Trendiness in Supply Chain Management

What This Article Covers

  • George Plossl’s View on the Trendiness of Supply Chain Management
  • The Difficult Spot that Consultants Often put Companies in as they Move from one Trend to the Next.
  • Illogical Supply Chain Management Trends
  • How an Infatuation with Trends Undermines Sound Planning

Background on Supply Chain Management Trends

With terms like JIT, TQM, Lean, B2B marketplaces, Kanban, optimization, supply chain management is filled with trendy concepts that influence decision makers (a strangely high percentage of which are Japanese in origin for some reason). In fact, for an area of study that is supposed to be more of a science than an art, supply chain management has been remarkably trendy.

I have previously described the fact that approaches applied to supply chain software very frequently do not have to pass any logical test. As I stated in response to a comment on demand sensing being a method to primarily fake forecast accuracy:

One consultant I was working with stated that company XYZ was reported to have success with the approach. I had just come from that exact company, and my experience with them was they neither their executives nor their IT group knew anything about forecasting, and this multi-billion dollar company could not do the most elementary forecasting functions. Actually, very few companies can be used as models for forecasting excellence. Most companies do a horrible job of taking advantage of systems to improve their forecast.

However, if a big consulting company does something, or a big client does something, that seems to be sufficient evidence that other people should do it as well. I think the first question needs to be “does it make sense?” and secondly, “have we tested it?” The fact that a consulting company or a client did this or that really means nothing. Very few executives call in journalists into their office to report that they completely bombed on their IT implementation because they were ripped off by Accenture who lied to them about what software could do for them and this caused them to miss their quarter. This is called reporting bias, and obviously must be adjusted for.

Illogical Supply Chain Management Trends

Observing the illogical nature of many supply chain management trends was noticed and written about decades ago by George Plossl. George Plossl was very focused on practical and often mathematical approaches managing the supply chain, and therefore many of the trends in a supply chain, most of which have failed to pay dividends must have struck him is strange as they strike me.

Probably the greatest misconception is that the job of effective planning and control is primarily technical. The literature of the technical societies and the words of a few consultants have led many managers to believe that all they need for control are the right techniques in a system. Overselling sound and necessary techniques like MRP has certainly been a great disservice to hard-pressed managers. Interest in new techniques flares up like fads in clothing and sports. Too many managers seem to believe that they can buy their way out of trouble quickly by adopting the Japanese “Kanban” technique or the Israeli super mathematical “Optimal Production Technology.” Over-simplified solutions to complex problems, like jogging for better health and fad diets, continue to beguile many people unwilling to adopt the necessary changes in life-style so needed for achieving their real goals. Sound planning, effective execution of the plan and adequate control requires more than techniques and computer programs however elegant and expensive these may be. – George Plossl

In this quote, George Plossl does a good job of explaining the penchant for trends that he saw in his consulting work.

References

“Production and Inventory Control: Applications,” George Plossl, George Plossl Education Services, 1983

To get a good basis in supply planning, see my book on supply planning software.

Supply Planning Book

SUPPLY

Supply Planning with MRP, DRP and APS Software

Showing the Pathway for Improvement

Supply planning software, and by extension supply planning itself, could be used much more efficiently than it currently is. Why aren’t things better?

Providing an Overall Understanding of Supply Planning in Software

Unlike most books about software, this book showcases more than one vendor. Focusing an entire book on a single software application is beneficial for those that want to use the application in question solely. However, this book is designed for people that want to understand supply planning in systems.

  • What methods fall into APS?
  • How do the different methods work and how do they differ in how they generate output?
  • What is the sequence of supply planning runs?

These types of questions are answered for readers in this book.

This book explains the primary methods that are used for supply planning, the supply planning parameters that control the planning output as well as how they relate to one another.

Who is This Book For?

This book as a practical primer for anyone looking to perform a supply planning software selection, any person beginning a supply planning project, or anyone who just wants to understand supply planning software simply better.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Where Supply Planning Fits Within the Supply Chain Planning Footprint
  • Chapter 3: MRP Explained
  • Chapter 4: DRP Explained
  • Chapter 5: APS Supply Planning Methods
  • Chapter 6: APS for Deployment
  • Chapter 7: Constraint-based Planning
  • Chapter 8: Reorder Point Planning
  • Chapter 9: Planning Parameters
  • Chapter 10: How MRP, DRP, and APS Relate to One Another
  • Chapter 11: Supply Planning Visibility and Master Data Management
  • Chapter 12: Understanding the Difference Between Production Versus Simulation

 

The Problem With Frequently Updating the Supply Planning Process

What This Article Covers

  • A False Belief of Responsive Supply Chain and the Frequently Updating the Planning Process
  • The History of Supply Chain Planning
  • The Issue of Lead Times in Supply Planning

A False Belief of Frequently Updating the Planning Process for Responsive Supply Chain

In many companies, a mantra has developed that it was important to be able to reflect the most recent updates into the planning process. What this results in are frequently last minute updates to the forecast and a very short or non-existent frozen period. This is promoted as forward thinking when in fact it is quite regressive.

The History of Supply Chain Planning

Planning has always existed in one form or another, however, it developed in conjunction with the rise of computers. There is no doubt in my mind that grain warehouse managers in ancient cultures performed some planning for managing the creation and inventory management of anything from grain stores to stones at a quarry. There is no doubt that planning took on enhanced capability with computers providing the ability to manage large amounts of data necessary to perform detailed planning. However, while many companies purchased supply chain planning software, far fewer internalized the concepts and discipline of planning. For this reason, the vast majority of supply chains are reactively managed, and many people in high levels of companies such as Vice Presidents and Directors of Supply Chain do not appreciate or have even studied supply chain planning at any level of detail. For many of them, the planning systems they are simply things to be manipulated to meet their short term goals.

Responsive Supply Chain Concepts

Many think that the more they interfere with the system and the more responsive they make the system; the better the results will be. Thus, few organizations make much progress with their supply chains from year to year, because they lack the knowledge and discipline among their leadership ranks of how to effectively manage the systems they have purchased to achieve the organizations’ supply chain objectives.

The Issue of Lead Times and Responsive Supply Chain

The problem with this idea is that it can be easily contradicted by looking at lead times. That is changes to forecast cannot realistically be expected to be effectively managed if they come in within total manufacturing or procurement lead times. However, the response one gets is that materials can be expedited. What would seem too desirable is for companies to build in flexible lead time capabilities into their products so that different lead times could have different costs associated so that the model could pick the best most appropriate lead time. However, the problem with this is most companies don’t know the actual costs of expediting products, and secondly, they have a big enough problem managing the master data of the lead times that they already maintain.

Conclusion

The concept of planning systems with regards to lead times is simple. The lead times entered are to be the company’s best guess as to the time required to perform different tasks. Planning systems are deterministic in that they produce a plan based on these lead times, and they need a sufficient lead time to do their job. If you interfere with their operation by forcing a broken and undisciplined forecast process onto the supply and production planning system, negative consequences will occur.

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

Why Magical Ideas Are More Appealing than Standard Supply Planning

What This Article Covers

  • Introduction to Magical Ideas in Supply Chain Management.
  • Why Dynamic Safety Stock is Not Held.
  • Why Lean is Magical Thinking
  • The Relationship Between Education and Magical Beliefs.
  • Proponents of Lean Supply Chain

Introduction to Magical Ideas in Supply Planning

There are several magical ideas which are extremely popular currently in supply chain management. The concept of Lean — which has been popular for some time, and demand sensing, which has recently become quite popular. Both ideas are primarily attractive to executives and have little to do with making supply chain planning work in systems. For instance, there is no setting in any supply chain system that one can activate if a decision maker wants to enable Lean.

Proponents of Lean Supply Chain Management

Proponents of Lean like to propose that one should only reduce inventory on “faith,” and this is due to some combination of stock being inherently evil, and some vague background story of how Toyota follows Lean principles — and therefore it must be good. The truth is that low inventories can only be held, without imposing even greater costs on the rest of the system by having lowered variability in the system (for instance lower procurement lead time variability and lower forecast variability). If lower variability is achieved, the system will naturally require less inventory. But one cannot put the cart before the horse – which is what most Lean proponents would have companies do.

Why is Lean Magical Thinking

Lean is magical thinking because it provides little evidence — unless one considers unproven anecdotes about Toyota as evidence, and is inherently illogical — relying upon the listener to have a limited and second-hand grasp on supply chain principles. Demand sensing is another magical belief that changes the rules of the game by allowing the forecast to be changed within lead time — which does no one any good. Demand sensing is equivalent to changing one’s bet at the halftime of the SuperBowl. Certainly, it improves forecast accuracy — but only if one accepts the assumption that predictions can be modified when it’s too late to place a bet. Vegas bookmakers require you to solidify your bet before the game starts.

Why Dynamic Safety Stock Is Not Held

While many people attempted to list the standard safety stock formulas, I think what need to be discussed is why the dynamic safety stock calculation are not used in companies. Rather than spending more time on reiterating involved safety stock formulas, the question needs to be asked: “why.” I believe the answer lays with the high forecast error that most companies have. Because most companies have a problem mastering statistical forecasting systems for supply chain management and because they make their demand history as un-forecastable as possible by doing things like not performing historical substitution, not accounting for promotional sales. It is a highly rare company — like Trader Joe’s, that makes its decisions with an eye towards how it will impact the supply chain. The higher the forecast error, the less likely the company will be willing to carry the safety stock as calculated by the dynamic safety stock formula.

A poor quality forecast increases the safety stock — but does not decrease the necessity to carry the calculated safety stock. This reality is covered in this article. The dynamic safety stock calculator is available at this link. This is a common problem with supply chain planning generally — that excuses are given as to why the standard formulas should not be followed.

The Relationship Between Education and Magical Beliefs

The fact is very few people that work in supply chain either have education in supply chain management or operations research, and this makes them far more susceptible to “magical” ideas. Look at what is emphasized. As an example, many more people that work in supply chain management can explain to you what “Lean” versus the difference between make to order, make to stock and assemble to order. There is no “Lean” setting in any system. Therefore, trendy concepts that have far less importance than the real substance of inventory management are over emphasized. Companies that cannot master the actual content — are quick to move to trendy concepts. This is true for not only supply planning but demand planning and production planning.

Around 1/2 of the general US population believes they have a personal angel. This belief diminishes with the more education as the person has and in particular, the more exposure to science that that person has. Some schools have grown their curriculum to have either minor in supply chain management of majors in the topic. Either these programs are too few (and they must be as accounting and marketing programs are nearly universal in colleges) or the education that students are receiving is ineffective. Of course, a supply chain management degree is not the only level that should provide sufficient background to allow a person to question things like Lean and demand to sense.

For instance operations research is even more widely taught than supply chain management and covers some of the same principles. This is not working. Another major problem is that it is not merely a feature of one’s knowledge. Ideas become trendy, and then it is necessary to move against the notion — when it has taken root at the executive level. Many people have the appropriate training but are more focused on their career than what is true or false. For this reason, plants have been run inefficiently, and reduced supply planning has been employed because it is simply too risky to challenge the status quo. Magical beliefs are appealing because thy hold the promise of vast improvements — with little work.

Conclusion

The fact is that the vast majority of supply chains are inefficient and wasteful — and while money has been expended on applications — the performance is not improving very much because improvement requires a lot more than only buying software and hiring a consulting company to implement supply chain software.

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

How to Best Understand PutAway and Goods Receipt

What This Article Covers

  • Goods Delivery the Putaway Process and Goods Receipt, Received Goods and Goods Received
  • Loading Bay or Loading Dock and the Staging Area
  • Confirmed Goods Received, Confirm Goods Receipt, Receipt of Goods and Inventory Receipt
  • Post Goods Issue and Post Goods Receipt
  • Putaway and the Putaway Process
  • The Receiving Department and the Shipping Department

Goods Receipt

Introduction

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 are 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 post good receipt will normally 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 the 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.

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 Best Understand Just In Time Inventory

What This Article Covers

  • JIT Definition or JIT Meaning
  • Just in Time Inventory or JIT Inventory
  • JIT Delivery and Higher Ordering Costs, Delivery Costs, Receiving Costs and Put Away Costs and Delivery Frequency
  • Goods Delivery
  • Just in Time Manufacturing, JIT Manufacturing or JIT Production
  • JIT Inventory System
  • Just in Time Supply Chain
  • Misinformation on Inventory Conceptually Because of Lean

JIT Inventory

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 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, than 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 upon philosophy and anecdotal evidence.

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

What This Article Covers

  • ABC Classification, ABC Inventory or ABC Inventory Classification
  • ABC Analysis, ABC Analysis of Inventory
  • ABC Inventory Control

ABC Classification

Introduction

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

In order 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 on the basis of 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 actually 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.

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:

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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

Inventory Accounting

Introduction

In this article, we will cover the cost of inventory. The cost of inventory 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 setup 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 at 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 are to now use a specific price, but rather the weighed average method or average cost method.

  • Weighed 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 weighed 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 against 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 that $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 have the ability to 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

I cover inventory 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 to Best Calculate Lead Times

What This Article Covers

  • What Lead Time Means and a Lead Time Definition to Define Lead Time
  • Lead Time in Supply Chain and Lead Time Supply Chain
  • Supply Lead Time and Customer Lead Time
  • Lead Time in Inventory
  • Lead Time Analysis
  • How to Calculate Lead Time, Lead Time Calculation and a Build a Lead Time Calculator

Calculate Lead Times

Introduction

In this article, we will cover lead time in several dimensions. We will start off with the lead time definition and the lead time in the supply chain.

Lead Time in Supply Chain or Lead Time Supply Chain

The lead time in supply chain or lead time supply chain relates to lead times specific to supply chain are terms that describe lead times specific to supply chain management, as lead times are a general term that can apply to non-supply chain topics.

What Lead Time Means and a Lead Time Definition to Define Lead Time

The lead time definition is required to define lead time.

What lead time means is the time required to complete a supply chain process required to provide product to a customer ultimately. Common lead times include:

  • Supplier Lead Time or Supply Lead Time
  • Manufacturing Lead Time
  • Purchasing Lead Time
  • Shipping Lead Time

Customer Lead Time and Order Lead Time

Additionally, there are lead times from the demand side. This includes:

  • Customer Lead Time
  • Order Lead Time

Lead Time in Inventory

Lead time in inventory is the portion of inventory that is correlated directly to the lead time. Lead time in inventory is made up of the inventory without variability.

Safety stock for the lead time in inventory would then be where the variability (always higher as only the variability above the baseline is what is calculated in safety stock) of the lead time is maintained.

Lead Time Analysis

There is a lead time analysis that can be performed to determine the position in the lead time in inventory. This lead time analysis can divide the product database by lead time length. But this required performing a lead time calculation.

How to Calculate Lead Time, Lead Time Calculation and Build a Lead Time Calculator

How to calculate lead time or perform a lead time calculation means knowing how lead time is added together.

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

For Procured Products

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

Often what is desired is a total lead time, and this means having a lead time calculator that combines multiple component lead times as is shown above.

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. The shipping lead time can only be accelerated at considerable expense (unless the product in question is of high value and low weight)

Conclusion

In this article, we define lead time and we covered lead time analysis which requires lead time calculation. But to calculate lead time and develop an accurate lead time calculator and perform a lead time calculation means knowing the independent lead time components. These include things like the manufacturing lead time, procurement lead time, supply lead time, etc..

Lead time in supply chain or lead time supply chain declare lead time separately from other types of non-supply chain lead times.

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

How to Plan Long Lead Time vs Short Lead Time Items

What This Article Covers

  • What is Lead Time and Lead Time Meaning?
  • Long Lead Time Items and Short Lead Time Items
  • How to Reduce Lead Time and The Feasibility of Lead Time Reduction

Short and Long Lead Times

Introduction

The lead time a foundational concept within supply chain management. In this article, we will discuss various features of lead times including managing long lead time items and short lead time items and the feasibility of lead time reduction.

What is Lead Time and Lead Time Meaning

Lead time meaning is the time required to complete a supply chain process required to provide product to a customer ultimately. Common lead times include:

  • Supplier Lead Time
  • Manufacturing Lead Time
  • Purchasing Lead Time
  • Shipping Lead Time

Additionally, there are lead times from the demand side. This includes:

  • Customer Lead Time
  • Order Lead Time

The Customer lead time and order lead time are considered to be synonyms.

Therefore when the question “what is lead time” the answer depends upon what lead time is being discussed.

Long Lead Time Items and Short Lead Time Items

A product location database can be segmented by the length of the lead time. What is considered a long versus short lead time can change depending upon the company? For many US companies, the division between long lead time items and short lead time items is whether the product is sourced from overseas (often China) or domestically sourced. Of the products that are locally sourced cost more, but come along with short lead times.

Long lead time items must be planned considerably differently than short lead time items, and there is less margin for error. Long lead time items must carry more safety stock than short lead time items to make up for this.

How to Reduce Lead Time and The Feasibility of Lead Time Reduction

Often it is proposed that one can reduce lead times and therefore reduce the impact of lead times on supply chain planning. But really, what is the feasibility of lead time reduction? It turns out that there are normally few options to reduce lead times. The lead time that has the highest feasibility of lead time reduction is normally shipping lead time. However, shipping lead time is also normally expensive to reduce. And the supposed case studies that often are used to show the feasibility of lead time reduction tend to have little-published detail about them, and therefore are difficult to verify independently.

Conclusion

The lead time meaning is the time required to complete a supply chain process.

One of the most important lead time distinctions in companies is short lead time items versus long lead time items. Most companies treat the planning of short lead time items quite differently from long lead time items. What is often not included in cost calculations for moving to lower cost items with long lead time items is the increased inventory costs which as well as planning and update costs which are incurred by accepting longer lead times. Finally, many of the

Finally, many of the case studies presented that show a reduce lead time example don’t stand up to scrutiny or don’t provide sufficient detail to verify if in fact lead times were reduced, and secondly, what costs were incurred to reduce those lead times.

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

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 at a particular 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 actually as make to order. Make to order products tend to be premium priced and many products that are thought to be make to order (such as configurable computers) are not make 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

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

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