Re: Unsafety $ Stock

Yes, OTTO thinks all orders are valid unless the order is coded in such a
way to indicate it is a "forecast place keeper", as you described. In that
case order treatment within OTTO will vary from a total ignore by OTTO (mrp
remains as you describe) to specialized reporting identifying orders
customer service must review and report on the disposition.

The specialized reporting is there because, beyond creating bogus component
orders, building inventory and imposing a load on production, the order's
open balance is still being treated by the business as a valid backlog. At
some calendar date that open balance results in an invalid revenue
projection - not a good thing when talking to investors or senior
management.

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
macwheel99@xxxxxxxxxx
Sent: Friday, February 29, 2008 6:20 PM
To: BPCS ERP System
Subject: Re: [BPCS-L] Unsafety $ Stock

Thanks for reminding me.

OTTO can probably help when the problem is safety stock for children
orphaned by engineering changes. A month or so ago I pointed out that
my "unused" report, showing inventory on hand with no usages in all of 2007,

probably did not include a bunch of items that will have no usages in all of

2008, because the process of items going into orphan status (no where used)
is continuous with engineeering changes.

However, I already have query/400 to list orphan items with non-zero on-hand

or safety stock. We seem to have millions of query/400 exception reports,
that fall into disuse.

OTTO probably can not help when the problem is bogus customer orders for
customer business which has evaporated. For example, a customer tells us
estimated annual usage of say 1,000 ... so we have a customer order for
1,000 due Dec 31. They do a real order for 50 due next month. We enter
that order and subtract 50 from the Dec 31 order. Come November there will
be a surge of MRP generated bogus other orders for the Dec-31 orders that
customer service has not been paying attention to.

The reason for the bogus orders is to help people looking at MRP300 and
other screens to see the total requirements for some item, but those
requirements can be no good if there are no real orders any more.

lwl wrote

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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