Search Results for: inventory-optimization

  • How to Best Understand Inventory Planning

    ByPrimary Researcher

    … 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:

    Using this inventory optimization construct, a portion of the total stocking level is the safety stock, and another part is called the ISL or initial stocking level.
    The initial stocking level will be the target stocking level if no supply or demand variability exists.

    Segmentation Of Inventory by Inventory Usage

    Inventory has …

  • How to Perform Cost, Duration and KPI Production Scheduling Optimization

    ByPrimary Researcher

    … been discussed.
    Inventory Optimization: This supply planning method requires that service levels be placed into the application, which will then drive the application to hold a certain level of inventory –which of course, has a financial cost.
    Target Days Supply: This is a way of setting inventory levels, which considers the cost to keep inventory.

    Of the three methods listed above, cost optimization is the most direct manner of driving the planning system output through financial considerations. Cost optimization has been the dominant form of supply and production optimization since many vendors broadly introduced optimization in the early to …

  • Introduction to SAP APO

    ByPrimary Researcher

    … rest of their supply chain controlled by a combination of SAP ERP and other legacy or best-of-breed solutions. Determining which applications are the best to implement isn’t as straightforward as it sounds, however. Many companies are currently attempting to move toward service level planning (a.k.a. inventory optimization); however, this functionality is contained within an application that many customers don’t look at unless they’re considering service parts planning.
    In addition to resources, your company needs to keep an open mind because there may be functionality accessed from applications that weren’t originally thought to …

  • How to Best Estimate The Costs of Attaining Fill Rate

    ByPrimary Researcher

    … level of inventory is too expensive actually to maintain does not make an impact on the listener. Often the response will be “well, its a target.”
    Companies are supposed to analyze the profitability implications of different service levels. This is infrequently done. A way to start is to use an inventory optimization and multi-echelon application that can very accurately calculate inventory costs for different services levels. This can be utilized as a base, in which storage costs, transportation costs, and other overhead can be added to. However, because companies do not quantify this, they are left guessing as to …

  • How to Understand How Cloud Changes the Labor Needs in IT

    ByPrimary Researcher

    … to do many unthinkable things in the recent past. It is hard to look at a chart of computer performance and not come away impressed. The increases are so significant that they can’t be shown on a graph due to the growth rate.

    This graphic is from my book Inventory Optimization and Multi-Echelon Planning Software. I had to stop the graph in 1986, and if you extend the timeline, the new enhancements become imperceptible from one another. 
    However, it’s important not to confuse computer hardware improvements with either…

     The benefits received from computers and software
    The efficiency …

  • How to Best Understand The Limitations of MRP Based ERP Systems

    ByPrimary Researcher

    … that then pull the spreadsheet into the ERP system.

    Intelligently Improving an ERP Based MRP System
    We have analyzed this issue for decades. The problem is that the traditional approach, which implements a complex external supply planning system, does not have a very high success rate. Both cost optimization and inventory optimization arrived as major trends and then faded from prominence.
    Cost Optimization and Inventory Optimization to the Rescue?
    We have written in detail about how cost optimization never made any sense for supply planning. While at least consistent with the goals of supply planning, inventory optimization has been the …

  • The Art of Blaming the Client When an SAP Project Goes South

    ByPrimary Researcher

    … are getting the most out of SAP.”

    PP/DS lacks the functionality for process industry manufacturing.
    DP has not had real consensus collaborative forecasting functionality.
    DP does not manage attributes or perform top-down forecasting very well.
    DP cannot optimize forecast parameters (Alpha, Beta, and Gamma) except during the best fit procedure, but almost no one runs the best fit in production.
    SNP does not perform inventory optimization
    SNP does not fairly share the way companies want unless the stars and dates align

    The Reality
    Many parts of SAP do not work as clients think they do. That is …

  • Book on How to Best Setup Safety Stock and Service Levels

    ByPrimary Researcher

    … 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

    Table of Contents
    Chapter 1: Introduction

    Books and Other Publications on Safety Stock and Service Level
    The Use of Screen Shots in the Book
    Timing Field Definitions Identification
    How Writing Bias …

  • How to Cover Up SAP DP Weaknesses to Sell Training and Consulting

    ByPrimary Researcher

    … is true, this is a textbook mechanism for suppressing most criticism.
    Finally, the author does not seem to be acquainted with the other writing at Brightwork Research & Analysis. There are many solutions offered at this site — but there are no solutions written for solutions that do not exist. There are many of our books; for instance, the book Superplant explains how to plan integrated international factories using specialized production planning and scheduling software. Many companies struggle with this but don’t have the right software to do anything about it. Inventory Optimization and Multi-Echelon Planning Software is the first

  • How to Best Understand Reorder Point Versus MRP

    ByPrimary Researcher

    … any of the supply planning methods, or they can be used to control the supply plan without any of the methods exclusively. However, when used solely to control the supply plan, the company performs reorder point planning instead of forecast-based planning. MRP/DRP and APS (heuristic, allocation, cost optimization, inventory optimization) methods are forecast-based planning.
    An ROP definition can be derived from reviewing an ROP formula. Our interactive calculator is available in this article. 
    Why Reorder Points Have a Poor Reputation
    Reorder points are frequently criticized for not providing foresight. However, many of the arguments against reordering point …