Welcome to this first of three videos on Advanced Inventory Replenishment, or A I R for short.
AIR for Dynamics GP is designed to accurately record and analyze inventory demand on a monthly 4-weekly or weekly basis. For each item it will then predict stock demand for the coming period using one of a number of industry standard replenishment calculations.
Features of AIR
Item resource Planning Welcome to this first of three videos on Advanced Inventory Replenishment, or A I R for short. AIR is designed to accurately record and analyze inventory demand on a monthly 4-weekly or weekly basis. For each item it will then predict stock demand for the coming period using one of a number of industry standard replenishment calculations.
Purchase Order generator Item demand can be reviewed and maintained and the outcome used as a basis for automatically generating purchase orders using Dynamics GP Purchase Order Generator. In this video we will be looking at the basic principles and concepts of AIR, while in the second and third we will see it in day to day operation.
There are two main ways of creating a Purchase Order in Dynamics GP.
• PO entry where the user may have information on reports to help him decide what to purchase but essentially it is a manual process and decision
• PO generator
The values on the Resource Planning Maintenance Window which we see here are the ones that are used to by the PO generator. If the forward availability of inventory is less than 245 then the PO generator would suggest ordering up to 654, taking into account in ordering units and order multiples where appropriate. So on the face of it we have an automated routine that can reliably tell us what we need.
But how we have set 245 and 654 in the first place? In reality these figures will change for any number of reasons. It could be a new item trending up, or a new account may commit to purchasing more; the item could be seasonal, or superseded. A Competitor item may have been taken off the market. Any of these reasons would cause our order quantities to change. Dynamics GP of course has nothing that updates any of these parameters automatically. Their maintenance is a manual process.
Line Point maintenance With AIR Stock levels determined by demand analysis and forecasting and are expressed in time rather than quantity An inventory controller is he less likely to think about an absolute reorder point quantity and more likely to think in weeks or days.
In other words, he thinks “I always want to have an absolute minimum of two week’s stock on the shelf and my vendor lead time is notionally one week. I also have a pattern of ordering from this vendor on a fortnightly basis”. So logically I will probably re-order when I am down to three weeks’ stock. We are looking at a window from AIR that shows how our stock levels have actually been calculated automatically based on time parameters combined with something called current weekly demand which is forecast to be 81.69.
How have we have arrived at current weekly demand we shall see in the second video.
We have a policy that safety stock should not fall below 2 weeks so 2*81 = 163, The lead time is 7 days so we should order no later than 21 days of stock = 245. We only order every two weeks so if I just miss an order date I may well go below re-order point in the next two weeks so add another 14 days to get line point = 35 days. – qty = 408. If an item is below line point but above order point, then it is not essential that I order it today but it may drop below order point before my next scheduled order placement date so I may wish to include it in an order especially if I need to fill a container or hit some other supplier threshold Line point will become available to us in the PO generator as an alternative threshold for ordering. There is no hard and fast rule.
Item Site Range Allocation The time parameters are user set. Other than lead time they are typically policies that reflect the level of willingness to invest in stock to achieve high service levels. These time parameters can be set globally or for groups of items using simple routines. This screen shows how time parameters can easily be adjusted by range. There is also a wizard that can be used to simplify the initial set-up process.
The other time based parameter is of course lead time. This can be set as a policy, reviewed, and reset if appropriate. This screen compares actual average lead times with current lead time parameter and permits an override. In practice a user may wish to retain the policy lead time rather than surrender to poor vendor performance and push up re-order point and therefore expenditure as a result.
What we have seen on this video is how to set our stock policies in time and use them to calculate safety, order and order up to levels. In the next video we will see how estimated weekly demand is calculated and the information that the buyer can make use of to better understand inventory demand. Well I hope you found this interesting and if you would like to know more please schedule your free demonstration today.