What can be cooked from squid: quick and tasty

Good time, Ladies and Gentlemen. The sun is shining outside my window, birds are singing. So pour some tea and coffee, in the arena Alexei Sever, who is ready to show you another acrobatic sketch on the topic Effective assortment management .

What, in fact, is the speech about. In the previous lessons, we turned our product range into slicing from consumer categories. Each of them was assigned the status - "Evolve", "Hold" or "Kill" ... Now a legitimate question arises before us, why was this whole circus started?

So, in fact, all this assortment balancing act is necessary to achieve three specific goals.

1. Increase in sales, and even better coming Money to the cashier and to the current account.
2. Reduced operating costs or at least keeping them under your control.
3. Increase in profits as the end result of all these shenanigans.

To achieve these goals, we need to materialize them with specific numbers - Performance indicators ... At the same time, by assortment, I mean product categories that need to be managed and monitored.

My friends, this is very important, because without specific planned values, and, most importantly, without control over their implementation, all our assortment activities turn into a funny clownery, meaningless and merciless.

And if everything in the world is meaningless, - said Alice, - what prevents you from inventing any meaning?)))

Determination of the planning period

The first thing to do is determine the period , for which we want to achieve the planned indicators. General rules here are simple.

For Seasonal category the duration of the planning period is the time it takes to prepare for the season, plus the season, plus the time it takes to close the season.

If we sell felt boots, then our Planning period is a month before the season, for which we need to order them from the supplier and bring them to the warehouse, plus the season is three winter months and a month after the season, for which we will sell all valenko balances.

For Off-season categories standard planning periods are 3, 6 months and 1 year. Which one to choose depends on the turnover of goods in a particular category of goods.

It is one thing if you decide to develop the "Bread" category, and quite another if you decide to kick off the category "Nuclear missile carrier", the production of which takes about 5 years.

Hence the simple rule: choose a period for which you can actually change something in the work with your category and see the results of these changes.

And it is better to let this period be longer than less.

SALES AND PROFITABILITY INDICATORS

From the choice of the planning period, we move on to the main topic -the choice of benchmarks,the execution of which will pro-semaphores to us thatthe task of developing or maintaining a category is completed .

Indicator 1. Active customer base

NSthe number of customers who took goods of this category in the planning period.

Winnie the Pooh understands that you can't eat honey without bees. An "active client base" is the most important indicator, on which, to my regret, 90% of marketing and sales specialists put their big zucchini. And the reason for this is simple. They are annoyed by the calculation of this indicator.

How much time do you personally need to calculate your Active Customer Base in the last 3 months? And if you need to do this every week, in the context of Territories, Managers, Product categories, and if you add a plan / fact comparison here? Well, after all, it's really a pity to spend your life poking around in these numbers, don't you agree?

I can help you with a simple advice: use normal information systems, in which you can see your customer base, and all other indicators, in any context for any period of time, by pressing one button (for example, IS "TopControl").

Indicator 2. Sales volume of the category

This indicator is standard and banal, so we will not dwell on it. It can be in rubles, pieces, kilograms, in general, in any unit of measurement that will clearly show the total sales of the entire category.

If you sell sausage, then it is logical to measure sales in kilograms, if in stationery, then the easiest way is to set plans in rubles. It all depends on the specifics of your products.

Indicator 3. Percentage mark-up (margin)

It shows how much we sell and how much we earn. In distribution, as a rule,% of the trade margin is used, which is calculated as follows:
Sales Volume - Cost = Gross Profit
Gross Profit / Cost =% Trade Margin

Manufacturers usually operate on another indicator, calling it profitability or margin as a percentage. It is calculated as follows:

Gross Profit / Sales Volume = Profitability (Margin)

It is important to plan for this metric because you need to see the profitability of your assortment categories. If he is neither in the white nor in the red army, then first you need to raise prices, change the composition or recipe of the product, technology, or simply bend suppliers, and only then engage in the development of the category.

Indicator 4:% of representation of matrix positions

This is purely a motivational indicator, which serves not so much to monitor the effectiveness of product categories as to promptly motivate sales personnel to sell the specific assortment you need.

There is no nuclear physics here. We simply select key positions that should be bought a priori by the overwhelming majority of our clients.... This list of products is called the Assortment Matrix. Further, the sales staff is tasked with selling each of the items on this list to each of their customers.

Here is a simple table in which customers go by rows, products by columns, and in its cells a one means the fact of selling a specific item to a specific customer. It does not matter how many pieces were sold - one or fifty-one.

So, the task of the sales staff is to fill this table with units by 100%. If this does not happen, for example, in fact at the end of the month we have the following sales option:

Then our "% of the representation of key positions" is calculated as follows:

The total number of client-position combinations is 50, we exclude the gray zero cells and get the number of triggered combinations of 30. Thus, the% of fulfillment of the indicator "representation of key positions" is: 60% = 30/50 * 100%.

We'll talk in detail about how to build such matrices and monitor their implementation later, now just understand the essence of the indicator and how to calculate it.

Indicator 5. Sales plan of matrix positions

H You must take our plate and replace the units with the volume of sales of each item to each customer in rubles, pieces or the unit that you use.

In the previous metric, we controlled the task sell at least 1 piece ... Here we set a more global task. Sell ​​a specific volume of each position to each client. Here is an example of calculating such an indicator.

We planned to sell 300 units, sold 240. 80% fulfillment of the plan (240/300 * 100% = 80%).

I will run ahead to bring some clarity. In practical work we will not set tasks for sales personnel to simultaneously fulfill two indicators at once:% of representation and sales by key positions. This is completely pointless.

The logic is as follows. At first, the merchants must organize stable sales to customers for at least one piece of each of the key positions, and only after this goal is achieved can the task be complicated and the sales plan must be fulfilled.

Inventory performance indicators

Indicator 6. Level of provision of goods

This indicator is calculated as follows:

UOT = Number of days when the position was on balance / Total number of days in the planning period

Simply put, we have to count the days when each of the positions was on the balance and divide them by the total number of days in the month. Let's go back to our simple tables and see an example. Instead of Clients, the lines contain the days of the month, and the columns contain specific assortment items. In the cells of this table, the amount of the remainder of each position that was on that day.

The total number of day / position combinations is 155, while in 16 cases there were zeros on the balances. 155-16 is equal to 139. Thus, the "level of provision of goods" was 90%. I hope this is clear. We go further.

Indicator 7. Depth of the residue

Zeroing the balances is already a fait accompli, which directly cuts our sales. And it is bad to admit this lyubasik. On the other hand, freezing money in stock and creating leftovers for a hundred years in advance is also a great sadness, which, well, cannot be tolerated.

So, in order to find a balance between zeroing and overstocking, we will use an indicator called the "Depth of the remainder", or as they say in the office common people, "Days to zero."

Depth of balance = Current stock balance / Average daily sales for the selected period.

As a result, we will receive the number of days after which the balance for the selected positions will be reset to zero.

Example. The second column of this table contains the current stock balance for each item, the next column contains the sales volume for the last 30 days. The fourth column is the volume of sales for each position divided by 30, which is the average daily sale. And in the last column we see the "Depth of the remainder" indicator, obtained by dividing our balances by the average daily sell.

You can see that the "Depth of the remainder" very clearly shows where we have a repackage, and where there is a shortage of goods. By the way, in the future, with the help of this gorgeous indicator, we will not only manage the assortment category, but also competently purchase goods, preventing zeroing and repacking in the warehouse.

Indicator 8. Turnover of stocks in warehouses

We are entering the home stretch, because the last indicator, which I will talk about, is an alternative to the Remaining Depth indicator. It's about the eerie and mysterious "Turnover", which everyone knows about, but very few people can usefully and usefully apply.

The fact is that in some cases the “Depth of the remainder” indicator does not give an accurate picture on which to rely on when assessing the effectiveness of work with our assortment categories, and in this case the only way out is to control the “Turnover” of commodity items.

"Turnover" shows how many days we need to sell our average daily stock in the warehouse.

How to calculate it? See, count first Average daily stock in stock ... Let's assume that this is a table with the daily balances of the "Bayonet shovel" item in your warehouse for each day of the month. To calculate the average, we sum these balances and divide by the number of days in a month. We have it in April, so we take 30 days.

We get an average daily stock balance equal to 200 shovels. Our monthly sales are 150 shovels.

As a result, we will reach our figure of 40 days, during which we will sell our average daily balance.

For the sake of truth, I will say that there is still a variant of calculating the indicator "Turnover at times", but we will not need it, and therefore I see no reason to fool them.

Let me explain once again the difference between the “Depth of the remainder” and “Turnover” indicators.

"Depth of the residue" shows the number of days after which we will sell out the current stock of goods.

"Turnover" gives the number of days in which we will sell the average stock in our warehouse fora certain period of time.

That is, if yesterday you capitalized a truck with a product, and today you count the "Depth of the remainder", then it will show you that you will be trading this product for a long time and persistently. If the product comes to an end, then the "Depth of the remainder" for this position will be for a couple of days of trading.

Thus, you need to understand that the "Remaining Depth" indicator can jump up and down so that any Isinbayeva will envy.

"Turnover" is devoid of these problems, since the remainder of the month is averaged, which means the result will be more visual, although it does not give a clear understanding of how many days of trading you have left with goods at the current time.

Later we will figure out: in which cases to look at the Depth, and in which - at the Turnover, for now, just understand the essence and calculation methodology. It'll be enough.

I think that after looking at all this boring complex, you probably figured out how long it will take you to calculate all these 8 indicators at least once a month, not to mention their constant weekly control. They figured it out and, of course, out of grief, waved a couple of glasses of brandy with a tangerine. My friends, stop abusing. I assure you, this is useless.

All these indicators can be monitored quickly and easily at the touch of a button and spend 15 minutes a day on it without sweating or straining. We do it in Information System "TopControl", for which she has great respect and respect.

Well, now do not consider my request as arrogance, write out these indicators on a piece of paper and at least once count them for a couple of your assortment positions in order to fill your hand and feel the essence and logic. And now - Intermission. I am waiting for you after the third call. Good luck and great sales.

To be continued… VideoVersion of the post

Control of balances during the shipment of goods is configured separately for the warehouse and for organizations. The control of balances, which is used in the warehouse, is indicated in the warehouse card.

For the warehouse, it is necessary to determine whether or not the balance will be monitored during the paperwork. If the residuals need to be controlled, then the checkbox should be checked Monitor collateral... The list of those positions for which it is not necessary to control the balances on a given slide can be added to a separate list ( Exceptions).

Control of the balances in the warehouse is carried out when carrying out goods circulation documents as follows.

When posting shipment documents (Sales of goods and services, Domestic consumption of goods etc.), free balances of goods in the warehouse are monitored, taking into account previously reserved goods. The balances are monitored as of the current date.

When placing orders (sales orders, orders for internal consumption, etc.), stock control depends on the established supply option (column Actions) for a specific item of the item.

• Reserve in stock... The balance is monitored taking into account the previously reserved goods for the current date.
• Book by date... The balance is monitored in accordance with the schedule of goods movement, taking into account previously reserved goods and goods planned for receipt.
• To ensure or Provide apart... There is no inventory control, these goods are planned to be ordered.

The control of the balances in the organization depends on the “Intercampani” scheme defined in the program.

In order for the balances to be monitored in the context of organizations, in the settings of the accounting parameters, check the box Control the balances of goods of organizations (Administration - Organizations and funds).

With the operational posting of the document (posting the document by the current date), the balance of the organization as of the current date will be monitored.

If we correct and repost a document that was created earlier, then in addition to operational control of the balances, additional control of the balances will be carried out. Control of balances will depend on the selected type of control of balances: the balance will be additionally controlled at the end of the day on which the document was issued, or at the end of the month in which the document was issued.

When the documents for the delivery of goods are canceled, additional control of the operational balance of goods is carried out. The delivery document cannot be canceled if the remainder of the goods is not enough for the current date.

If the program is configured with the "Intercampani" scheme (see "How to limit the list of those organizations that have the right to sell someone else's goods (goods belonging to another organization)?" Intercampaigns. For example, in accordance with the scheme introduced into the demo database, when selling goods on behalf of the organization of the entrepreneur, the joint venture entrepreneur will control the total balance of two organizations: the entrepreneur and the Kompleksny trading house.

If the intercampaign scheme is not configured and the control of the balances of organizations is disabled, then only the presence of balances of goods in warehouses will be monitored. In this case, the shipment of goods on behalf of any organization will be available. In this case, negative balances of goods will be automatically recorded in the case of sales of goods from other organizations. In the future, based on these data, it will be possible to draw up a document for the transfer of goods between organizations. Such a document is drawn up manually. The document provides for a service for filling the tabular section with negative balances of another organization ( Fill in - Pick up by negative balances at the recipient).

Control should be directed to the "process" - its beginning and end with reference to a specific person. At the same time, one cannot rely on "collective financial responsibility"; each process in the warehouse must have its own "owner". It is simply impossible to physically control all processes in the warehouse, therefore in logistics it is customary to pay attention only to "deviations" from the norms and plans previously established.

Control is the basis for managing any system, any organization, including a warehouse.
At first glance, it may seem that it is enough to "put" a good inventory of goods in the warehouse or buy good software with WMS - a computer program for warehouse management and problems with control and management will disappear by themselves.
Yes, in part, all of this contributes to the solution of the issue of control, as a means, an instrument.
But the algorithm is needed even when setting up and implementing WMS. Although it already contains many functions and a script for their execution.
The algorithm of the goods movement control system (SKT) in the warehouse still has to be created and built for you for your specific warehouse. Otherwise, “conflicts” with the “alien” management system and with employees cannot be avoided.

So, how to build a control system for goods movement (SKT) in a warehouse, so that it helps to work, and does not complicate the work of employees with unnecessary functions, while reducing their motivation and labor productivity.

First of all, you need to understand that the control system is an additional cost, and it is simply impossible to control “everything and everyone”.
Therefore, it is necessary to highlight only the most important "control points".
But what do we control and how?
Logistics management is distinguished They differ from the administrative in that it is necessary to control "processes" to a greater extent than people.
It is through the management of processes in logistics that the management of employees, motivated to perform these processes, operations, actions, takes place.
Accordingly, control should be directed to the "process" - its beginning and end with reference to a specific person. At the same time, one cannot rely on "collective financial responsibility"; each process in the warehouse must have its own "process owner". It is simply impossible to physically control all processes in the warehouse, therefore in logistics it is customary to pay attention only to "deviations" from the norms and plans previously established. Such an algorithm of the process control system is possible only if a processor model of the warehouse operation is built. In the model, all warehouse work is divided into separate "processes", simple "operations", elementary "actions". Regulations and standards must be developed for them, which are accepted as a "plan" in comparison with a "fact".
That is, the SKT in the automatic mode should conduct a plan-fact analysis according to control points, identifying deviations.
The operation of a logistics warehouse with full material responsibility of employees and complex inventory control is not possible without a clear control system for goods movements with individual responsibility for the objective results of the quality of the processes and operations performed.
The cost of warehouse errors is high, since the warehouse contains huge working and fixed assets of the company in the amount of several million dollars. Therefore, it is difficult to overestimate the importance of product flow control.
For a typical trading company with a standard supply chain, the following algorithm of the goods movement control system (SKT) can be applied:
The process of warehouse movement begins even before the goods arrive at the warehouse , namely at the stage of operational planning of the parish.
Receipt of goods is the first checkpoint , in which material responsibility is transferred to the warehouse. Control is a plan-fact analysis at a point, therefore, for comparison, a “plan of receipts” with specific “purchase orders” is taken as a “plan”. They reflect information - when, from whom, what and in what quantity should be delivered to the warehouse. The task of the receiver, as the "master of the process", when a truck with goods arrives, is to check the compliance of the actual receipt with the planned order from the purchasing department. But the very acceptance of the goods occurs only on the basis of the shipping documents of the supplier, and not the "purchase order". In case of discrepancies, the acceptor must make adequate decisions previously defined in the instructions, acting in accordance with the approved regulations.
As a result, the acceptor must issue:
- shipping documents from the supplier
- Act of acceptance of goods and materials
- Statement of discrepancies in quantity and quality, if any
- Deed of marriage, if found
The product acquires the status "Received in warehouse". From this moment, the purchasing manager considers that the goods have arrived and removes it from his control.
The transfer of goods from the receiving area to the storage area is the second checkpoint which is often overlooked. But this point is important, since it fixes the fact of the transfer of material responsibility from the receiver to the storekeeper of the storage area and the change in the status and location of the goods. The goods are moved from the acceptance area to the "cell" of the storage area and acquire the "Accepted for storage" status, that is, they go on sale.
Acceptance and transfer at this point occurs according to the "Internal movement" consignment note, made by the receiver on the basis of the "Act of acceptance of goods and materials".
From this moment, the sales manager "sees" the product in his database and can sell it.

The picking of goods by the collector from the “storage bin” is the third most important checkpoint.
Why? Because according to it, warehouse balances are monitored, control reconciliations and selective planned inventories are carried out.
It is necessary to pay special attention to the time interval that occurs between the moment of the actual picking of the goods by the collector from the bin and the moment it is written off from the bin in the software. If these "moments" do not coincide, then you will never be able to qualitatively control the balance in the warehouse.
Correct stock balances are basic information for almost all company structures. Without this information, the company simply cannot operate effectively.
The "owner of the process" of storage - the storekeeper - should be responsible for the remains in the warehouse.
Only the confirmation of the storekeeper in the “selection list” can serve as the basis for the transfer of material responsibility for the selected goods from the storekeeper to the collector. And also, this confirmation can serve as the basis for writing off the goods from the storage area in the software.
In this case, the product acquires the “selected” status.

The picker hands over the assembled part of the sales order to the picker and the controller of the picking and order control area.
This is the fourth point of control.
Full control of the entire customer's order on the basis of the "picking list", by the controller, at this point all "resorts" and other errors should be cut off, since then the order is transferred "to the places" of the packages on the basis of the packing lists.
At this point, there are three successive operations - the consolidation of all parts of the order, the control recount of all goods in the order and its packaging.
The “master of the process” is the controller; it depends on him what the client will receive as a result.
In this case, the order acquires the status "assembled and checked", and the material responsibility for the goods passes from the assembler to the controller on the basis of the "selection sheet".

The checked, marked and packaged order is transferred "in places" on the basis of the "picking list" from the picking and order control area to the order storage area.
This is the fifth point of control.
At this point, financial responsibility is transferred from the controller to the storekeeper of the order storage area, and the order acquires the "ready for shipment" status. Do not underestimate the importance of the fifth point of control, as with a large continuous flow of orders it can be easy to get confused and take a long time to search for an order for a client who has arrived. At this point, you can easily control how long the collected order has been waiting for shipment. It is not uncommon for a sales manager to be abused by breaking the rules and collecting orders gathering dust on the shelves for weeks waiting for customers to pay for them. And this is very serious additional storage costs and the creation of an artificial shortage of goods in the warehouse.

Upon presentation of the shipping documents, the customer's order is transferred from the order storage area to the shipping area for acceptance and transfer to the client or the forwarder.
This is the sixth point of control.
At this point, financial responsibility is transferred from the storekeeper of the order storage area to the client, and the order acquires the "shipped" status. This is the point at which the item physically leaves the warehouse.
Why it is needed does not cause any doubts, since it is often the last point of control.

But more and more often the goods are delivered to the client by the company's own transport. The goods from the warehouse are accepted by the forwarding driver of "his" transport department.
It is not uncommon for the delivery of an order to a client to be interrupted for various reasons. The forwarding driver of "his" transport department is forced to return the goods to the warehouse late in the evening, when all the administrative and sales departments of the company are not working.
In this situation, problems often arise with the basis and control of the acceptance and transfer of the order back from the driver-forwarder to the warehouse.
This is where the seventh point of control comes in.
It seems to be, as it were, does not relate to the warehouse, but is a connecting link that completes the process of goods movement from the company to the client. Therefore, it is advisable to use this control point.
If the order is delivered to the client, then, based on the mark in the consignment note in the returnable copy, the order acquires the “delivered” status. The "master" of this process is often the warehouse operator or the dispatcher of the transport department located in the warehouse. In this case, at the seventh point of control, liability passes from the driver-freight forwarder to the client.
If the order is not delivered to the client, then on the basis of the mark in the consignment note in the returnable copy, the order acquires the “not delivered” status.
In this case, the order is returned for safekeeping to the order storage area.
And in the morning, according to information from the seventh control point in the office, an analysis of the reasons begins, and decisions are made about the further "fate" of the order. There may be a command for re-delivery to the client or for disassembly - dismantling the order and returning the goods to the storage area.

It is possible and necessary to control only seven points in the warehouse without any software at all, or it is possible to have no control with software in the form of a WMS system.
Logistics management is different systematic approach, when administrative authoritarian methods are no longer effective.
It is doubtful to build a high-quality accounting in a warehouse without a control system for goods movement, as well as a control system without accounting. The accounting system and the control system are two complementary systems.
The question may arise:
"Why do we need all this?"
Like, they didn’t grieve, and the business didn’t develop badly!
Then, that the pace of life is accelerating every year, less and less time is left for making decisions, correcting mistakes. The competitive environment has become more rigid and focused on finding ways to reduce costs.
In such conditions, the system of control of goods movement becomes vital. Now it is no longer possible to manage in a hurry with the dismantled factory floor for the "dump" of goods, calling it all a warehouse. The warehouse begins to occupy the primary and honorable place in the company as a high-tech mechanism for servicing the ever-growing customer needs.
Such a "mechanism" requires quality control of all its elements.
Start small, with a control system, and you have another chance to survive in this turbulent sea of ​​business.

Inventory management in 1C: Integrated Automation 2 (1C: KA)

With inventory management, you can:

• receive information about the availability of stocks in the required quantity in warehouses;
• achieve the required level of customer service;
• provide production activities;
• reduce the need for working capital;
• reduce the shortage of material resources;
• improve the characteristics of the products being circulated;
• reduce the costs of the organization for the purchase and storage of goods;
• eliminate excess inventory.

In order to maximize the above points in the application solution, it is possible to meet the needs for procurement plans, maintain stocks in the warehouse, and ensure the quantity of goods for current shipping orders.

Simplified inventory management

With the help of simplified maintenance of inventory in a warehouse, you can solve the following tasks:

• control the current balance of goods in the warehouse;
• determine the minimum and maximum stocks;
• calculate the average daily consumption of goods;
• choose a supplier and determine the conditions for working with him;
• form orders for the supply of goods in the quantity that is necessary to maintain stock.

When maintaining simplified inventory maintenance, the following parameters are indicated:

• the maximum remaining stock is the desired quantity of goods, which determines the level of stock and the frequency of delivery;
• the minimum stock of goods is the desired quantity of goods, determined by the delivery time.

The size of the minimum and maximum balance can be entered manually or determined automatically, taking into account the average daily consumption of goods.

With the help of the formation of orders to suppliers, you can maintain stock in the warehouse with a simplified version.

The maximum, minimum balances, as well as the number of actual balances of goods in the warehouse are taken into account when calculating the number of goods recommended for ordering from a supplier in order to maintain stock.

For all goods that need to be ordered from a supplier, their quantity is calculated. At the same time, the system gives recommendations for ordering only for those goods whose stocks in the warehouse are less than or equal to the minimum balance.

When the quantity of goods in the warehouse is less than or equal to the minimum balance, it is proposed to order this product in order to bring its balance to the maximum level.

For example, there is a free balance of goods in the warehouse in the amount of 50 pieces. The minimum stock of this product is 100 pieces, the maximum is 200 pieces. However, there are no shipping orders. Considering these data, the system recommends ordering 200 pieces of goods from the supplier, because the current balance of goods in the warehouse is less than the minimum balance.

Extended inventory management

Extended inventory management helps to solve the following tasks:

• control the current balance of goods in the warehouse;
• determine the maximum and minimum stocks;
• determine the way and method of meeting the needs;
• choose a source for meeting needs;
• calculate the average daily consumption of goods;
• determine suppliers and conditions of work with them;
• form the terms and schedules for the delivery of goods;
• form various orders.

Extended inventory holding implies the indication:

• ways to meet needs;
• methods of meeting needs;
• parameters of maintaining the stock, corresponding to the methods of meeting requirements;
• terms and schedules of delivery of goods.

With extended maintenance of stocks in the warehouse, requirements can be met in several ways, including:

• purchase from a supplier;
• movement of goods between warehouses;
• assembly;
• production by the processor.

In the application solution there is a tool "Requirements fulfillment method", with the help of which it is possible to define the methods of fulfillment of requirements and the rules for the formation of orders. Rules allow you to automatically calculate the date of delivery and shipment of goods.

Requirements fulfillment methods used to maintain stock in the warehouse help to solve the main problem - to form the requirements for ordering goods at a time when the balance of goods in the warehouse is less than or equal to the minimum.

If the stock of goods is in the minimum quantity, then the system will recommend to order the quantity equal to the maximum stock.

To maintain an irreducible level of stock balance in the warehouse, you can apply different methods meeting requirements and the corresponding parameters of maintaining stocks.

With the help of the tool "Inventory maintenance" you can control the level of stock of the remaining goods at the minimum or maximum level, depending on the needs. The data on the maximum or minimum stock is entered manually. The minimum balance is fixed for the purchase period, and the maximum balance is fixed for the secured period.

For example, there is no required product in the warehouse, the minimum desired stock of which is 100 pieces, and the maximum is 300 pieces. There are no shipping orders to provide. Taking into account these data, the system recommends ordering goods in the amount of 300 pieces, because the existing balance of goods in the warehouse is less than the minimum level.

An example of calculating the quantity of goods recommended for an order to maintain stock is shown in the diagram.

By maintaining a stock that is calculated at a rate, you maintain stock in the warehouse, taking into account the daily rate of consumption of goods. The calculation of the minimum and maximum stocks takes into account the average daily consumption.

By maintaining inventory, which is calculated according to statistics, the inventory in the warehouse is maintained in accordance with the sales data, which are taken into account in calculating the average daily consumption of goods, as well as the minimum and maximum inventory.

The size of the minimum, maximum balances and the actual balance of goods in the warehouse are taken into account when calculating the total number of goods recommended by the system to an order in order to maintain stock.

The quantity of goods required for an order to maintain stock in the warehouse is automatically calculated for all commodity items. The system recommends to order only those goods whose stocks in the warehouse are less than or equal to the minimum balance.

Securing ongoing shipping orders

The program provides a number of options for securing ongoing shipping orders:

• the choice of the way to meet the needs;
• the ability to edit the delivery schedule;
• ensuring control over the number of goods required to meet the needs;
• determination of the source of meeting the needs;
• control over the quantity of goods prepared for shipment by order;
• the ability to select a schedule for securing orders for shipment;
• formation of orders.

Current orders can be formed taking into account the parameters of meeting the needs:

• the order-by-order supply method is used to provide the quantity necessary to close the requirements for the current shipment order;
• way of satisfying requirements - provides for the needs for orders in several ways: moving through warehouses, buying from suppliers, assembling, etc.

Shipping orders can be carried out at the expense of stocks - when calculating the quantity of goods required to secure shipping orders, the current inventory balances in the warehouses, as well as expected deliveries of goods, are taken into account.

For example, according to the order, you need to ship goods in the amount of 400 pieces. This product is in stock in the amount of 100 pieces. The desired minimum balance is 100 pieces, the maximum is 300.

An example of calculating the number of items recommended for an order is shown in the diagram.

It turns out that 100 pieces have already been provided, this is the current balance in the warehouse. A further 300 pieces are awaiting receipt. This inventory quantity provides 400 items for shipping.

When calculating the quantity of an item required to provide inventory, current stock balances and expected receipts are not taken into account, regardless of whether the inventory is being maintained.

For example, for shipment by order, you need a product in the amount of 400 pieces. Regardless of the maintenance of stocks, the system will clearly recommend the quantity of goods required for shipment according to the order, namely, 400 pieces.

Meeting the needs for planned purchases

If special requirements apply to the fulfillment dates, then volume scheduling is used. It implies meeting requirements by forming orders to a supplier based on pre-formed purchase plans.

Purchase plans are generated manually or automatically, taking into account various sources of planning data. Sources for forecasts can be: information about customer orders, sales for the elapsed period of time, the volume of purchases for a certain time, etc.

Also, various needs of the organization can be taken into account, for example, orders from internal departments, orders from their own stores or retail outlets, etc.

Work to meet the needs for procurement plans is carried out at the "Formation of orders to suppliers according to plans" workplace.

With its help you can:

• analyze needs according to procurement plans and clarify the volume of goods that is required to order from a supplier;
• determine the composition and quantity of the order from the supplier;
• choose suppliers, determine the conditions for working with them, choose a warehouse to provide;
• form orders to suppliers for the required quantity of goods.

The process of forming orders to suppliers according to purchase plans is presented in the diagram:

In this article, we will consider the basic principles of calculations that can be applied to obtain recommendations when placing orders. We all know that the presence of the most complete statistics and its visualization is good for visually determining the trends in the behavior of sales and balances. But this is not enough to create orders. It is important for a purchasing manager to see certain recommendations for each commodity item, which should take into account the delivery time of the goods, current availability in warehouses, sales history, safety stock level ...

What is the optimal stock level?

The optimal level of stock is a level of stock that: (1) must ensure the availability of goods for existing demand until the next delivery of products; (2) must limit oversupply of goods in stock.

How is the optimal stock level calculated?

The optimal level of stock usually consists of two components: (1) stock to ensure sales for the period until the next delivery from the moment the current delivery arrives; (2) safety stock needed in the event of supply disruptions or unexpected spikes in sales.

Stock to ensure sales for the period until the next delivery

I think that the main difficulties are connected precisely with forecasting the demand, which determines how much goods we have to put in the warehouse in order to ensure the company's sales. To forecast sales for each position, different methods are used - from elementary ones, like calculating average sales for a period, to more complex ones, like taking into account trends and seasonality.

Even when calculating a sales forecast based on average sales, there are pitfalls. For example, we want to calculate the average weekly sales over a 2 month period. Often the following calculation occurs: the amount of sales for 2 months (8 weeks) is taken and divided by the number of weeks (that is, 8 weeks). What's the catch here? The fact that there is a division into 8 weeks, when, for example, the availability of goods in the warehouse was only 6 weeks. Thus, we underestimate the real level of average weekly sales. In this case, of course, it is worth considering only those weeks when the goods were in the company's warehouse. How can this be taken into account? For example, Figure 1 shows statistics on weekly sales for 8 weeks, as well as the balance at the beginning of each week.

Picture 1

In Figure 1, the columns with blue font show the balances of the goods at the beginning of each week, with the red font - sales for the week. The total amount of sales for 8 weeks is 24 pieces. If we divide 24 pieces by 8 weeks, we get an average weekly sales of 3 pieces. But the picture clearly shows that there were no sales for two weeks due to the lack of goods. Therefore, these weeks must be excluded from the average. Thus, we need to divide 24 pieces not into 8 weeks, but into 6 weeks, when the product was available for sale (was in the company's warehouse). We get average weekly sales - 4 pieces.

As for the forecast of sales based on trends and seasonality, the calculations in this case can be even more distorted: due to the lack of goods; due to the flow of demand between similar goods of different brands; due to the lack of sufficient sales history; due to changes in the economy that affect the decline or growth of sales, which are not reflected at a certain point in time in the sales statistics ... Forecasting trends and seasonality in the context of each commodity item will show itself well in a stable market situation with a stable economic environment, with a stable market environment (competition), with constant availability of goods in the warehouse (which is quite rare) ... As you can imagine, there are many “ifs” here, which are very difficult to take into account using formulas. Therefore, initially, when building a procurement system, trading companies try to use just elementary forecasting methods based on average weekly sales, and the emerging demand surges are compensated for by the level of safety stock.

Safety stock

The safety stock should be in two parts: (1) the level of stock in case of supply disruptions; (2) stock level in case of unexpected sales spikes.

How can you determine the level of safety stock in case of supply disruptions? There is a fairly simple technique here. You need to analyze delivery variances with some regularity. For example, the planned delivery period for products from a specific supplier is 4 weeks. You analyze the last 10 deliveries of products and determine that 4 out of 10 deliveries exceeded the delivery period by 1 week. Then, it goes without saying that the level of safety stock in case of supply disruptions should be the reserve to ensure the average weekly sales for 1 week.

How can you determine the level of safety stock in case of unexpected sales spikes? I think that there can be a number of techniques here too. But in any case, you need to start from the calculation of a certain deviation of sales from the average weekly sales, which shows the existing volatility (variability) of sales over the analyzed period of time. Sales volatility usually describes the coefficient of variation, which indicates the level of deviation from average sales. This is exactly the safety stock in case of sales spikes and should be calculated based on the calculated coefficient of variation for each position.

So, the coefficient of variation is the variance in sales divided by the average sales for the period. We have already found out how to calculate the average weekly sales above. The question remains how to calculate the deviation in sales.

The deviation in sales can be counted in different ways. The most popular way is to calculate the standard deviation. Wikipedia will tell you scientific language, what it is and how the standard deviation is calculated using the formulas 🙂 In turn, I will show you a simpler calculation in MS Excel. MS Excel has a STDEV formula that calculates the standard deviation of sales. Opposite the position, just enter the formula in this format:

STDEV (Cell1; Cell2; Cell3)

Cell1 is the address of the cell that contains the weekly sales statistics, for example. The number of cells in the formula simply shows the range that your weekly sales statistics are in. For example, here is the real formula from the calculations:

STDEV (BC7; BA7; AY7; AW7; AU7; AS7; AQ7; AO7)

The listed cells contain weekly sales statistics, that is, in our example, statistics for 8 weeks.

How you calculate the deviation from the average sales is up to you. The main thing is to understand the principle that I showed with the example of the standard deviation. After all, you may want, for example, to determine the most maximum sales for three weeks out of 8 weeks and calculate that it is this deviation that is most important for you to form a safety stock in case of spikes.

Let's go back to the example in Figure 1 and use the statistics provided to calculate the coefficient of variation as the standard deviation divided by the average weekly sales.

So, we have already said that we calculate the average weekly sales only for those weeks when there was a remainder. And in this case, the average weekly sales were 4 units. In turn, the standard deviation also makes sense to count only on the basis of the weeks when the goods were in the company's warehouse. Using the formula in MS Excel STANDARD DEVELOPMENT, we find that the standard deviation is 3.35 pieces. Accordingly, the coefficient of variation is:

3.35 pieces / 4 pieces = 0.84 (or 84%)

Thus, for the analyzed position, the optimal stock is:

Wholesale stock = SP * Ned + StZpost + StZvspl,

• SP - average weekly sales,
• Ned - the number of weeks of stock for which we form the stock (this quantity depends on the frequency of deliveries, for our example, let's assume that orders for the supply of products are placed with us every 2 weeks)
• StZpost - the level of safety stock in case of supply disruptions (calculated by multiplying the average weekly sales by the available period of disruptions; in our case, 4 pcs. Multiplied by 1 week of supply disruptions and we get safety stock at the level of 4 pcs.).
• StZvspl - the level of safety stock in case of surges in sales (calculated by multiplying the average weekly sales by the coefficient of variation; in our case, 4 pcs. We multiply by the coefficient 0.84 and get 3.35 pcs.)

Ultimately, for the analyzed position (Figure 1), we have the following level of optimal stock:

Wholesale stock = 4 pcs. * 2 weeks + 4 pcs. + 3.35 pcs. = 15.35 pcs.

So, in this article we looked at principles for calculating the optimal stock... In the next post, we will post the second part of the article, which will show the principle of calculating the recommended quantity for an order, taking into account the balance at the time of posting the next batch of goods and the calculated level of the optimal stock. And we will also voice some of the nuances that should be taken into account in relation to various types of sales statistics (regular and irregular sales).

I wish you success in your career and business.