Download - “Best Practices” Inventory Management

2005 Grant W. Howard Company 1

Grant W. Howard

13214 Wallace Road

Manchester, MI 48158

(734) 428-0529

[email protected]

“Best Practices” Inventory Management

The Next Level

Profitability, Longevity and Growth


Our Discussion Today

The Big Picture The Replenishment Process Getting Results:

– Customer Service– Profitability

Systems Utilization Some Final Thoughts

Through Slide 28 Today


Profitability

Longevity

Growth

Warehouse

Sell

Procure

Customer Service

Vendor Performan

ce

Employee Happiness

Education and

Understanding

Communication,

Structure, and Team

Systems and ToolsProcesses and

Procedures

Owner’s Returns

and Happines

s

The Fundamental Tree

Service, GM Improvement, Asset Manage-

ment, Efficiency, Accuracy


Profitability, Longevity and GrowthProfitability ($&%): GM Improvement ($&%):

– Sales Increase - Loyalty:» Sell Price x 2» Velocity Pricing» Lost Business and Backorders» More of Customer’s Business» New Business

– COGS Decrease/Supplier Negotiations

Expense Reduction:– Asset Management:

» Freight Reduction» Cost to Carry Reduction

• Rifle Approach• Surplus, Safety Stock, RC/OC/OQ

» Replace Freight & Inventory with ...

– Efficiency and Accuracy:» Cost to Replenish Reduction

– Replace Costs with ...

Longevity: Customer Loyalty:

– Customer Service:» Fill Rates» Backorder Handling» On-Time Delivery» Accuracy - Product, Price, Quantity,

Terms

– Ability to Solve Customer Issues– Use Technology to ...

Being Dynamic - its Critical:– Adaptability to Market Changes– Use Technology to ...

Growth: Existing Customers:

– Lost Sales and Backorders– Depth of Customer’s Business

New Customers


Procure: Inventory

Management/Control Operations Sales Marketing Systems and Technology

Warehouse: Operations Inventory Management/Control Systems and Technology Sales Marketing

Sell: Sales Marketing Inventory Management/Control Operations Systems and Technology

Seems to be a Pattern?

Where does Management fit into all

of this?



Customers: Availability Backorder Handling On-Time Delivery Accuracy

– Product

– Quantity

– Price

– Terms

Win-Win MEASURE

Vendors: Not Just Price Win-Win MEASURE

Employees: Want to do a Good Job Balanced Objectives/Team Tools, Processes, EDUCATE! Remove Stress, Give Method Win-Win MEASURE



Communication, Structure and Team: Companies need to have a team concept, KNOWN balanced objectives, with a way to get there - Management!

Systems and Tools: Companies need to understand and use more than 20, 30, 50% of their systems!

Processes and Procedures: Companies need to have closed-loop, actual working processes and procedures!

Education and Understanding: Companies need to education their people and help them be part of the solution!



Who’s Involved?

Usage LT Saf RCCtoP

EOQCtoP

EOQCtoC

On-hand

Paper-float

SurpPrev/Disp

BOHand-ling

OTD Acc-uracy

IM X X X X X X X X XSales X X X X X X XOpers/Ware X X X X X X X X X X XOffice X X X XIS/IT X X X X X X X X X X X XMgt X X X X X X X X X X X X


Inventory Management

Getting ResultsWhen, What, How Much


The Replenishment Model

A Good Replenishment Model addresses the two objectives of

Customer Service and Profitability

WhenWhen to Replenish? to Replenish?

What What to Replenish and to Replenish and How muchHow much??

What is incoming and will be late?What is incoming and will be late?

What is incoming and will be early or is not needed?What is incoming and will be early or is not needed?

What is not needed?What is not needed?


“When, What and How Much” “When to Replenish”

– Target/Incentive and/or Review Cycle - Profits

– Worthy Items Below Order Point with Target/Incentive and/or RC Considerations - Profits and Service

“What to Replenishment”– Line Buy (Make Target/Review Cycle)

– Fill In/Emergency Buy

– Transfers

– Do Nothing “How Much to Replenish”

– Up to Line Point/Remaining Cycle (Cycle Coverage - Freight/C to P)

– Compare to Suggested Order Quantity (EOQ/Class - CtoC and CtoP)

– Minimum Run

– Vendor/Transfer Package Rounding

PNA/Level

Surplus Point

Line Point or Max/EOQ

Order Point or Min

EOQ

Order Cycle

Lead Time

Safety


Data

Usage - OE/WT

Lead Time - PO/WT

Level/PNA Info - OH & Paperfloat

Purch Hist

Set-up

“Smart” Set-up

Co. and Whse.

Product Pline

Product Master

Product Whse.

The Numbers

Hits/Ranking

Order Cycle

Ave Usage, Safety, OP, LP, Order Quantity

Replenishment

Buyer’s Ctrl Center

Items BOP/Priority

Timeline Analysis

Too Late

Too Early

Surplus Inventory

External/Lng. Term

Internal/St. Term

Measurement

Fill Rate, BO’s

Turns, Excess, Mix

T&E, GMROI

Maintenance

One Stop Inq/Maint

Proofs/Mass Update

Exc Control Center

The Tools

Data to Info


Data

Usage - OE/WT

Lead Time -PO/WT

Level/PNA Info - OH & Paperfloat

Purch Hist

Set-up

ICSR - “Smart”

ICSD - Whse

ICSL - Pline

ICSP - Prd Master

ICSW - Prd Whse

The Numbers

ICAI - Rank

ICAR - RC

ICAMM - AMU, Safety, OP, LP, OQ

Replenishment

POERR/WTERR

POERA/WTERA - BCC

Timeline Analysis

ICRIG - Too Late

ICRIG - Too Early

Surplus Inventory

ICRIS - Ext/LT

ICRIS - Int/ST

Measurement

ICRIF - Fill Rate

ICRIT - Turns

ICRIR - T&E

Maintenance

POERA - One Stop

Proofs/Mass Update

ICAMU - ECC

The Tools

Data to Info


Know the Right Things to Do

Do these Things Right

Inventory Management is at the Time of Replenishment, the

“When, What, and How Much”, Everything Else is Correction.


Getting Results!


Service - Fill Rates? How well a business meets its customer’s needs - pulse of customer’s happiness/loyalty. What to Measure:

Fill Rates = Shipped/Ordered

Quantity: 9 out of 10 = 90%

Line Item SC: 9 out of 10 = 0%

Order Ship Complete?

What Should Fill Rates Be? The Report is Broken? Look at “First Pass” Orders - EDI, Fax, Internet, etc for true fill rates and backorder

percentages Only one way to better Fill Rates - The Right Inventory. Two ways to the Right

Inventory...


Profits - Turns? ROI?

Freight, Cost to Carry and Cost to Purchase

Maximize the Bottom Line

C to P Turns

80’s $10.00 2-3

90’s $5.00 3-6

00’s $2-3.00 6-10

EDI/VMI $0.13?

Many companies are increasing the turns, but the infrastructure does not support it; bottom line, longevity and growth are all suffering! Customer

Service, GM Improvement, Efficiency, Accuracy, Asset ManagementP

rofi

tabi

lity

Turns


TurnsWhat is it Measuring - Profits?

J M/A J/J S/O D C/I Turns

1.00 s1.25 1/1 1c1.00

1.00 s1.25 s1.25 2/1 2c1.00 c1.00

1.00 s1.25 s1.25 s1.25 s1.25 4/1 4c1.00 c1.00 c1.00 c1.00

CGM T&EGM%

GMROI.25 .25

20%20

.25 .5020%

40

.25 1.0020%

80Turns DOES NOT measure Profits, Turns is an Indicator of Profits

Turns is a Measurement of Utilization and Efficiency - i.e.., C to C

Turns is a one-side Indicator of Profitability, it looks at C to C... - What about Margin, Freight, C to P and SERVICE?

R O I

Inventory = Dollars! How many Times the Dollars are used to do Something


Turns

4

5

6

7

Margin

35

30

25

20

Return

140

150

150

140

The “Whole” Picture

Inventory Management is not only Turns

Customer Service Improvement - Availability, OTD, BO Handling

Gross Margin Improvement - Sell Service (Price) and COGS

Expense Reduction - Freight, Cost to Carry, Cost to Replenish

Inventory Management is Bottom Line, Longevity and Growth

7 Turns & 4% Bottom Line or 5 Turns & 7% Bottom Line


Return on Investment

GMROI:

= Turns CGM%

= COGS GMAve Inv COGS

= Sls Turns GM%

= Sales GMAve Inv Sales

= GMAve Inv

x

x

x

xx

x

Turns:= COGS (+

$Transferred)Ave Inv

T&E:

= Turns GM%

= COGS GMAve Inv Sales

No Directs, Non-Stocks or Pass-Throughs


Inventory Management Objectives

Customer Service Availability (Fill Rates)

Proper Backorder Handling On Time DeliveryAccuracy: Item, Quantity, Price

Profitability (ROI)GM Improvement (Sales and Cost)

Freight Considerations - OC AnalysisEfficiency & Asset Mgt: CtoC and CtoPSurplus Inventory & Safety InventoryTurns/Days supply, ROI/T&E/GMROIWatch the C to P

(Purchasing/Replenishment, Receiving &

Put-away, A/P)

Watch the C to C

(Warehousing, Handling, Obsol. &

Shrink, Taxes, Ins, Interest)

Service Profits


1. Right Inventory not Suffering because of Wrong

2. Controlled Replenishment

3. Stocking Policy

4. Good Numbers and Proper Use of Them (OP, Level, LP, and OQ) - Path to Service:– Replenish at Order Point - Prio

– Usage: Lost Sales, DP

– Freight/C to C vs Service

– Line Buy vs Emergency Buy

– Understand LP and OQ Effect

Customer ServiceAvailability, Backorders, OTD, Accuracy

5. Operations:– Backorder Policy and Handling

– On-Time Delivery

– Accuracy of Shipments and Billing

6. Fill Rates - Monitor, Drill Down, Find Areas of Improvement

Back to Basics


7. Understand and Use:– Customer Buying Habits

– Timeline Analysis

– NOOS Policy and Procedure

– Smart Selling/Transferring

8. Follow LP and EOQ Suggestions:– Too many Fires

– BOP but not at Target Problems

9. “Never-Arrive” Incoming

10. Safety Stock Increase:– Safety Analysis (Over

Utilizing)

– Safety Increase:» Use a Rifle Approach

» Watch the Profits

Stellar Customer Service does not have to drive your inventory through the roof, it just has to be done smart.

Customer ServiceAvailability, Backorders, OTD, Accuracy

Keys to Good Fill Rates


Inventory Management Objectives

Customer Service Availability (Fill Rates)

Proper Backorder Handling On Time DeliveryAccuracy: Item, Quantity, Price

Profitability (ROI)GM Improvement (Sales and Cost)

Freight Considerations - OC AnalysisEfficiency & Asset Mgt: CtoC and CtoPSurplus Inventory & Safety InventoryTurns/Days supply, ROI/T&E/GMROIWatch the C to P

(Purchasing/Replenishment, Receiving &

Put-away, A/P)

Watch the C to C

(Warehousing, Handling, Obsol. &

Shrink, Taxes, Ins, Interest)

Service Profits


ProfitabilityGM & Expenses (Freight, CtoC, CtoP)

1. Stellar Customer Service

2. Controlled Replenishment

3. Stocking Policy

4. Good Numbers and Proper Use of Them (OP, LP, OQ, Level) - Path to Profitability:– Up to LP, OQ, Min, Package– Usage: Exceptional, DP– Targets/Incentives Properly– Line Buy vs Emergency Buy– Availability (Sales, GM, Fires)

5. Vendor Performance and Negotiations

6. T&E and/or GMROI - Monitor, Drill Down, Find Areas of Improvement

Back to Basics



7. Excess and Defective Control:– Prevention

– Disposition

8. Order Quantity Reduction:– OC/RC (LP) Reduction:

» OC/RC Analysis/Paths, Watch Freight

» Lower Targets - Negotiate» C to P Departments Tools/ Efficiency

– Suggested OQ Reduction (EOQ):» Watch C to P Departments» Proper C to C

9. Safety Stock Reduction:– Safety Analysis (Not Utilizing)

– Safety Reduction:» Improve the Process

» Use Rifle Approach

» Watch the Service

10. Other Reductions:– “Never-Ship” Committed

– Duplicate Products and Lines

Turns the Right Way!Balanced Objectives - Increase

turns/decrease inventory but DON’T EFFECT SERVICE!

Reduce Inventory/Increase Turns


PNA/Level

Surplus Point


Order Point or Min

EOQ

Order Cycle

Lead Time

Safety


Understand the Impact Areas: Excess and Defective:

– No one wants or needs

– Control the Feelings

– Let it Roll, Let it Go

– Be Careful - C to C/Mix

– Cost of Disposition

Line Point and Order Quantity:– “What” and “How Much”

– Be Careful - C to P Departments

Order Point - Safety Stock:– “When”

– Be Careful - Customer Service

Least Risk

Most Risk


Surplus Inventory Disposition

BOP/GAP - Put of the fire: Short or Long Term

BLP/Sugg Xfers - Use it where you can: Long TermTeach branches to use LT first. Don’t borrow stock and put branch in “need”.

1. Stock Balance: (“X” Months Supply) - With “To” branch approval/Before Buy

2. Sell Above Cost: Customer, Other Distributor

3. At Cost: Sell at cost, Return at cost with no charges (freight, restock)

4. Below Cost: Sell below cost, Return below cost and/or with charges

5. Sell Above “Write-off” Cost: Garage/Fire Sale, Flea Market, Auction House, Liquidation House

6. Dump at “Write-off” Cost: Donate, Scrap, Dump


How Much of the System is Your

Company Using?


“Best Practices” Inventory ManagementImprove Customer Service, GM, Asset Management, Efficiency, and

Accuracy Better SKU Coverage - System and Buyers

– 50 - 70% SKU Coverage to 85-97%– 5-25,000 SKU/Buyer to 40,000-100,000+

Improved Time Management Improved Priority Setting Improved Efficiency Improved Accuracy Technology and Core Replace Inventory with Information Rifle Approach Better Numbers and Better Tools Ability to Balance Profits and Service


“Smart” Parameters

Product Record

Product Line Record

Vendor Record

Warehouse Record

Company Record

Table Driven/Automated

Depth

Watch Hardcoding

Balanced


Economic Order Quantity (EOQ)

The EOQ formula minimizes the “Cost of Reordering or Purchasing” and the “Cost of Keeping or Carrying” which develops the lowest total hidden inventory costs - the lowest total inventory costs. The “How Much”

decision affects your bottom line and service!

24 x Avg. Monthly Usage x Cost to Purchase (“R”eorder cost)

Unit Cost x Cost to Carry (“K”eep cost)

C to C C to PCos

t Per

Uni

t Ord

ered

EOQ

Total Cost

Cost to Carry

(“K”eep Cost)

Cost to Purchase

(“R”eoder Cost )

Quantity Ordered1. Not less than “x” weeks supply (1 week)2. Not more than “x” weeks supply (1 year)


EOQUsage Rate 1

Item Cost $100.00

Cost to Carry 24%

Cost to Purchase $4.00

EOQ 2

$100 Month Usage, 2 Month Supply

Usage Rate 100

Item Cost $1.00

Cost to Carry 24%

Cost to Purchase $4.00

EOQ 200

$100 Month Usage, 2 Month Supply

$Mth Usage Mth’s Supply $Inv $CtoC $CtoP M’s Sup (2.00CtoP)

.01 200 (16.67 years) 2.00 4.00 4.00 141 (11.75 years)

.10 63 (5.25 years) 6.30 4.00 4.00 45 (3.75 years)

1 20 (1.67 years) 20 4.00 4.00 14.1 (1.18 years)

10 6.3 (189 days) 63 4.00 4.00 4.5 (135 days)

100 2 (60 days) 200 4.00 4.00 1.41 (42 days)

1,000 .63 (19 days) 630 4.00 4.00 .45 (13.5 days)

10,000 .2 (6 days) 2000 4.00 4.00 .141 (4.2 days)

100,000 .063 (1.9 days) 6,300 4.00 4.00 .045 (1.35 days)

1,000,000 .02 (.6 day) 20,000 4.00 4.00 .014 (.42 day)$CtoC = $Inv x Month’s Supply x 1/2 x 2% (1/2 for Average Inventory, 2% Monthly CtoC)

What about freight percentage and RC days?


Paperfloat Control


Buyer’s Control Center/Workbench

On-line, Priorities, One-Stop, Drill Down, Maintenance,

Targets


Making Targets ProperlyGeneral rules of thumb: Days Dollars 1/2 way through OC/RC

Cost to Carry vs Freight, Price, and Service:

Key is equal days supply Increase or Decrease Use for Proper Emergency

Buys/Fill-ins

LinePoint

OrderPoint

Out ofStock

SafetyStock

xx

x

x

x

xx

x

x

x

x = Products in Product Line

New line pointafter adjustingreview cycle days

xx

xx


$Dis

coun

t/In

crea

se$C

to C

$C to C

$Discount/Increase

Quantity

Negative

Positive

Break Even

Max. Potential

Discounts and Price Increases

Break Even (Days) =(2 x Discount% / Monthly C to C) x 30

Maximum Potential Savings (Days) =(Discount% / Monthly C to C) x 30

This is total days supply to have on the shelve, not to buy. Use the “up to vendor target logic*” (change order cycle days) to meet the days supply.*This method works well for periods less than 90 days supply (seasonal or large swing items - be careful).

Be aware of future freight, minimum considerations, fill ins, NS and OAN items. If targets are involved, be sure to fill in the entire line not just the fast movers or work a deal.


Time Line Analysis

In Out

7-30 days

Ideal

Timeline

Out In

0 + days

Too Late

Timeline

In Out

30 + days

Too Early

Timeline

Identification and Prevention are the KeyDoesn’t matter if late if didn’t need

Doesn’t matter if on time if needed earlier


Surplus Inventory

Responsibility Coordination

Prevention

Identification

Disposition

Goals/Plan

CONTINUOUS


“Smart” MonitoringSafety Stock - Service and Turns

Safety Stock Level

X

X

XX

X

X

X

X

X

X

X = Actual stock available at time of receiving

Stock out

X

Properly managed safety stock will result, over time, in this configuration of remaining stock levels at time of receivingthe replenishment PO. Impossible task if done manually.

75%

25%

50%

Enhancement automates the monitoring.


If there is no measurement, then it is all hearsay. Data-free conversations will cause lots of

frustrations, cost lots of money and result in lots on disappointments...

Use measurement and monitoring to confirm results and to drill down and find areas of improvement.

Be sure to use a “aimed” (rifle) approach rather than a broad (shotgun) approach, or it will be lots

of $$$ and probably disappointing!


Measure ResultsCustomer Service: Availability (ICRIF & SMRL) Safety Analysis (ICAMU) Accuracy:

– Actual and Billing

– Product (CM%)

– Quantity (CM%)

– Price (CM%)

On-Time-Delivery Backorder Handling (ICRIN) Customer Defection (SMAC)

Profits and ROI: Surplus - Prevention &

Disposition (ICRIG & ICRIS)

RC/OC/XC and OQ:– Freight Dollars - As

percentage of sales– Turns - Really C to C and C

to P (ICRIT)– Turn and Earn - ROI (ICRIR)

Safety Analysis (ICAMU)

Vendors? Employees? Efficiency? Accuracy?

Do better on both sides!


Vendor Performance and Negotiations - It’s not just Price

Lower COGS Lower Freight Minimums Multiple Drops for Freight Combined P/O’s for Minimum Freight Paid Fill-ins

Fill Rates Consistent Lead Times and OTD Accurate Shipping (Blanket

Receiving) - Product, Quantity, Price

Good Backorder Handling

EDI/VMI/2-Way Information Flow - B2B

Automated Product and Pricing Updates

RGA’s on New Items Excess Inventory Returns

Win/Win - Partnership


“Best Practices”Better Numbers - Order Point

Usage Data and Calculation:– Lost Sales/Exceptional Sales Capability

– “Smart” Exception and “Auto” Correction

– “Path” Exception Reporting

– Flexibility to Where Usage Placed for Shipments, Backorders, and Credits

– Monthly, Weekly, Daily, Transaction Buckets

– DP/MRP Capability

– Flexibility with Method and Window by Rank

– Seasonal Capabilities:» Individual “Parameter Driven” Seasonal Trending» Lead Time Advance for Seasonal Items» Season Shift Capability» Dual Usage for Seasonal with Long Lead Times

– Threshold Minimums

– Rollup Capability

– Usage Forecasting Accuracy Analysis and Correction

Safety Stock Improvements:– Safety Days or Percentage– Safety Control by Rank– Method Control by Lead time– Safety Stock Analysis

Lead Time Improvements:– Minimum and Maximum– History File with Maintenance– History/Parameters by Path (Int/Ext)– Exceptions w/ Automated Ignore– Manual Exceptional Lead Times

Customer Buying Habits, Threshold Minimums and “Automated” Overrides

Use of Hits and “Smart” Item Ranking “Smart” Parameters and Controls


Review/Order Cycle Improvements:– Based on Purchasing History or Extended

AMU– Min, Max and Exception– Transfer Cycle Days– OC/RC Analysis

Order Quantity (EOQ) Improvements:– Co, Whse, Pline, Product level

– Vendor and Transfer (Path)– Min and Max Supply– Calculate but do not use (SP)


Cos

t Per

Uni

t Ord

ered

EOQ

Total Cost

“K”eep Cost

“R”eoder Cost

Quantity Ordered

“Best Practices”Better Numbers - Line Point and OQ

PNA/Level

Surplus Point


Order Point or Min

EOQ

Order Cycle

Lead Time

Safety


“Best Practices” - Better Tools Buyer’s Control Center - BCC

– Priority– Targets– “Smart” Rounding– Drill Down/Maintenance– Proper combination of the three models and use of EOQ– “One-stop” Thinking

Time Line Analysis– “Too Late”– “Too Early”

“Smart” Surplus - “True” Surplus Exception Control Center - ECC

– “Smart” exception reporting– Mass Update– “One-stop” thinking

Safety Stock at Receipt Analysis Measurement and Monitoring

Rounding Control and Smart WT Three buying methods and WT’s:

– LP with or without OQ

– WT Cycle and Set weeks supply

– Full control and Works together

– Proper products, Proper quantities Improved Stock Levels:

– Orders, PO’s and WT’s Control

– Future Sales Orders

– Future P/O’s

– Strong Suggested Count Program

– WMS Flexible Product Merge Utility Stock Balancing Tools



Some Final Thoughts


It’s not just good Software and Systems

It’s not just good Processes and Procedures

It’s not just good People and Education

It’s not just good Management

IT’S ALL OF THEM!

It’s not just good Usage

It’s not just good Order Points

It’s not just replenishing at Order Point

It’s not just the Timeline

It’s not just working the Surplus

IT’S THE ENTIRE PROCESS

Same Company Different Software


The Big PictureLon

gevi

ty Grow

th

Profitability

Customers

Employees

Vendors

Service, GM Improvement, Asset Management, Efficiency, Accuracy

Replace Inventory and Costs and Improve Service with Technology


Replace Inventory and Costs and Improve Service with Technology.

Improve the Bottom Line with Technology

Information, Efficiency, Accuracy(If it is not helping Service, if it is not helping Profits…)


“Getting Results” - Top 10Better Numbers:1. Hits based Ranking - ICSR and ICAI

2. Smart Set-Up and Maintenance - ICSR

3. Usage: Lost Sales and Exceptional Sales, Seasonal Trending, and Roll Up - ICSR, ICSW, OE and WT

4. Customer Buying Habits - ICSR & ICSW

5. RC and EOQ Control and Depth - ICSD, ICSL, ICSW, ICAR

Better Tools:1. Paperfloat Control - BIIS

2. Buyer’s Priority, Targets Properly/Equal Days Supply, and One-Stop - POERA

3. Timeline Analysis “Too Late” and “Too Early” - ICRIG

4. Long Term Surplus - ICRIS

5. Exception Control Center and Mass Update - ICAMU


“Getting Results” - Top 10Improved Fill Rates:1. Accurate Order Point:

– Track Lost Business/Usage– Customer Buying Habits

2. Accurate Level

3. “When” - Replenish at OP - BCC

4. Stock Out /Lost Business Prevention -Timeline Analysis/”Too Late”

5. Closed-loop Backorder Process

Improved Profitability:1. Accurate Line Point (OC) and Order Quantity

(EOQ/Class):– Track Exceptional Business/Usage

– Proper LP/OQ Controls and Use

2. Accurate Level

3. “What & How Much” - Line Point, Order Quantity, Package

4. Surplus Prevention - Timeline Analysis/”Too Early”

5. Inventory Reduction:– Surplus/Excess Reduction

– OC/RC/OQ Reduction - Caution

– Safety Reduction - Caution


Spend your days reacting to the fires... you may be efficient, but

will you be effective?

Where are Your Systems, Procedures, and Objectives S(p)ending Your People?


Back to BasicsMost distributors DON’T: Set the system up properly Feed the system good data Understand or Use the system properly Clean up bad processes and procedures Educate their people on the system or processes Help departments work together Help work towards common goals

Yet they think it will all just magically work


“Branch Participation”It’s Essential! Sell

Service the Customer Controlled Replenishment (PO’s and Transfers) Good Data and Information (Rifle vs Shotgun)

– Lost and Exceptional Sales

– On-hand Integrity and Paperfloat Control Proper Backorder Handling Surplus Prevention & Disposition

– Controlled Replenishment

– Help utilize the Surplus “Smart” Selling and Transferring Eyes and Ears

Train the MassesTeach Them Benefits

Give Them the Tools


REMEMBER!

When to Replenish

Order Point

Service

What and How Much to Replenish

Line Point and OQ

Profitability

There is Always a Left and Right Side

Balance


The World is Changing!

Yesterday Today TomorrowBuyers/Inv. Control Inventory/Asset Managers ???

Turns Dominated Customer Service Oriented If you can’t

Inaccurate Data Data/Information Managers handle today,

Four Glass Walls Communications & Team how will you

Learned from “Bill” Education & Understanding handle

Pencil and Paper Technology and Efficiency tomorrow?

If your company is stuck in Yesterday or having troubles with Today, how will it survive Tomorrow?


Keys to “Getting Results” - Top 101. Hits/Ranking and “Smart” Parameters

2. Order Point, Line Point and Order Quantity Accuracy:

– Usage:» Lost/Exceptional Utilization» Usage Exceptions and Maint» Proper Method and Window» Seasonal Trending & Adv LT» Roll Up» Usage Accuracy Analysis

– Lead Time Exceptions and Maint– Safety Set-up and Safety Analysis– Order Point Adjusters– OC/RC Analysis– Proper EOQ Parameters– WT “Smart” Rounding

3. On-hand and Paperfloat Accuracy:– SC/CC Program and

Address the Issues, Good Processes

– Paperfloat Control– WMS, BC, RF


4. Buyer’s Control Center:– Priority - Replenish at OP– On-Stop, On-line, Paperless– Making Targets Properly - Keep

Equal Days Supply

5. Timeline Analysis:– “GAP”/“Too Late”– “Too Early”

6. Surplus/Excess/Defective:– “Smart” (Long and Short Term)– Visibility, Utilization and

Disposition– Incoming with LT Surplus

7. Backorder Policy and Procedure - Closed-loop

8. Exception Control Center:– “Smart”/”True” Exceptions

– On-Stop Corrections– Mass Update

9. Measurement and Monitoring:– Service (Fill, BO, OTD, Accuracy)

– ROI

– Mix

– Excess

– Freight

– Vendor Performance

Keys to “Getting Results” - Top 10

10. Controlled Replenishment and Stocking Policy


GWHCO

www.gwhco.org

Grant Howard:[email protected]

734-428-0529 Phone

734-428-0593 Fax

John Cason:[email protected]

256-830-0676 Phone

256-830-0481 Fax

Our approach involves tailoring the best practices in distribution to the specific needs of our clients. Our working philosophy revolves around building a strong and self-maintaining infrastructure by developing a working plan based on processes and procedures, education and understanding, implementation of tools and technology; and through communication, organizational structure and team environments.