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 The start of the problem
Sales are the life blood of any business. It's difficult enough to win orders, but then to find you cannot deliver because the stock isn't available is exasperating and you may lose the business. The Materials Manager is often instructed to 'sort out the stock', with or without a forecast from Sales. In fact forecasts are invariably inaccurate - that's why they are forecasts. So what should the Material Manager do?
The reaction
Faced with such a problem, and with the constraints of the computer systems the company is using, the reaction is to play safe and generally increase stocks. There are other measures that can be taken. Like addressing supplier lead times or minimum order quantities - but these require a great deal of time and analysis and are constantly subject to change.
Can I ever win?
Without the right tools it's a job you will never win. Every new day brings new problems and new shortages - and it can become extremely stressful. The tendency will be to review minimum stock holdings upward for those items short. But, what of those items in excess? These items generally never get reviewed. Even if they did, what level of stock should they be reduced to? Generally the computer system will require data in fields like 'Minimum Stock Level', 'Minimum Order Qty' and 'Lead Time', but provides no help in establishing what these values should be.
Adding to the problem
The Buyer may be working to an MRP order report or, to incredibly lengthy stock status reports requiring individual item interpretation. Because of the length of these reports, they are often printed and then analysed periodically by supplier - the items bought from supplier ABC Ltd reviewed, say, each Thursday - but a lot can happen in a week!
Micron have the answers
What is needed is 'reporting by exception', highlighting only those items required to order. Enterprise Resource Planning (ERP) systems do not address these problems very well. MRP will attempt to do this, but it can only use the fixed and probably inaccurate data to perform its calculations (Minimum Stock Level, etc.) and will also have to rely upon forecast accuracy. 'Reporting by exception' is just one of the benefits from using our sophisticated forecasting and inventory management software tools. View inventory optimisation
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References read more
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Forecasting & Inventory Management
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