OMSAN LOJİSTİK

Information Systems to Inventory Management

Inventory Planning and Management

Latin America Logistics Center

Logistics Management Series -

Agenda

• Planning vs. Control

• Forecasting

• Fill Rate Planning

• Replenishment Planning

• Optimisation

• Supply Chain Management

Planning vs. Control

Planning

Man

ag

em

en

t

ExecutionMon

itori

ng

Inventory Control

• Fundamentals for Inventory Planning

• How Many do I have in Stock?– By Item– By Position

• Accuracy is Critical– Key Performance Indicators – % Accuracy by % de Positions

Demand Forecast

• Critical for Inventory Planning

• Question: How Many will we sale?– By Item– By Period

• Planning Horizon Coverage

• Optimal Review Intervals

• Key Performance Indicators in Demand Forecast

Forecast

A Forecast, a range & a probability

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10period

Un

its

Actual

Forecast

Fill Rate Planning

• How Many in Stock to achieve the target by fill rate & ROI

• By Item, by Position, by Period

• Stock Cycles

• Safety Stock

• Stocks Building

Inventory Management in Time

0

100

200

300

400

500

600

700

1 2 3 4 5 6 7 8period

Un

its Cycle

Build

SS

Forecast

Stock of the Replenishment Cycle

• Is the Stock that results from the difference between the replenishment quantities and the quantities of the demand orders

0

50

100

150

200

250

1 2 3 4 5 6 7 8

Cycle

SS

Safety Stock

• Planned Inventory to fulfil demand overloads during lead time

02040

6080

100120

140160

1 2 3 4 5 6 7 8

SS

Actual

Plan

Building Inventory

• Planned Inventory to accumulate stock before the demand season

• Generally for periods of time in which demand exceeds production capacity

0

100

200

300

400

500

600

1 2 3 4 5 6 7 8

Inventory

Forecast

Replenishment Planning

• When does Inventory should be replenished?

• How many units?

• From which location?

• Planning Scope– Reorder Points– Distribution Requirements Planning (DRP)– Constrained Optimisation

Replenishment Planning

CustomerDC

DC

CustomerDC

Plant Plant

DC

CustomerDC

Constrained Optimisation

• Develop a plan that recognises the business constraints

• Capacity and Sequence of the Production Lines• Vehicle Capacity and Transportation Costs• Warehousing Capacity• Inventory Carrying Cost• Customer Prioritisation

• Business Performance Optimisation– Cost Minimisation & Revenues Maximisation

Constrained Optimisation

• Simultaneously consider all SKUs that share Constraints– Within the Business– Between Business

• Requires Advanced Mathematical Techniques of Optimisation– Linear Programming– Artificial Intelligence Techniques

Supply Management

• Inventory Management and Replenishment through Supply Chain Business

• More Acronyms...– QR - Quick Response – ECR - Efficient Consumer Response– VMI - Vendor Managed Inventory– CPFR - Collaborative Planning, Forecasting &

Replenishment

QR, ECR, VMI

• The Supplier is Responsible for Inventory Planning and Replenishment in the POS

• Usually occurs between big suppliers and customers

• Requires EDI or Electronic Data

• Batch Oriented , is not interactive

Local User

Internet/ExtranetCustomer,Supplier,Remote User

Forecast &Replenishment

Planning

Reviews and Confirmation

Internet Collaborative Planning

Case Study - Heineken USA

• HUSA is the only importer of Heineken to USA

• HUSA sales 150 SKUs to 450 distributors

• No Production Facilities in USA – only Marketing, Sales and Distribution

Product and Information Flow

HUSA

BreweryDistributors

Orders

Orders

Product

Objectives

• Reduce order lead time

• Provide to the Brewery better product forecast

• Improve Service Levels to and from distributors

• Improve flow of information of marketing with distributors

HOPS Characteristics

• Gathers Sales and Stocks Data

• Delivers to the Distributor a Forecast for Review and Approval

• Delivers to the Distributor an Inventory plan. Allows reviews of parameters and rules

• Delivers to the Distributor a suggested order

– Based on forecast, targets & constraints

• Real Time System

Information Flow

HUSA

BreweryDistributors

Confirmed Orders,Sales & Forecasts, Inventory Position

Distributors Orders & Aggregate Forecast

Suggested Orders,Inventory, Forecasts

Heineken Operational Planning System

Outcomes

• Better achievement of sales targets

• Dramatically improved forecasts sent to the Brewery

• Sales person dismissal from taking orders

• Four weeks reduction in customer order cycles

• Sales Increase!!!

Software for Inventory Management

• Manugistics

• Numetrix

• i2

• FYI Planner

• Lucas-Baer

• LPA

• Logility

• Information Concepts Inc.