How to Best Understand PutAway and Goods Receipt

Executive Summary

  • There is a putaway and goods receipts which involves the confirmed goods received post goods issue and post goods receipt.
  • There is also a putaway process.

Goods Receipt

Introduction to the Putaway Process

A goods receipt is the process of receiving goods into a facility. A goods receipt is performed both physically and in the computer system. Receiving goods is part of one of the major processes in a warehouse and factory. In this article, we will cover goods receipt from multiple dimensions in this article.

Goods Delivery the Putaway Process and Goods Receipt, Received Goods and Goods Received

The putaway process is the activity in a warehouse or factory of taking the stock and “putting it away” into the stocking bins, or otherwise repositioning the stock into the facility. The putaway process takes the stock from a staging area and moving the goods received its final storage location.

The costs or impacts of increased frequency of goods delivery on putaway, goods receipt, received goods and goods received costs are something to consider, that is nearly always ignored by proponents of JIT.

Loading Bay or Loading Dock and the Staging Area and Storage Location

The received goods are taken in from the loading bay or loading dock either to two potential areas in the facility. One is to the staging area to the final storage location. One can skip the staging area and take the received goods directly to the final storage location.

Confirmed Goods Received, Confirm Goods Receipt, Receipt of Goods and Inventory Receipt

  • Part of goods receipt to confirmed goods received is the confirmation of the receipt of good and the inventory receipt.
  • So confirmed goods receipt and confirmed goods receipt is part of the result of the goods issue and goods receipt process.
  • This confirmation to confirm goods received is to mean a “receipt” generated. The receipt process transfers the ownership between entities.
  • The receipt signifies the movement of the material from one set of books to another. However in the computer age, little of these receipts are paper.

Post Goods Issue and Post Goods Receipt

Posting goods issue is the computer reaction to the physical goods receipt process. When you post goods issue, the inventory decrements (increases) by the goods receipt amount. Goods receipt, which increments the inventory works the same way but in reverse.

Post goods issue or good post receipt will typically have a lead time associated with it. This means that the goods issue or goods receipt and the inventory do not increment or decrement until the lead time has passed.

The Receiving Department and the Shipping Department

Goods receipt and goods issues are managed by the receiving department, which is contrary to the shipping department.

Conclusion

Goods issue and goods receipt are two sides of the same coin. This the movement of goods both physically between buildings or locations and the accounting entry which records the receipt of goods. The confirmed goods received that is placed into both the receiving system and the issuing system.

This the movement of goods both physically between buildings or locations and the accounting entry which records the receipt of goods. The goods issue and goods receipt process are not instantaneous which is where both goods issue and goods receipt lead times are used.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

Lean and Reorder Point Planning Book


Lean and Reorder Point 2

Lean and Reorder Point Planning: Implementing the Approach the Right Way in Software

A Lost Art of Reorder Point Setting?

Setting reorder points is a bit of a lost art as company after company over-rely upon advanced supply planning methods to create the supply plan. Proponents of Lean are often in companies trying to get a movement to Lean. However, how does one implement Lean in software?

Implementing Lean in Software

All supply planning applications have “Lean” controls built within them. And there are in fact some situations where reorder points will provide a superior output. With supply planning, even within a single company, it is not one size fits all. The trick is understanding when to deploy each of the approaches available in software that companies already own.

Are Reorder Points Too Simple?

Reorder points are often considered to be simplistic, but under the exact circumstances, they work quite well.

There are simply a great number of misunderstandings regarding reorder points – misunderstandings that this book helps clear up.

Rather than “picking a side,” this book shows the advantages and disadvantages of each.

  • Understand the Lean Versus the MRP debate.
  • How Lean relates to reordering points.
  • Understand when to use reorder points.
  • When to use reorder points versus MRP.
  • The relationship between forecastability and reorder points.
  • How to mix Lean/re-order points and MRP to more efficiently perform supply planning.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Lean versus MRP Debate.
  • Chapter 3: Where Supply Planning Fits Within The Supply Plan
  • Chapter 4: Reorder Point Planning
  • Chapter 5: Lean Planning.
  • Chapter 6: Where Lean and Reorder Points are Applicable
  • Chapter 7: Determining When to use Lean Versus MRP
  • Chapter 8: Mixing Lean and Reorder Points with MRP-Type Planning

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How to Best Understand Just In Time Inventory

Executive Summary

  • Just in Time or JIT has a specific definition.
  • JIT delivery comes with higher ordering costs, delivery costs, receiving costs and put away costs and delivery costs. JIT means specific things in terms of just in time manufacturing, JIT manufacturing and JIT production.
  • Overall there is a great deal of misinformation around JIT and Lean, and we cover some of it in this article.

Introduction

Just in Time Inventory or JIT inventory have been influential concepts in both just in time manufacturing and in inventory management generally and has been used as philosophical support for reducing the stocking level.

In this article, we will cover all the ways that just in time supply chain has been applied.

JIT Definition or JIT Meaning

The JIT meaning or JIT definition is the reduction of inventory so that the new inventory that replenishes the stocking level right before it is to be depleted. There is some debate as to technically this is when this happens. That is after safety stock has been partially depleted, but there are many different JIT practitioners, and they have differing opinions.

The JIT definition of JIT meaning has several sub-areas. These JIT definition or JIT meaning includes just in time inventory and just in time manufacturing, JIT manufacturing or JIT production, which we will discuss further in the article.

While many people do not know the specifics of the JIT definition or JIT meaning, most do know that JIT results in lower inventory. But what is not at all well known is the method by which JIT proponents arrive at their proposal of stocking level is philosophical and based on the anecdotes of experience in inventory management from Japanese manufacturers.

Just in Time Inventory or JIT Inventory

Just in time inventory or JIT inventory is the minimization of inventory based on the concept that a smaller stocking level can be maintained and an increase in delivery frequency performed. Quantification of the extra costs of the JIT inventory system is not part of the JIT method. The just in time inventory system or JIT inventory system is based upon philosophy, not based upon developing a body of evidence to support the move away from traditional inventory management.

JIT Delivery and Higher Ordering Costs, Delivery Costs, Receiving Costs and Put Away Costs and Delivery Frequency

Extra costs of the JIF inventory system include higher ordering costs, higher delivery costs, higher receiving costs and

  • Higher Ordering Costs
  • Higher Delivery Costs
  • Higher Receiving Costs
  • Higher Put Away Costs

Put away is the process of moving and stocking the inventory at its stocking place. Put away follows goods receipt.

One of the primary reasons why JIT proponents don’t calculate the ordering costs, delivery costs, receiving costs or put away costs is that if this were done, the overall costs would necessarily look higher. The reason for this is that the inventory carrying cost is far lower than all of the transactions that make up the stocking level.

Delivering in small quantities with high delivery frequency is called JIT delivery. Many shipping companies specialize in JIT delivery frequency to meet the market demand. JIT delivery can be driven my JIT or Lean thinking, or it can apply to factories in congested areas that lack sufficient stock space.

The EOQ formula produces an order quantity based on a trade-off between inventory holding cost and inventory ordering cost. In such a formula, the ordering cost costs, delivery costs, receiving costs and put away costs could all be placed into the ordering cost category. JIT inventory management does not support the concepts of such mathematical determinations.

Just in Time Manufacturing, JIT Manufacturing or JIT Production

JIT primarily came from Japanese manufacturers, through US consultants and to global companies. Although the greatest JIT craze was probably in the US. Just in time manufacturing, JIT manufacturing or JIT production means JIT applied to manufacturing. Therefore, JIT is a manufacturing inventory concept that came from factories and was then applied to the overall supply chain.

Just in Time Supply Chain

Just in time supply chain is simply applying just in time manufacturing, JIT manufacturing or JIT production principles to supply chain, which means to inventory management outside of the factory. Just in time supply chain supports seeing the overall supply chain as if every stocking position and every stocking level is a short lead time product location that is no different than a manufacturing facility that is lucky enough to be able to be continuously replenished under the Toyota, inventory model.

JIT Inventory System

A JIT inventory system is simply a method that applies JIT. Any supply planning or MRP/ERP system can be made to operate under JIT principles. This typically results in the system being set to work on consumption based planning using methods like reorder points. JIT is opposed to forecasting philosophically, considering it too unreliable. The problem is that while this may apply to a stocking level or stocking position, it is not possible to apply consumption based planning in all circumstances. And the longer the lead time.

Misinformation on Inventory Conceptually Because of Lean or JIT

Lean is just rebranded JIT. Since at least the 1980’s a philosophy of keeping low inventories has gone by various names. At one time it was JIT, and then it became Lean. JIT was based upon low inventories that the Japanese were able to keep. But without understanding, that Japanese companies work more collaboratively than US companies. Second that many industrial areas in Japan have suppliers located close to their customers. The US does not have the same supplier network setup that Japanese companies do. Also, if simply a supplier is maintaining your inventories, then the overall system inventories are not lower. This distinction was left out of most of the explanations provided to US companies by JIT/Lean consultants.

Lean is primarily a philosophy which is based on taking a concept from production planning that works in specific circumstances. Lean does make sense when it uses an analytical approach to segment the product location database and converts some of the unforecastable product locations to reorder point planning. 

Conclusion

Just in time inventory rose from just in time manufacturing or JIT production to be highly influential in inventory management coming to be known as just in time supply chain. JIT and lean are non-evidence based approaches to inventory management that are based on philosophy and anecdotal evidence.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

References

Lean and Reorder Point Planning Book


Lean and Reorder Point 2

Lean and Reorder Point Planning: Implementing the Approach the Right Way in Software

A Lost Art of Reorder Point Setting?

Setting reorder points is a bit of a lost art as company after company over-rely upon advanced supply planning methods to create the supply plan. Proponents of Lean are often in companies trying to get a movement to Lean. However, how does one implement Lean in software?

Implementing Lean in Software

All supply planning applications have “Lean” controls built within them. And there are in fact some situations where reorder points will provide a superior output. With supply planning, even within a single company, it is not one size fits all. The trick is understanding when to deploy each of the approaches available in software that companies already own.

Are Reorder Points Too Simple?

Reorder points are often considered to be simplistic, but under the exact circumstances, they work quite well.

There are simply a great number of misunderstandings regarding reorder points – misunderstandings that this book helps clear up.

Rather than “picking a side,” this book shows the advantages and disadvantages of each.

  • Understand the Lean Versus the MRP debate.
  • How Lean relates to reordering points.
  • Understand when to use reorder points.
  • When to use reorder points versus MRP.
  • The relationship between forecastability and reorder points.
  • How to mix Lean/re-order points and MRP to more efficiently perform supply planning.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Lean versus MRP Debate.
  • Chapter 3: Where Supply Planning Fits Within The Supply Plan
  • Chapter 4: Reorder Point Planning
  • Chapter 5: Lean Planning.
  • Chapter 6: Where Lean and Reorder Points are Applicable
  • Chapter 7: Determining When to use Lean Versus MRP
  • Chapter 8: Mixing Lean and Reorder Points with MRP-Type Planning

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How To Use ABC Inventory Classification

Executive Summary

  • ABC classification or ABC inventory is a way of segmenting inventory so that the product location combinations can be managed.
  • We cover how ABC classification works and how it compares to other comparative methods of segmentation.

Introduction to ABC Classification

ABC classification is probably the most common way of performing segmentation of an inventory database. In this article, we will find all about ABC classification.

ABC Classification, ABC Inventory or ABC Inventory Classification

One way of looking at inventory is by ABC classification, ABC inventory or ABC inventory classification. ABC classification is where inventory is segmented by valuation or volume or both. ABC inventory classification sets up three divisions or segments.

  • A Items: These are the products or the product location combinations that are the most expensive, and or that have the highest sales.
  • B Items: These are the products or the product location combinations that are the medium expensive, and or that have a medium level of sales.
  • C Items: These are the products or the product location combinations that are the least expensive, and or that have the lowest sales.

ABC Analysis, ABC Analysis of Inventory

To use ABC classification, an ABC analysis or ABC analysis of inventory is necessary.

Some ERP systems like SAP ECC have transactions where this can be automatically calculated, and this is one reason that explains why ABC classification, ABC inventory or ABC inventory classification are so frequently used.

ABC analysis or ABC analysis of inventory is not as straightforward as it sounds. If only sales quantities are used, then the most important items, which are often the highest sales priced items are not captured. If only sales dollar amounts are used, then the volume is left out. If the volume X sales price is used, then the highest value items will dominate the ABC inventory results.

ABC Inventory Control

There is no ABC inventory control “setting” in supply planning systems. Rather ABC inventory control is simply controlling inventory by the ABC analysis of inventory. For instance, one could set C items to be consumption planned while A and B items would be driven by the forecast.

There are many examples, but it would simply mean changing the settings in the supply planning system to correspond to ABC.

Conclusion

Therefore ABC analysis of inventory is much easier to talk about in the abstract than it is to implement. In US companies for every one worker who performs the calculation, there may be 5 or 6 people throwing the term around and offering their opinion on it. Books that cover ABC inventory analysis will almost always underestimate the difficulty in using ABC inventory classification.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Brightwork MRP & S&OP Explorer for Tuning

Tuning ERP and External Planning Systems with Brightwork Explorer

MRP and supply planning systems require tuning in order to get the most out of them. Brightwork MRP & S&OP Explorer provides this tuning, which is free to use in the beginning. See by clicking the image below:

References

I cover inventory and safety stock in the following book.

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How Best to Perform Inventory Valuation

What This Article Covers

  • Introduction to the Cost of Inventory
  • The Types of Inventory Cost
  • Inventory Cost, Inventory Price, Inventory Valuation Methods and the Valuation of Inventory
  • Inventory Accounting with the LIFO Method or Last In First Out Method, FIFO Method or First In First Out Method
  • Inventory Accounting with the Weighed Average Method, Average Cost Method and the Costs of Goods Sold
  • The Concept of Average Inventory Formula

Introduction

In this article, we will cover the cost of inventory. The cost of stock is critical to both how inventory is managed as well as the final determination of the profits of a company. And the calculation method of the cost of inventory must be set up within the inventory management and financial system or systems of the entity.

There are many methods of determining the cost of inventory that relates to the inventory accounting, inventory valuation, etc.

The Types of Inventory Cost

The types of inventory cost are related to things like the purchasing cost of the inventory. However, other types of inventory cost are absorbed into things like facility costs. This is included in the carrying cost formula that is used by many companies to estimate the cost of holding inventory for a year or a month.

Other types of inventory cost include obsolescence and breakage. The types of inventory cost are quite numerous and impact a balance sheet in a multitude of ways.

Inventory Cost, Inventory Price, Inventory Valuation Methods and the Valuation of Inventory

Inventory will almost always have an inventory cost and sometimes and inventory price if the inventory is a finished good. That is an inventory price is only necessary for inventory that is sold. And the margin is determined by subtracting the inventory cost from the inventory price when the same items are purchased and sold. But this becomes more complex when a material is converted into a finished good and then sold. In that case, the combined costs of goods sold that went into the finished good must be estimated. This means subtracting the inventory cost of various materials from the final inventory price of the finished good.

This means using inventory valuation methods that allow an entity to determine the valuation of inventory. Inventory valuation methods are constrained by the tax laws of the particular country, but typically there are some standard inventory valuation methods to choose from in almost every country.

An inventory cost or inventory valuation is necessary for all of the inventory that a company maintains.

Inventory Accounting with the LIFO Method or Last In First Out Method, FIFO Method or First In First Out Method

An entity will normally choose an inventory accounting method and then configure their system to operate that way. One of the complexities is that costs change over time. Therefore, raw material “A” may cost $20 on Jan 20th, but cost $25 on Feb 25th.

  • If the raw material is issued on Feb 26th, then what is the correct cost of the raw material? When inventory is recorded in a location, it is not serialized (in most cases). Therefore the inventory at a location virtually “blends.”
  • This makes the assignment of a cost to the material difficult as 1/2 of the inventory may have been purchased at the cost of $20, and the other half at the cost of $25.

Two of the most common inventory accounting valuation methods are LIFO Method or Last In First Out Method, FIFO Method or First In First Out Method.

  • The LIFO Method or Last In First Out Method: This method values the inventory at the cost which goes to the last item cost received. So in the example above the $25 per unit cost would be used.
  • The FIFO Method or First In First Out Method: This method values the inventory at the cost which goes to the first item cost received. So in the example above the $20 per unit cost would be used.

Inventory Accounting with the Weighed Average Method, Average Cost Method

Another inventory accounting method is to now use a specific price, but rather the weighted average method or average cost method.

  • Weighted Average Method or Average Cost Method: This method values the inventory at the cost which is an average of the cost received. So in the example above the ($25 + $20),/2 or $22.5 would be the cost used.

Overall the weighted average method or average cost method has the advantage of being far less complex than the LIFO method or the FIFO method.

The Concept of Average Inventory Value

Average inventory value means taking an average of the inventory holding position and then applying a particular value (as determined as explained above). Average inventory value is used to improve the value determined in the system. The article up to this point has focused on the average inventory value for a specific product or product location combination. However, average inventory value also applies to the overall product database. The average inventory value for the overall product database is then typically tracked by companies and compared to a maximum stock level that the company wants to hold.

Cost of Goods Sold

Apparently, these various inventory accounting methods are used to determine the cost of goods sold. The costs of goods sold in total combined with the administrative and overhead will serve as the cost basis for the company.

Inventory Value

While the inventory value is the average cost of the materials time the number of materials, the term inventory value can mean several things. Any one item can have an inventory value. Or the overall system or network-wide inventory can have an inventory value, or the inventory value can be just of the materials kept at a particular distribution center.

Most companies try to cap the overall inventory value at a specific number. Such as no more than $100 million in inventory.

Conclusion

Inventory valuation works behind the scenes in inventory but drives many decisions. At this point, most ERP systems have strong capabilities for the valuation of inventory. Once the ERP system is configured properly, the valuation of inventory is automatic. Most ERP systems can show the inventory valuation at any point in time.

Another important factor related to inventory valuation is sales and operations planning. This is where the company projects supply and demand, and the impact on the overall inventory valuation of the planned inventory to be carried.

References

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How to Best Understand Inventory Planning

What This Article Covers

  • What is Inventory Planning and Stock Planning and the Stock on Hand?
  • What is the Difference Between Forecast Based Planning and Consumption Based Planning?
  • What is an Inventory List or a list of Inventory Items?
  • Replenishment Lead Time, Procurement Lead Time, Manufacturing Lead Time and Shipping Lead Time or Lead Time For Delivery
  • What is The Role of the Inventory Clerk and the Inventory Manager?
  • What is an Inventory Planning System?

Inventory Planning

Introduction

This article will provide an overview as to many topics related to inventory planning, stock planning and inventory and stock inventory.

What is Inventory Planning and Stock Planning and the Stock on Hand?

Inventory planning or stock planning is the analytical process of determining the stocking levels throughout the supply network. This means planning for every product location combination in the supply network. Inventory planning or stock planning can be based on two primary approaches; one is forecast based planning and the second is consumption based planning.

The stock on hand is the stock at each product location combination (if the overall supply network that is being discussed) that the company has in inventory. The stock on hand can also apply to a specific product location combination, such as a particular product material in a specific distribution center.

What is the Difference Between Forecast Based Planning and Consumption Based Planning?

These two major approaches, which contain a large amount of detail below each are the following:

  1. Forecast Based Planning: This is where a forecast is used by the system to drive the ordering logic.
  2. Consumption Based Planning: This is where the consumption of the stock drives the ordering logic.

There is no need for a company to choose exclusively forecast based planning or exclusively consumption based planning as all supply planning applications contain settings for both, and their forecast based planning or consumption based planning can be used for specific product location combinations.

What is an Inventory List, a list of Inventory Items, Product Inventory or an Inventory Database?

The inventory list or the list of inventory items is the product inventory or inventory database that the company maintains. The inventory list or list of inventory items is not specific to a location, so will always be far lower than when locations are brought into the analysis. This is why it is always important to specify whether one means the inventory database or the inventory database per location.

Any inventory list should be reviewed for whether some of the products on the list of inventory items should be removed. This is because the inventory list has a way of proliferating over time due to things like new product introductions.

Replenishment Lead Time, Procurement Lead Time, Manufacturing Lead Time and Shipping Lead Time or Lead Time for Delivery

The various lead times connect in the following way:

For Manufactured Products

Replenishment Lead Time = Manufacturing Lead Time + Procurement Lead Time (for raw materials, components, and subassemblies) + Shipping Lead Time or Lead Time for Delivery

For Procured Products

Replenishment Lead Time = Procurement Lead Time (for raw materials, components, and subassemblies) + Shipping Lead Time or Lead Time for Delivery

There is often discussion of expediting the various lead times, but in many cases, the only lead time that is reasonably capable of being expedited is the shipping lead time or lead time for delivery. The shipping lead time or lead time for delivery can normally only be expedited at a considerable expense (unless the product in question is of high value and low weight)

There are cases where the opposite occurs, where the total fulfillment lead time is shorter than the order lead time. Examples of this include defense contracting and custom suits. While it receives a very high amount of coverage, this is in actuality a very small portion of the overall market that is as made to order. Make to order products tend to be premium priced, and many products that are thought to be made to order (such as configurable computers) are not made to order at all, but in fact, assemble to order.

What is The Role of the Inventory Clerk and the Inventory Manager?

The inventory clerk is the individual how touches the inventory and does things like the physical inventory. Although the term inventory clerk is a bit dated. The inventory manager performs inventory planning and also expediting of things like purchase orders and production orders. While the inventory clerk is entirely execution focused, the inventory manager must often keep inventory stock on hand below a certain cap, while attaining service level targets.

What is an Inventory Planning System?

An inventory planning system can refer to either an approach or to software applications that implements a particular inventory planning system.

Conclusion

The functions of inventory are to have the right amount of stock on hand when demands are received to meet expected service levels expectations. The foundational functions of inventory are to compensate for where the order lead time is shorter than the replenishment lead time.

While inventory planning and stock planning is certainly not a high profile activity, it is of great importance.

Inventory planning and stock planning has been greatly changed through the introduction of both inventory planning or supply planning software and the use of general tools like spreadsheets. These tools allow the inventory manager and others to manage far more inventory more effectively than they did in the past.

References

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How to Best Understand SKU Stands and the SKU Number

Executive Summary

  • The term SKU has a specific meaning and is associated with the SKU number.
  • The SKU number tells us important things about the properties of the SKU.
  • There is a question of whether the location is part of the SKU, sometimes it is and sometimes it isn’t. And when it is it can be quite beneficial.

Introduction

SKU stands for “stock keeping unit” is a commonly used term in supply chain management. According to the website Lokad, an SKU is..

“Refers to a specific item stored to a specific location. The SKU is intended as the most disaggregated level when dealing with inventory.”

A little later on, I will discuss why this explanation of the term is inconsistent with something called the SKU number. Understanding what the term SKU stands for means knowing a bit how the term first developed.

Understanding what the term SKU stands for means knowing a bit how the term first developed.

Origin of What the Term SKU Stands For

The term Stock Keeping Unit was originally used at the store level. So if one goes into a Target, each product has a bar code and is called a Stock Keeping Unit. That is a distinct item from any other item in that store.

And for that purpose, the term works perfectly well.

The problem arises when one works in supply chain management, and that same Stock Keeping Unit is in many locations, including warehouses. Therefore what the term SKU stands for does not translate well outside of the single store environment.

SKU Numbers

SKU numbers are internal numbers and letters that are used for products. Sometimes the SKU number can have a code that is human-readable build into it. For instance, the following SKU number could apply for socks.

  • NK-SK-BL-8-12-0023

The code of this type of SKU number would be the following:

Manufacturer, Color, Size, Model Number. Therefore this is

Therefore this SKU number tells us that this is an (NK) Nike, (SK) Sock, (8-12) Size 8 to 12, (0023) model number.

Most SKU numbers are short, and therefore, one has to know the “code” to read them. A SKU number both identifies the SKU from other SKUs but also provides information about the SKU to the individual/company/entity that maintains the SKU.

Location as Part of the SKU Number?

Something else interesting about SKU numbers is that they do not have a location component. I have never seen a SKU number that looked like the following:

  • NK-SK-BL-8-12-0023-SDDC

That is the last add-on being (SDDC) San Diego Distribution Center.

This is because it makes no sense to have a location appended to a SKU because obviously, a SKU travels through the supply chain, and if it had a location appended to the SKU number, then everytime that SKU was transferred it would have to have its SKU number altered. That would create a serious problem.

Conclusion

  • The term SKU has been around for a very long time.
  • What the term SKU stands for is not descriptive. That it does not tell the listener what they want to know.
  • The term SKU does not include within it whether it refers to a location, and opinions vary as to what its meaning is.
  • When you use the term SKU, it may have a different meaning to the listener.
  • SKU numbers are important components to supply chain management, and a SKU number both identifies the SKU from other SKUs and provides information about that SKU.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

References

https://www.lokad.com/stock-keeping-unit-(sku)-definition

I cover supply planning and stocking principles in the following book.

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Service Level & Safety Stock Setting

Service Level & Safety Stock Setting

Setting service levels and inventory can be performed far more easily than is done at the vast majority of companies. Click the image to see how.

service_level_and_safety_stock_setting

Is the Term SKU a Useful Term?

What This Article Covers

  • What is a SKU?
  • The Problems with the Term SKU
  • The Term Product Location Combination, aka the PLC, aka the PL.
  • What is the Relationship Between the SKU and the Product Location Combination?
  • Counting Valid PLCs

The most important information carried by this term is two attributes. This is the uniqueness of the product and the uniqueness of the location. Does the term SKU communicate this information to the listener? In this article, you will find out. 

Introduction

SKU, which stands for “stock keeping unit” is a commonly used term in supply chain management. According to the website Lokad, an SKU is..

refers to a specific item stored to a specific location. The SKU is intended as the most disaggregated level when dealing with inventory.

That is not how I have found the term to be used in practice. Often when people use the term SKU, they only mean the “product” divorced from its location. For years the term SKU-Location or “SKUL” was commonly used in companies and still is.

The Problem with the Term SKU

The term Stock Keeping Unit was originally used at the store level. So if one goes into a Target, each product has a bar code and is called a Stock Keeping Unit. That is a distinct item from any other item in that store. And for that purpose, the term works perfectly well. The problem arises when one works in supply chain management, and that same Stock Keeping Unit is in many locations, including warehouses.

In that environment, the term SKU, which has some confusion as to whether it is tied to a location or not linked to a location is more confusing than helpful. I can say this because I have had repeated discussions where I have to ask, or the other person has to ask if they or I mean an SKU or an SKU location combination. For this reason, I recommend the use of a different term.

That is the term product location combination or “PLC” for short or even the “PL.”

The Product Location Combination, the PLC

The term “product location combination” is an excellent term because it is impossible to confuse with any other meaning. All supply networks are made up a mix of goods at locations. If we look at a company that carries 100 products and has 10 locations, then 1000 product site combinations are the maximum number of potential product location combinations.

Counting Valid PLCs

In most cases, the actual number will be significantly lower than this as companies don’t carry every product at every location. On the other hand, when on looks in the supply chain system, there are often many more product location combinations than the theoretical maximum because of old product locations that have not been removed from the system. Therefore another important distinction is how many “active” PLCs exist in the system.

Conclusion

  • The term Stock Keeping Unit has been around for a very long time.
  • Ther term Stock Keeping Unit is not descriptive. That it does not tell the listener what they want to know.
  • The term Stock Keeping Unit does not include within it whether it refers to a location, and opinions vary as to what its meaning is.
  • The term product location is far more useful for being self-descriptive.

References

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

https://www.lokad.com/stock-keeping-unit-(sku)-definition

I cover supply planning and stocking principles in the following book.

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Service Level & Safety Stock Setting

Service Level & Safety Stock Setting

Setting service levels and inventory can be performed far more easily than is done at the vast majority of companies. Click the image to see how.

service_level_and_safety_stock_setting

How to Understand the Types of Inventory Infographic

Executive Summary

  • There are important segmentation or types of inventory.
  • There is a segmentation of inventory that includes the types of inventory, inventory classification, and the uses of inventory.
  • The functions of inventory include the anticipation inventory, goods in transit or stock in transit, transportation inventory, pipeline inventory, lot size inventory and hedge inventory or speculative inventory.

Introduction to Inventory Segments

In this article, we will cover many of the different ways that inventory can be divided or segmented.

The Concept of Types of Inventory, Inventory Types, Categories of Inventory, Inventory Categories and Inventory Classification

There are many concepts of the types of inventory, inventory types, categories of inventory or inventory categories that are used in supply chain management. Some of these have to do with how the types of inventory or inventory types are treated by the supply planning system. For instance, high-value product inventory may be set on different supply planning settings that low-value product inventory.

Categories of inventory or inventory categories can be based upon what that inventory does. That is, is the inventory a raw material, a finished good, a component, work in process, etc. Understanding these categories of inventory is important both for working with others (so you can have a shared understanding of the meaning of different categories of inventory) but also to decide which of the inventory categories one may want to use themselves.

Target Stocking Level, Safety Stock Level, and the Initial Stock Level

One way of looking at inventory is the total amount of inventory in the system or the inventory at a stocking location in total. This can be viewed as the actual inventory versus the target inventory.

The target inventory or target inventory level is often made up of the following conceptual components.

  • TSL: The Target Stocking Level
  • SS: The Safety Stock Level
  • ISL: The Initial Stock Level

Each of these different stocks is shown in the following graphic:

tsl-or-safety-stock

  • Using this inventory optimization construct, a portion of the total stocking level is the safety stock, and another portion is called the ISL or initial stocking level.
  • The initial stocking level would be the target stocking level if no supply or demand variability were to exist.

Segmentation Of Inventory by Inventory Usage

  • Inventory has multiple inventory uses.
  • It can be categorized into multiple inventory types.
  • By categorizing inventory and evaluating the allocation of the overall inventory into the different uses and types, one can gain a measure of the relative impact on overall inventory of these segments.
  • It is also valuable to consider what the actual function is the inventory that is carried.

Types of Inventory, Inventory Classification, and Inventory InfoGraphic

The following infographic shows the types of inventory and inventory classification by two different dimensions.

inventory-categories

Functions of Inventory: Anticipation Inventory, Goods in Transit or Stock in Transit, or Transportation Inventory, Pipeline Inventory, Lot Size Inventory and Hedge Inventory or Speculative Inventory

Another way to categorize inventory is by its function.

  •  Fluctuation Inventory: Fluctuation inventory is inventory that is carried to account for variability in either demand or supply. The technical definition of this is safety stock.
  • Anticipation Inventory: Anticipation inventory is inventory that is held in anticipation of specific or unusual demand. It goes without saying that all inventory is “anticipatory” in nature unless the stock has been sold already, but what makes anticipation inventory different from normal inventory is that there is a reason that can be pointed to for carrying more inventory than normal. A very common example of anticipation inventory is inventory carried specifically for weather events.
  • Goods in Transit, Stock in Transit or Transportation Inventory: Goods in transit, stock in transit or transportation inventory is stock that is somewhere in the process.
  • Pipeline Inventory: Pipeline inventory is a subset of transportation inventory. However, pipeline inventory is only the portion of the stock in transit inventory that it is outbound to the customer.
  • Lot Size Inventory: A lot size is an order size that in many cases are larger than the demand. The lot size is applied to keep companies from purchasing in “non-economic” quantities, which means quantities that would incur overly high transaction costs. The resultant lot size inventory, therefore, is the inventory that is carried not because of need, but because the lot size required the quantity to be increased. Lot size inventory is differentiated from inventory that is purely demand driven.
  • Hedge Inventory or Speculative Inventory: Hedge inventory or speculative inventory is inventory that is carried above what would ordinarily be carried to meet the demand for a speculative purpose. If an entity were to conclude that some input material has a high chance of becoming more expensive in the future, then it would make sense for that entity to purchase and carry hedge inventory or speculative inventory which would reduce its cost of material acquisition. Hedge inventory or speculative inventory would tend to be the most common in raw materials, as the raw material can be converted into so many output items and never really becomes obsolete.

Classes of Inventory: Raw Materials Inventory and Raw Materials Examples, Components Inventory, Work in Process Inventory, Finished Goods Inventory

Another way to classify inventory is of its class.

  • Raw Materials Inventory: Raw Materials Inventory is the material that is in a very basic stated with little manufacturing or other processing performed by the supplier. Raw materials examples are things like gold, copper, grain, industrial powders, raw milk, etc. Raw materials examples will tend to be shipped in bulk.
  • Component Inventory: Component inventory is inventory that is a recognizable part or assembly that goes into the finished goods. When component inventory is held until a sales order is received, this is called assemble to order manufacturing.
  • Work In Process Inventory: Work in process inventory is material that has is somewhere along in the manufacturing process but is not yet a finished good or finished product.
  • Finished Goods Inventory: Finished goods inventory may be in storage at the factory right after manufacture, or finished goods inventory can be anywhere in the outbound supply chain. For entities that distribute an item rather than manufacture an item, these entities receive finished goods inventory from suppliers.

Conclusion

Most supply planning systems will not break out the total inventory by the types of inventory that I have listed above.

There are many “dimensions” by which one can “segment” inventory. This article explained some of the most commonly used.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:

References

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings

How to Best Understand Supply Chain Inventory

Executive Summary

  • Considering inventory it is necessary to understand why it is held.
  • We cover the components that makeup inventory that is held.

Introduction

In supply planning, inventory is that product that his held in the company’s supply network to satisfy demand. In this article you will learn the various reasons for holding supply chain inventory. 

Inventory and the Manufacturing Environment

Finished goods inventory is necessary for make to stock environments. Component inventory is necessary in assemble to order environments. In make to order environments, if followed faithfully, no inventory should be necessary. Fundamentally inventory is necessary due to the lag between when a product is demanded, and when it can be supplied.

Sales and Statistical Forecasting Combined: Mixing Approaches for Improved Forecast Accuracy

Like the question of what is inventory, the reasons for holding inventory or stock inventory boil down to the fact the lead-times for production and procurement are longer than the customer demand lead-time.

Not all companies need to forecast all of their finished goods products. One example of this is defense contractors that frequently know years in advance, what they will build as they have firm contracts containing quantities and dates from the government.

However, even these companies are still required to create forecasts for the service parts that support the products that they sell.

How is Inventory Positioned? 

Inventory is positioned in different locations by the supply planning system. The assumptions that the software uses to perform positioning very much depends upon the supply planning method selected.

This is described in this article.

What Makes Up Inventory?

The total inventory at a location is the total stocking level, which is made up of cycle stock (the stock held between ordering) and safety stock (the stock designed to ensure there is enough stock to satisfy demand while mitigating demand and supply variability)

  • The total stocking level is not necessarily the correct amount of stock that should be held.
  • This is referred to as the target stocking level (only MEIO vendors refer to it like this, but it is quite a logical term)

What are the Functions of Inventory to Keep Inventory, or the Reasons for Holding Inventory and to Stock Inventory?

Fundamentally the functions of inventory are to allow the company or entity to have something available at the time of sale. The reason for holding inventory or to stock inventory is because, in the vast majority of cases, the lead time required by the customer, or the order period is shorter than the

The reason to keep inventory or to stock inventory is because, in the vast majority of cases, the lead time required by the customer, or the order period is shorter than the replenishment lead time. This is the reason to keep inventory or stock inventory because not to do so will result in not being able to fulfill demand.

Understanding how the various lead time connects is required to get to the essence of the functions of inventory.

The True Reasons for Holding Inventory

This is important to consider the true reasons for holding inventory. This is because many Lean inventory advocates propose that stock can be drastically cut and in fact refer to inventory as a liability.

That is technically inaccurate. When inventory is excessive that portion of the stock is a liability, but it is only really a liability if the inventory is either not used or if it is significantly marked down when sold.

The costs of carrying inventory for short periods of time is quite low. And of course, the cost of having a stock out is much higher than having too much inventory. Therefore the reasons for holding inventory really required illumination.

Conclusion

Inventory is controlled by the supply planning system and is designed to be moved and stocked to satisfy future demand. The reasons for holding inventory are often not fully explained and the costs of maintaining inventory versus not having inventory when it is needed, are in most situations not quantified.

Remote Supply Planning Consulting

  • Want Help with Supply Planning?

    It is difficult for most companies to make improvements in supply planning without outside advice. And it is close to impossible to get knowledgeable supply planning advice from large consulting companies. We offer remote unbiased multi-dimension supply planning support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Brightwork MRP & S&OP Explorer for Order Optimization

Order Sizing and Optimization

Order optimization is necessary in order to get the predicted value from ERP and other supply planning applications. The Brightwork MRP & S&OP Explorer does exactly this, and it is free to use in the beginning until it sees “serious usage.” It is permanently free to academics and students. See by clicking the image below:

References

Replenishment Triggers Book

Replenishment Triggers

Getting the Terminology Right

The terms make to order and make to stock roll quickly off of people’s tongues regardless of their knowledge of other supply chain conditions. Many executives speak about “moving to make to order environment.” For most companies, this simply is not realistic. And many businesses that say they do make to order/configure to order/engineer to order are doing assemble to order planning.

The Universality of The Manufacturing Environment Type

These terms are specific types of manufacturing environments. They are embedded in almost all supply planning applications ranging from the most basic ERP to the most sophisticated advanced planning system. However, each manufacturing environment leads to some implications, implications that are most often not completely understood.

Getting Clear on Requirements Strategies

Requirements strategies are what control what drives the replenishment of supply in systems. In most cases, the need strategies control whether the forecast or the sales order triggers replenishment.

This book cuts down the amount of time that is required for people in companies to understand the relationship between manufacturing environments (the business) and requirements strategies (the technology setting in the supply planning application).

By reading this book you will learn:

  • What are the major manufacturing environments and what determines which manufacturing environment a company follows?
  • How do the different manufacturing environments impact how inventory is carried?
  • How are the various production environments configured in software?
  • What is mass customization, and how accurate is useful is this concept in real life?
  • What is the interaction between variant configuration and the manufacturing environment and the bill of materials?

Chapters

Chapter 1: Introduction
Chapter 2: The Different Manufacturing Environments
Chapter 3: Triggering Replenishment
Chapter 4: Requirements Strategies
Chapter 5: The Make to Order Illusion
Chapter 6: The Limitations to the Concept of Mass Customization
Chapter 7: Forecast Consumption
Chapter 8: Variant Configuration in SAP ERP
Chapter 9: Conclusion

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:

software_ratings