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Step 1 - Defaults

Purpose

This routine is used to maintain the Stock Replenishment system settings recorded for global use within the Inventory and Forecasting modules. The details entered here can be changed at any time during the use of Online Advantage.

Data Input

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Step 1 – Defaults

Replenishment Method

Replenishment Method is used in the calculation of “replenishment point” in the Inventory Control and Forecasting modules. Specifically the method selected here will drive the Stock Replenishment reporting that the system will calculate during an Inventory End Of Day (EOD) overnight run.

There are two options available:

Nett Stock method.
The Nett Stock Method compares each product’s Nett Stock quantity with the inventory items minimum quantity to determine if reordering is required. In other words, using this method the system will include every know “pending” transaction (receipts and issues) for a each product to determine the bottom line “Nett” stock quantity before deciding if the item needs to be replenished. The system then compares this “Nett” stock quantity to the inventory items “Minimum” stock quantity to determine if reordering is required.

Lead Time method.
The Lead Time Method calculates Nett Stock at the point of earliest replenishment using the weighted/average lead time held per Inventory item, rounded out to the end of the week, and then adding all on order quantities up to this point to calculate a theoretical “Nett” stock quantity at that specific point in time. It then compares this calculated “Nett” stock quantity to the minimum stock to determine if reordering is required.

Check Stock factor %

Enter the percentage figure to be used as the “Check Stock Factor” when producing the Stock Replenishment report. The report will then show all inventory items whose “Nett” stock quantity is X% away from the inventory items “Minimum” quantity on-hand (where X is the check stock factor percentage entered at this prompt). The main idea here is to show items that do not necessarily need to be replenished right now on the report, so that if you are placing an order with a supplier and want to add other items to that order (to make a minimum order value or to fill a container) you can see which items are approaching the point where they need to be replenished.

Follow up factor %

Enter the percentage figure to be used as the Follow Up Factor when producing the Stock Replenishment report. This then includes all inventory items on the report whose Quantity On Hand is X% away from their Safety Stock Quantity (where X is the follow up factor entered here). Note this is using Quantity On Hand and not the “Nett” stock quantity which is used for the “Check Stock” factor.

Use Usage or Demand

Select whether the stock replenishment reporting system will use the recorded “Usage” or “Demand”. There are two options available:

Usage
Usage is the sum of your actual stock issuing transactions i.e. those movements that deplete your Inventory levels.  The transactions included in Usage are:

  • Invoices – customer sales transactions
  • Credit Notes – selective customer returns based on a setting held against the ‘Reason for Return’
  • Manufacturing Issues – material issues to Work Orders
  • Kit Issues – material issues to Manufacturing Kits
  • Manual Stock Issues – which is optional per transaction based on user selection

Demand
Demand is a measure of requirement. An attempt to record what stock you might have ‘used’ if you had it available at the time it was ‘demanded’.  In other words it is not meant to represent what happened. It is meant to give you an indication of what could have happened, if you have the stock levels to satisfy the ‘demand’. This is why Demand should not to be confused with ‘Usage’. It can be very different.

Another way to look at this is to say that Usage is what we sold/used. Demand is what we could have sold/used. There is a difference. The difference exists because you may not be able to sell/use an item if you don’t have it. In practical terms, this means that sometimes a customer won’t order an item if you don’t have it in stock and available to sell. Likewise another branch won’t receive a stock transfer if there is no stock to send them. It is this ‘gap’ that Demand attempts to measure.

The other important characteristic of Demand to keep in mind is that it can be calculated based on a formula. The ‘transaction’ elements included in Demand can be defined in the system and therefore they may vary from one stock location to another. Because of this the  ‘Demand’ can be more selective. It might only include “Ordered” demand (Customer Sales Orders and Stock Transfer Orders) which can on a given stock item be a very different number to ability to deliver/fulfill orders as sales/used usage.

Report Format

Select the report format; Detail or Summary.

The Report Format determines which of the two Stock Replenishment Report formats would be used by the Inventory End of Day. As their names suggest, one has more detailed information whilst the other is a shorter summary format.

Number of Months for Average

Enter the number of months to be used on the Stock Replenishment Report and Stock Displays when the system calculates the number of months “average” stock usage for each inventory item. The average is thus calculated over the number of months entered here.

Separate non stock items

Select the option if you wish to separate the “Non Stock” items from the “Stocked” items on the report.. If you are building a purchase order from replenishment details, then if this option is ticked you are asked whether you want to build for stock or non-stock items. You may require the “Stocked” and “Non-Stock” items to be separated in the report because different people look after the purchasing of those items. If you do not select this then the items will appear together as with any other item needing replenishment. See related topic: Purchase Order Entry

Print ‘Next’ Details

Enable this option if you require details of the ‘Next’ purchase order due in for a given inventory item (product), to be shown on the replenishment report. This will help you to decide if a item needs further replenishment, or if you need to chase the next order to come in before you run low of stock.

Print Usage/Demand Figures

Select this option to have usage or demand information (depending on the ‘Use Usage or Demand’ setting) included in the details that appear in the Stock Replenishment Report.
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