formula for calculations
- Establish low and high level percentages to determine if an item has unusual usage. Any forecast that falls outside of this range, compared to current usage, will be considered an unusual forecast.
- Include Safety Stock in the Formula
- Rank items using forecasts for sales analysis
- Select other options that you may want to use
Come and discuss with the Inecom team where you are and lets see how we can help transform the future of your business with Inventory Optimisation for SAP Business One.