Trinity Advanced Inventory Replenishment

Trinity Advanced Inventory Replenishment Bringing powerful demand planning and purchasing tools to Microsoft Dynamics GP .. Technology that changes everything

Introduction Inventory replenishment is potentially one of the most complex and time-consuming tasks facing any distribution business.. .. But also one of the most important. A distribution business can stand or fall by its ability to provide timely service by investing in the right inventory at the right time whilst also keeping purchasing costs under control

Introduction • The complexities are many including .. • Managing seasonal products • Dealing with item supersession ( replacing one item with another). • Recognising trends • Buying ahead for future demand when purchasing against a long lead time. • Understanding which are your key products and your sporadic ones. • Building in information about unusual activity – e.g. new contracts or promotions. • Recognising lost sales and exceptional sales so that you look at true demand

What core Dynamics GP offers Dynamics GP with its powerful drill down and business intelligence tools can help the buyer to formulate decisions and enter purchase orders .. either via purchase order entry as here ....

What core Dynamics GP offers .... or by using the Purchase Order Generator which will prompt with a suggested purchase order by comparing item parameters such as re-order point with current inventory availability.

What core Dynamics GP offers ... This screen shows the basic calculation that is performed by the PO Generator to arrive at a suggested purchase order quantity .. .. But of course the resulting suggestion depends upon your re-order point and order up to level being as up to date and reliable as possible in the first place..

What core Dynamics GP offers ... and these parameter levels are set manually in Dynamics GP... This involves reviewing them regularly to reflect changing patterns of demand or evolving stocking policies. For a distributor with thousands of items this can be a daunting task.

Trinity A.I.R. Intro • ...In setting these parameters not all items can be dealt with in the same way • Most inventories can be broken into three types. • Specials – not held in stock but purchased to order, possibly delivered direct. • Sporadic movers - sold infrequently and erratically to no clear pattern. These items are typically restocked based on numerical policies e.g. hold 2 in stock, when 1 sells replace it. • High/ Fast movers – the items that you sell most frequently and that make up the majority of your bin-trips. For these it most likely there will be time based rather quantity based policies e.g. hold 3 weeks safety stock, 1 week lead time, purchase once every 4 weeks. • We will look at each in turn ....

Item Ranking Wizard AIR’s item ranking wizard will help you to categorise your inventory in this way by subdividing your inventory based on frequency of sale by site. The wizard can assign ABCDX category automatically but they can also be assigned manually and fixed.

Let’s take a look now at how we would deal with each of these three general categories of inventory .. First let’s look at specials ..

Specials / non-stocked items Setting order point and order up to level to zero means that these items will only be purchased when there is demand and then just enough will be purchased to satisfy that demand. NB .. There are also features in Sales Order Entry and elsewhere that enable such orders to be placed “back to back “ and even direct delivery. (these are standard Dynamics GP features –that do not require Trinity AIR)

Sporadic Movers For sporadic movers ..there are tools in the Trinity solution that allow you to set order point and order up to level externally e.g. in XL and review and import them direct into GP. These are typically where, for example, you hold 2 in stock and buy 1 when you sell one.

High / Fast movers High/Fast movers may only account for a small percentage of the item count but will almost certainly account for the majority of bin trips.. .. They typically represent the largest part of inventory investment and having them in stock is critical to achieving customer service levels... Stock policies for these items are likely to be time based. AIR allows these policies to be set by item or en masse with routines such as the one shown here.

High / Fast movers These time based policies need to be combined with the best possible estimate of level of demand to come up with automatically calculated order points and order up to levels. .. Example I estimate weekly demand to be 71. I wish to keep at least three weeks stock ( 21days) so safety stock is 21/7 * 71= 213 If my lead time is four weeks (28 days) then I need to re-order when my available inventory falls below (21+28)/7 * 71 = 497

High / Fast movers This brings us to one of the key challenges of replenishment .. which is trying to come up with the most reliable possible prediction for that “estimated weekly demand” ( or monthly) referred to in previous slide. We have two main sources of data to help us with this process .. Historical Demand – knowing what the demand has been in the past can be a good guide to future demand .. especially if we choose the best way of interpreting the data .. Forecasts –items that are driven by forecasts for large customers or that are subject to major promotion campaigns would be good examples of where we cannot rely wholly on historical demand. Let’s look at each in turn ..

High / Fast movers This is the AIR Demand Review window. It is the starting point for the automatic recalculation of “Estimated Period * Demand” This screen only shows last six periods demand but the program is capable of going back far further in its analysis of historical demand... You will see that items have differing Calculation Methods for coming up with this “E.P.D.” figure. * Periods can be weeks or months

High / Fast movers .. By going right back though the demand history the AIR software tries out all of the thirteen potential formulae to find the one which , historically, has been the most accurate predictor of demand for that item. In our example then using three period rolling average would have meant that on average we would have predicted to with 7% the actual demand in the next period. Using this method the software will automatically detect seasonal, trending and volatile products and choose the appropriate formula,

High / Fast movers .. By “demand” of course we don’t just mean sales . AIR will help you identify lost sales and let you add these in. You can also flag exceptional demand so that you do not take into account one off events e.g. a stock clearance And there are facilities to inherit demand from another item so that when you bring on a new item you have ready access to meaningful history, You can even import data from external systems via a wizard

High / Fast movers We have already seen how the system takes the resulting E.P.D. and combines it with the time based stocking policies to automatically come up with new re-order points and order up to levels .. .. But for some items a single EPD is not sufficient. What if the product is trending , or if I have specific customer forecasts on a period by period basis,,, ?

High / Fast movers For this type of item we would set “Estimated Based on “ to Projected Forecast. This means that ... not only will the system come up with a period by period EPD – (ideal say for trending or seasonal products that are on a long lead time) ... .. But it will also permit you to input your own forecasts . As on the next screen ..

High / Fast movers Here we can see that the demand projected by the system is pretty steady at around 160 per period .. But additional Exceptional forecasts have been added – perhaps because a major promotion is planned in the run up to Christmas... These forecasts can be input manually as in the lower screen here or .... . Reorder point and order up to level for this type of item can be updated in the demand review program but also automatically updated just before you launch the PO generator. This is because this type of item is date sensitive. e.g if my reorder point is 7 weeks then I need to look forward through my forecast and total it for those next 7 weeks to come up with reorder point.

High / Fast movers .. Collated off-line as in this example in a spreadsheet* and then imported as item/site/period forecasts. * The example shown is for illustrative purposes. Specific spreadsheet formats may be devised by customer and will be mapped to AIR as part of the services of the project.

Purchase Order Generator • Now that we have brought all of our re-order parameters up to date we are ready to run the Dynamics GP Purchase Order Generator. • It as it this point ..even after the demand review that has taken place that the buyer is looking not just for a suggested order quantity but the maximum decision support to enable him to confirm or amend suggested quantities. e.g. • Are there quantity break prices available or an imminent price hike from the vendor? • Have I just tipped over an order multiple when maybe I could risk rounding down? • Does my order fill a container ? • Have I met the minimum spend threshold for this vendor ? • What other items that are just above re-order point could I include in the order to make an economic order ? • To answer all these questions and many more Trinity has made extensive enhancements to the Dynamics GP Purchase Order Generator seen at the start of this presentation.

Purchase Order Generator The prompt screen includes a number of new options that enhance the flexibility of the PO Generator....

Purchase Order Generator • The main PO generator preview screen which shows suggested order lines also shows additional information including • Estimated weekly usage • Available Stock • No of weeks stock • Vendor Price alerts • * The example shown has also had cosmetic layout changes made using modifier

Purchase Order Generator • ..while a new “vendor totals” screen tracks the size and value of the order against vendor targets or minimums making it easy to work toward filling a container or reaching a minimum spend .

Purchase Order Generator and there is a wealth of extra decision support against each item as you scroll down through the list of items with further drill downs to detailed information .. For example vendor prices ...

Purchase Order Generator • The Vendor price inquiry • allows us to check • Quantity breaks available • Imminent price changes • Alternative suppliers • Price comments • and remember the vendor price inquiry is just one of many drill downs available .

Purchase Order Generator • Once you are ready to place the order this can be created with a single click ... • * • O

Purchase Order Generator ..and the order notified to the vendor using standard Dynamics GP functionality

Data Analysis There is a wealth of information available to help the buyer improve every aspect of inventory management. This XL spreadsheet for example – extracted via smartlists is illustrating how much above safety stock was held at time of receipt – with the implication of the potential for stock savings. *smartlist builder is a pre-req for this type of smartlist based analysis

Conclusion • This walk-through has not covered every aspect of • Trinity Advanced Inventory Replenishment • but has hopefully provided a good overview of the scope of the product. • We have seen .... • Easy categorisation of non-stock, sporadic and fast-moving items • The ability to import fixed reorder point and order up to levels for sporadic items • The ability to set up time based stocking policies for fast movers • The routine that identifies best forecast method per item • Auto-update of re-order parameters based on stock policies and estimated demand • Powerful purchase order generator with easy to access decision support • Vendor price lists with quantity breaks and effective dates • Data analysis tools

Next Steps • There is a wealth of additional information at the web site • http://www.trinitypartner.com/products_and_modules/add_inv_rep.htm • Including, brochure, whitepaper, case study, short introductory product movie • Web based demonstrations can be provided by Trinity • alanwilliams@trinitycomputers.co.uk • Evaluation copies of the product available on request though we advise introductory training to support this process. • For full implementation we also strongly recommend a program of training – customised to individual company requirements – but typically approx 16 hours delivered in 8 x 2 hour sessions. • ( in some cases this training can be provided direct by experienced partners )

Trinity Advanced Inventory Replenishment