by Teamsoft | Jun 19, 2015 | Small & Medium Businesses
In an ideal world, a product would arrive into stock from the supplier just at the same time as the last unit from the previous batch was being despatched to a customer. Taking into consideration the overheads associated with ordering and delivery, the number of units being received would have the lowest possible net cost. When demand is predictable, it is possible for the Purchasing Manager to plan in this way. Consider the following graph: There is a cost associated with Placing Orders. (Order Cost Line). This cost is high if the company orders small quantities, more frequently. This is because: a) suppliers generally offer incentives (lower pricing / promotions) to encourage larger orders and b) there is an overhead cost for each Order and each Delivery, so more frequent orders and deliveries will increase the cost. As a result, we see that the ‘Order Cost’ decreases as the Order Quantity increases. The counter this, there are costs that can be associated with holding stock in a warehouse. Stock that is sitting on a shelf: Is tying up working capital Is likely to deteriorate Can get damaged May become obsolete Consumes valuable warehouse space that could be used for faster moving products. Based on a products history and product attributes, it is possible to calculate a stock-holding cost for each unit of a product. The storage costs for each potential size can then be plotted. The end result is that it is easy to calculate the most economical order quantity (EOQ) for each product. This is the point in the graph where the total cost of ordering is at...
by Teamsoft | Jun 15, 2015 | Uncategorised
Purchasing Recommendations produced by EPR systems will always be based on the assumption that the company does not want to run out of stock. This basic premise is flawed and really only applies when the product is in very high demand, it is difficult to get or there is no substitutable alternative. A distributor makes a conscious decision to keep Inventory of certain products and to resell them to its customers. As each new product is taken on, certain attributes of the product are recorded:- static information such as Code, Description, Units of Measure, selling information such are Price, Discount Structures, Web Image etc. A key attribute that is rarely considered in ‘Expected Service Level’. Consider the following: The ‘Required Service Level’ is rarely considered when products are introduced into a company but it is fundamentally important in the control of Inventory. A Required Service Level of 80% tells the purchasing manager that he/she must ensure that the product can be supplied out of stock to a customer 4 times out of every 5 requests. It is OK to be out of stock!! The Service Level is not something that should be randomly set. While certain assumptions have to be made for new products, each product’s history can contribute valuable information. Once accurate demand figures are in place, the analysis of this demand will result in a bell curve like this: The dots represent the demand for a product at a particular point in time. Let’s imagine that each dot represents a week. We can easily calculate the average demand. This is the center point of the graph....
by Teamsoft | May 27, 2015 | SAP Business One, Small & Medium Businesses
Aberdeen’s research finds that 96% of Best-in-Class (the top 20% of performers) growing businesses have implemented an Enterprise Resource Planning (ERP) solution. These solutions are designed to help organizations of all sizes to face their challenges and provide a single business system to support visibility, efficiency, and decision-making. ERP is the key tool in business to make your life easier. 48% Real-time visibility into the status of all processes (compared to 6% without) 77% Able to standardize back office processes (compared to 22% without) 633% More likely to be able to share data with suppliers, customers, resellers, and regulatory body 4X More likely to be able to forecast and plan for demand 11% Reduction in operational costs A single system provides accurate, easy to find data that enables visibility, collaboration, and efficiency. Get the Full Infographic ...
