5 Steps to Inventory Optimization – Step 4 – Calculate your product Forecast
Feb 6, 2010 Inventory Management software
The calculation of the prognosis of the product is the most critical part of optimizing inventory. They are mistaken, and that is excessive or understock, which can be very damaging for business. The forecast is the basis for establishing the warehouse stock levels. The forecasts have to be as accurate as possible, so software is required to react immediately when changes in trends or seasonality.
There are two main policies estimate – statistical and demand – and both are important for different reasons. Statistical forecasting analyzes the long-term, and is controlled by the rules and methods. This means it has the great advantage of being more or less automatically calculated. Demand planning is influenced by short term changes in the market and capacity. It is more manual and reflects many influences, including marketing activities, the demand for new products, new markets and so on.
A statistical forecast system for repeating the demand patterns that occur at the same time every year. Therefore, you'll need at least a 12-month history of application to conduct the statistical prediction and identification of trends and profiles of season. It is important to focus on the history of the delivery order and not history, as both can be very different. With this information, statistical forecasting can identify trends and foreseeable demand, as if the demand for a specific product is going up or down over a long period of time.
While estimates of statistical prediction can be done automatically, can be less accurate if there are zeros in the history of the claim or if the history of the demand is very irregular. For example, the forecast does not take into account statistical fluctuations caused by specific sales and marketing activities, which are key factors in the numbers of demand planning.
Demand planning is preferred for short-term forecasts. Demand is when a customer buys their products and services, and is its sales and marketing, usually done to do this. Sales and marketing activities, the numbers forecast or demand plan, not vice versa. So you have to ensure that information on the budgets of sales, promotions and campaigns are included in their calculations. This method should also take into account capacity constraints and any potential shortages. This means you can buy or produce certain parts and put them into action before orders so you can deliver the final product during the peak season high.
Get your forecast right, and you never will be plus or understocked, their customer service levels will rise, and warehouse efficiency will be optimized.
Of course, while forecasts are of vital importance, which has yet to put products on the shelf. That means there is a step to the left in its program of inventory optimization and replenishment is – making their relationships with suppliers to implement the best possible way.
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Avoid a stock out of inventory – an industrial challenge
Feb 5, 2010 Inventory Management software
"A horse, a horse, my kingdom for a horse," said King Richard III in Shakespeare's well known drama – and may well wonder what relevance does manufacturing for the world! A closer examination of this event allows us to draw a series analogies with an out of stock situation of manufacture.
- There is a desperate need for an element that appears to be now available
- the value of the item has dramatically increased the party wishing to
- the location of a replacement item becomes fundamental
- and any delay in obtaining the item may be fatal
Analogies hard, but maybe there have been many cases where a manufacturing operation has sunk because of the purchasing policies of the poor and the lack of inventory control. One thing to have the ability to manufacture and assemble the desired order. It is quite another matter to ensure that all components and materials are available in hand and can be easily located when needed. This brings us to the realms of the purchasing process and inventory management, both of which are key components in the manufacturing process.
In a previous article in this series, entitled "Estimate – A parameter key benefit for manufacturers, it was noted that proper assessment and costing of a job is crucial to a profitable result. However, no matter how accurate is the cost estimate is of limited value once construction begins, if the material and supplies needed for the job are not available when needed. The lack of a component or the inability to locate his whereabouts often substantially the impact of workflow through the shop. Usually this can result in one or all of the following scenarios
- urgent request and deliver the item
- deflect or delay human resources to locate the item
- delays in a workstation with a full partially finished
- reconfiguration of machines to take on another task
- rescheduling of other activities in the workshop to accommodate the delay
- the reallocation of labor
Inevitable delays and accidents sometimes occur, but these must be the exception not the rule. If there is a high incidence of emergency order or production plant seems to be in a frequent state of confusion, looking for components or consumption, then it is almost certain that there are some serious problems that must be addressed.
Urgent request is a classic symptom of a system of procurement under stress. Whenever a properly managed inventory must be very few urgent orders placed. Inventory management requires interfaces well with the estimation process so that the requirements for a specific job are known before an appointment becomes a firm order. Once the production order is confirmed and timely component ordering supplies should continue in a measure.
Appropriate inventory management also should include
- maintaining proper stock levels and components based on well-developed max / min figures
- timely marketing orders to avoid stock outs
- relevant receipts so that items recorded delivery
- a well-defined storage location numbering system
- and a reserve capacity of quarantines values for specific stock items
In the past, many of these requirements are difficult to manage and track, particularly for small and medium-sized manufacturing companies. With limited human resources available in a small organization of the manual systems are prone to error and the opportunity is often suspected that the staff tried to keep up with the paper trail and workflow.But today, with the ubiquitous and cost-efficient desktop computer smaller organizations can now compete on an equal footing with large, complex organizations, always select the right software.
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