Is Your Inventory Replenishment Software Working?
When you have out of stocks and overstocks at the same time, the question you need to ask is Do You Need better Inventory Replenishment Software? Inventory Replenishment is a critical link in your chain. Ask yourself, is your current inventory replenishment software delivering the best service levels to match your customer demand? Does your inventory replenishment software maximize profitability with inventory optimization technology to create purchase orders? Do your automated Purchase Orders minimize inventory to carry only what is needed to meet service goals and still meet supplier shipping requirements? Do your users have tools on the Purchase Order pages to aid the Purchase Order approval and exception management processes? If not, then why not, what are you losing to your competition every day you do nothing?
Inventory Replenishment Software
There are essentially four different aspects of successful inventory replenishment and sadly the forth is often missing in the inventory replenishment software:
- What – Demand Forecast is the future demand of your products – this drives replenishment.
- When products need to be reordered to meet demand (Demand Driven Lead Times tell you the item order point – bottom up (JIT), not a plan)
- How many Units of those products need to be ordered? Your days’ supply should be calculated based on demand forecast, not last x week’s sales, using on hand and on order inventories. How many units to purchase should be the difference between your Order Up to Amount (max) (SS+LT+OrCy) – (on hand + existing on order). The amount should be rounded to next product UOM pack listed by the supplier.
- Purchase Order Generation that properly addresses your product unit needs in conjunction with vendor requirements (Computer automated purchase orders meet BOTH service and supplier shipping constraints)
While some inventory replenishment software applications are capable of helping you meet one, maybe two of these PO needs, there is much more involved in the process if you want to ensure maximum profits with minimal expense.
These four aspects of inventory replenishment software are also the four danger signs. Any one of these done wrong can bankrupt your company eventually. Do two or more of these wrong consistently and you can expect the end of your company.Learn More
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