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“Best Practices” Inventory Management

“Best Practices” Inventory Management. ICAMM. ICRIR. POERR. ICRIG. WTERR. ICRIF. ICAR. ICSR. ICAMU. Sx Enterprise Setting it Up, Getting Good Data , How to Use it, and How to Get Results. ICSL. ICRIS. WTERA. ICSW. ICRIT. ICSD. ICAI. POERA. ICSP. Grant W. Howard (734) 428-0529

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“Best Practices” Inventory Management

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  1. “Best Practices” Inventory Management ICAMM ICRIR POERR ICRIG WTERR ICRIF ICAR ICSR ICAMU Sx Enterprise Setting it Up, Getting Good Data , How to Use it, and How to Get Results ICSL ICRIS WTERA ICSW ICRIT ICSD ICAI POERA ICSP Grant W. Howard (734) 428-0529 ghoward@gwhco.org www.gwhco.org

  2. 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.

  3. Order Point: • Usage Buckets • Usage Method • Trending • Path/Roll up • LT Buckets • LT Method • Safety Method • OP Adjusters • Line Point: • Target & Type • RC/OC/XF • Calc. or Manual • EOQ: • “K” and “R” Cost • Min and Max • Surplus Points: • Internal (LP+EOQ) • External (X months) • Misc: • Status • Freeze • Usage Method, Path • Replenishment Method • Level: • On-hand • Committed • Incoming To Be a Profitable Company Forever Availability, BO Handling, Accuracy, OTD Sales, Cogs, Freight, C to C, C to P • 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 When to Replenish?

  4. “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 Inventory Manager/Buyer’s Day

  5. 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 Inventory Management10 Step Process 10. CONTROLLED REPLENISHMENT

  6. Inventory Management is at the Time of Replenishment - the “When, What, and How Much”, Everything Else is Inventory Correction.

  7. Data, Set up, and Generating the Numbers It All Starts Here Better Numbers

  8. 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) Inventory Management10 Step Process 10. CONTROLLED REPLENISHMENT

  9. Step 1: The Set Up - Parameters • “Smart” Parameters Maintenance ICSR • Warehouse Maintenance ICSD • Product Line Maintenance ICSL • Product Maintenance ICSP/ICSW At start up and as needed

  10. ICSR - IC Setup Replenishment

  11. ICSR - Ranking

  12. ICSR - Ranking

  13. ICSR - Usage Months

  14. ICSR - Usage Monitoring and Adjusting

  15. ICSR - Lead Time

  16. ICSR - Safety Stock and Analysis

  17. ICSR - Order Point Adjusters

  18. ICSR - Exceptions

  19. ICSR - BCC Priority

  20. ICSR - Transfer “Smart” Rounding

  21. ICSD - IC Setup Warehouse

  22. ICSL - Prod. Line Maint. (Order)

  23. ICSL - Prod. Line Maint. (Required)

  24. ICSP - Prod. Maint. Master (Req’d) 6” Disney Princess Doll - Belle Belle 6” Doll A1 Toys

  25. ICSW - Required

  26. ICSW - Ordering

  27. ICSW (Ordering) - Usage and Hits

  28. ICSW (Ordering) - Trending

  29. ICSW (Ordering) - LT Maint

  30. ICSW (Ordering) - ASQ

  31. ICSW - Frozen 12” Aluminum Shovel

  32. ICSW - Seasonality (Trending) 12” Aluminum Coated

  33. 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?

  34. Who’s Involved? - TEAM

  35. 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? Usage/DemandThe Cornerstone

  36. OEET- Lost & Exceptional Sales

  37. Lost Sales Tracking- Usage Logging

  38. 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

  39. ICAI - Rank (and Class)

  40. ICAR - Review Cycle Min, Max, Exception RC Analysis & Basis

  41. ICAMM - Review Cycle Basis

  42. Step 4: Stock Level/PNAThe Other Cornerstone • On-hand Integrity WMS, CC • Paperfloat Control BIIS Daily

  43. Paperfloat Control - BIIS

  44. Paperfloat Control - BIIS

  45. Profitability, Asset Management, and Efficiency “Getting Results” Better Tools

  46. 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) Inventory Management10 Step Process 10. CONTROLLED REPLENISHMENT

  47. “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 EOQ Order Cycle Surplus Point PNA/Level Line Point or Max/EOQ Lead Time Order Point or Min Safety Step 5: Replenishment

  48. ReplenishmentBuying and Transferring Generate RARR’s/Report POERR Merge P/O POERM Edit 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”

  49. PO/WTERR

  50. POERA- Line Summary(Buyer’s Control Center)

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