Re: Unsafety $ Stock -- BPCS-L

Hi Al,

A) Expiration date by item was stored in a field. Execute a batch program or SQL command to check /update if system date >= expiration date. Where condition met, then downgrade the status code, and erase safety stock and forecasts. Else, do nothing. ( A separate add-on file contained the following 3 fields: item code, item special status code, expiration date. Safety stock and forecasts may be stored in other regular files. This was not on BPCS, but these small mods can be easily developed on BPCS, perhaps using an existing unused field in the item master or CIC to store the expiration date).

B) For each item to be statued as enabling entry of safety stock or forecasts, the project manager (or sales manager) needed to supply forecast, safety stock, and expiration date info to the materials manager. These numbers were reviewed, and approved by the materials manager. Only the materials manager and his delegate had access to safety stocks and forecasts programs. This tight program access maintained integrity of the data and that of the process. This concept forces a dynamic proactive approch to item planning, as opposed to entering one time forecasts, safety stocks and forgetting them "forever". It worked very well in the company at the time. The company's culture of systems and processes facilitated enforcing this procedure.

To identify and catch declining items is not easy. Engineering change management is a moving target. Human intervention is always required to input external data that any ERP system cannot consider. The procedure described above forced a re-evaluation at one point in time of the items safety stock and forecast. There was a risk to forget or to neglect to reenter forecasts or safety stocks. This risk would result in stock shortages, late shipments, lost sales. But the sales managers had their own incentives for not losing sales, they very rarely missed out on re-activating expired safety stocks and forecasts. The risk was minimal.

Good luck !

Daniel Warthold P. eng CPIM

----- Original Message ----- From: <macwheel99@xxxxxxxxxx>
To: "BPCS ERP System" <bpcs-l@xxxxxxxxxxxx>
Sent: Friday, February 29, 2008 7:07 PM
Subject: Re: [BPCS-L] Unsafety $ Stock

Good concept

(a) How does it know the item just expired?

(Not knowing is part of our problem)

Our people are constantly scrambling to meet customer needs for changed
dates quantities models etc. so the fact that some repetitive item has
fallen off the radar screen is just not noticed. By the time we discover
that we have $ XXX,XXX inventory tied up to meet the requirements that fell
off the radar screen, it is too late to ask the customer to pretty please
bail us out financially.

(b) Permission needed to forecast or safety stock ... did you modify to
block people from keying in that info, or is it just erased if the
permission is not in the stock status field?

I think the latter is better for us ... for new items there's like a check
list of stuff that needs to be done, can be any sequence provided you caught
up before the weekend update runs.

Daniel Warthold wrote

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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