Re: Unsafety $ Stock -- BPCS-L

I had setup a special temporary stock status code attached to items. This temporary stock status code enabled entry of sales forecasts and safety stocks. There was an expiration date ( allowed to be no more than 12 months out) set on the items having this special stock status. A batch program executed at least once a month read the records in the file, and for every item that had just expired, the special stock status was changed to a lowered stock status ( obsolete or made to order only kind of status), the safety stock was cancelled to zero, and the remaining forecasts were canceled to zero as well. This stopped automatic reordering of the expired items. A report listed the items that had expired, with sales, on hand quantities, and usage history, for analysis.

The concept here is instead of having items on permanent safety stocks, give them a temporary status which would automatically expire unless the sales/ planning would carefully look after those, aanalyze, and renew the status, after intelligent consideration.

Good luck !
Daniel Warthold

----- Original Message ----- From: "lwl" <lwl@xxxxxxxxxxxxx>
To: "'BPCS ERP System'" <bpcs-l@xxxxxxxxxxxx>
Sent: Friday, February 29, 2008 10:34 AM
Subject: Re: [BPCS-L] Unsafety $ Stock

One approach is to look at supply versus demand into the future. If supply
(inventory + shop orders) exceeds sales order demand + forecasted demand to
a given horizon (6, 9 12, 15 months) then the item warrants further
investigation. Technically the trick is to drive top level demand down to
the lowest purchased component and identifying those components with no
demand.

Systems Plus's OTTO works this way.

Roy Luce
Systems Plus - Midwest

Direct: 847-540-9635
800-913-PLUS (7587)
Cell: 847-910-0884
Email: rluce@xxxxxxxxxxxxxxxxxxx

-----Original Message-----
From: bpcs-l-bounces+lwl=ix.netcom.com@xxxxxxxxxxxx
[mailto:bpcs-l-bounces+lwl=ix.netcom.com@xxxxxxxxxxxx] On Behalf Of Al Mac
Wheel
Sent: Friday, February 29, 2008 1:16 AM
To: BPCS ERP Discussion List
Subject: [BPCS-L] Unsafety $ Stock

My boss asked me for alternative solution choices, so I am asking how other
companies on BPCS cope, in case there's an idea I have not thought of, or
which has fallen out of my brain.

Situation: We're on 405 CD, off OSG, on AS/400 V5R1.

We repetitively make-to-order for Original Equipment Manufacturers.
There's a lot of model churning ... new models being added, old models
falling off schedule ... for many customers we are doing same approx $
volume business as years ago, just that the parts are not identical

Customer lead time = 2 weeks typically
Vendor lead time = 6-12 weeks
Some customers want us to keep 3-6 months raw materials on hand due to
vendor bottlenecks.
We setup various systems to order safety stock to cover expected future
needs.

Problem: As customer business evolves, we don't notice, until auditors
question mega bucks tied up in safety stock for long gone customer
business, then it can be very time consuming to research each
scenario. Last year, we wrote off 6% of the value of our inventory due to
this.

KISS = an unofficial mandate.
Any solution must be simple to comprehend by
* the people who approve it;
* the people who implement it; and
* the people who audit that it is working.

I have proposed in the past:
* replace fixed safety stock with seasonal safety;
* use MRP100 forecast and quarterly share the info with customers, asking
them to identify items they will no longer reimburse us for (when they
reach end of life cycle need some part from us)
* me write a "Business Evaporation Detector" program to list items where
current orders volume do not match historical average sales in last year,
to project impact on $ tied up in safety stock, by customer item, page
break totalled by customer
* I am now working on an "Only child detector" to list raw materials whose
need will be dramatically impacted by engineering revision changes (up or
down)

So, are there any better ideas than what I already know?
-
Al Mac

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