9.11. Replenishment

When implementing the replenishment process the following objectives are targeted:

• avoiding out of stock situations

• stock optimization

• purchasing products only when necessary

• reducing physical stock as much as possible

• automated purchasing

Implementation steps:

1. Product configuration - Replenish tab

   • Purchasing method

   • maximum/minimum, safety stock etc.

2. Product configuration - Purchasing tab

   • Current Vendor

   • Lead Time

3. Average Value Calculation

4. Update Minimum Product Stock

5. Replenish Calculation Report

   • Printing the report;

   • Generating documents.

Product Configuration - Replenish tab

For every product, in the Product window, Replenish tab, the following properties need to be defined:

• Warehouse - select the warehouse where the replenishment process will take place. The minimum level, maximum level and replenishment type will apply only for the selected warehouse;

• Source Warehouse - select a warehouse from where replenishment is done (used when generating inventory moves);

• Replenishment Type - determines when a product can be replenished:

  • Reorder below Minimum Level - the product is replenished when the available stock drops under the Minimum Level value;

  • Maintain Maximum Level - the product is replenished when the available stock drops under the Maximum Level value;

  • available stock = QtyOnHand - Qty Reserved + Qty Ordered;

  • Kanban, Sincron, Order Line, etc. - not usable in the current SocrateCloud version;

• Minimum Level - the minimum stoc; quantity required to respond to customer and internal requests:

  • at first should be entered manually, after which it will be automatically updated;

  • the quantity will be be updated using the processes described in this chapter;

• Maximum Level - the maximum quantity allowed on stock;

• Updateable - parameter used by the Min/Max Quantities Report:

  • checked - the report will update the Replenishment Type, Minimum Level and Maximum Level fields;

  • cleared - the report will not update the respective fields;

Replenish section:

• Variable Replenish Inventory - the safety stock may be set as a fixed value or can be calculated, using the average consumption from the previous month:

  • cleared - only the Fixed Safety Stock value is used;

  • checked - both Fixed Safety stock and Inventory Security Time will be used to determine the safety stock;

• Inventory Security Time (IST) - number of days for which the stock should be covered;

• Min Level Always Updateable - parameter used by the Update Min Stock process:

  • checked - the process will update the Minimum Level field;

  • not checked -

  • the process will not update the field;

• Average Daily Demand Calculation (ADD) - the number of days it takes to send an order after entering a requisition;

• Delay ADD Calculation - a delay for the ADD time;

• Fixed Safety Stock (FSS) - fixes stock value, entered manually (used for products with high fluctuations in average consumption);

• Average Consumption (AVC) - displays the current average consumption, calculated using the formula: Qty Out / Working Days;

• Inventory Surplus, Average Daily Demand. Complete Requisition, Complete Order, Print Label, Fixed Lot, Consumption Method - not usable in the current SocrateCloud version;

Product Configuration - Purchasing tab

For every product, in the Product window, Purchasing tab, the following properties need to be defined:

• Current Vendor - select product vendor and check the Current vendor checkbox;

• UOM - if a conversion between units of measure has been defined, an alternate unit of measure can be used for purchasing;

• Minimum Order Qty - minimum quantity allowed on purchase orders;

• Lead Time - expected time between the purchase order and material receipt dates;

Details in Calculate Requisition Offers.

Generate Average Consumption

Calculating the average consumption for products is done using the Generate Average Consumption process located in the Material Management -> Replenish menu. The following parameters are available before executing the process:

• Period - month for which the average consumption is calculated;

• Warehouse - the warehouse from where stock changes are recorded (shipments, inventory use);

• Product, Category, Subcategory - select to limit the calculation to specific products or product categories;

• Delete old processed records - check to update existing calculations for the same month;

Press Start to run the process.

The average consumption values for each product and period can be viewed in the Average Consumption window, located in the Material Management -> Replenish menu. The following fields are available:

Calculated Values (periods/specific) tab:

• Qty out - the used quantity (Inventory Use) plus the shipped quantity (shipments) from the warehouse in the selected month;

• Average Consumption (AVC) - average consumption for the current month, calculated using the following formula: Qty Out/ Working Days;

• %AVC - percent difference between average consumption values from the previous and current months, calculated using the formula: (Current AVC - Previous AVC) / Current AVC;

• Reorder Time - calculated using the formula: Lead Time + Delay ADD:

  • Lead Time - value from the Purchasing tab;

  • Delay ADD - value from the Replenish tab;

• Inventory Security Time (IST) - value from the Purchasing tab;

• Fixed Safety Stock (FSS) - value from the Purchasing tab;

• Variable Safety Stock - calculated using the formula: IST x previous AVC;

• Safety Stock - calculated using the formula: IST x previous AVC + FSS;

• Minimum Level - calculated using the formula: Reorder Time X previous AVC;

• Reorder Point - recommended minimum stock value, calculated using the formula: previous AVC x (Reorder Time + IST) + FSS;

The Calculated values (period) section is not usable in the current SocrateCloud version.

Update Min Stock

The Update Min Stock process, located in the Material Management -> Replenish menu is used to update the minimum stock level for a product. The following parameters are available before executing the process:

• Period - select a relevant period, used to determine the minim stock level (usefull when replenishing seasonal products)

• Warehouse, Product Category - selection filters, used to limit the update process to products in a warehouse or from a product category;

After running the process, for every product, the Minimum level field from the Replenish tab, Product window, will be updated using the Reorder point value from the selected period.

Note: The process will update the fields contained by the Replenish tab, Product window only for products with the Min Level Always Updateable checkbox selected, in the same tab.

Replenish Report

The Replenish Report, located in the Material Management -> Replenish menu, lists products to be replenished. Products will only be displayed if:

• are active and not marked as not in use;

• they have Replenish and Procurement configurations;

• their available stock is under the minimum level or above the maximum level (depending on replenishment type).

The following parameters are available before executing the process:

• Warehouse - select the warehouse for which the replenish report is generated;

• Product Category - the report can be limited to products from this category;

• Business Partner - the report can be limited to products with this current vendor;

• Replenishment Frequency - not available in the current SocrateCloud version;

• Create - select the document created after generating the report:

  • To generate a purchase order the following conditions need to be fulfilled

    • Products must have prices on the vendor price list;

    • The Vendor must have a Representative and Payment Term;

  • To generate an inventory move you must select the source warehouse in the Purchasing tab;

• Document Type select a document sub-type for the selected base document the Create field. Details in Document Types.

Report results:

The Qty to Order (quantity to order from a vendor) is calculated depending on the replenishment type:

• Reorder below Minimum Level = Minimum Level - Qty on Hand + Qty Reserved - Oty Ordered;

• Maintain Maximum Level = Maximum Level - Qty on Hand + Qty Reserved - Oty Ordered;

• For products with Min Order Qty (Purchasing tab) greater than the Qty to Order, the Min Order Qty will be used instead of the calculated quantity;

• PO/ Requisition - a document for each different vendor will be generated. The products and the report values for Qty to Order will be added to the document details;

• Inventory Move - a new document for each source warehouse is generated. Separate details for each product instance will be added until no Qty to Order is left. If Qty to Order > the available quantity, a partial inventory move will be generated and the remaining quantity will be displayed in the log.

Min/Max Quantities Reports

The Min/Max Quantities Reports, located in the Material Management -> Replenish menu is used to optimise product stock within a warehouse. Running the report will generate the following results:

• Updated Minimum Level, Maximum Level and Replenishment Type values for products (Replenish tab, Product window);

• A report containing minimum and maximum stock values proposed by the system;

The process can be configured to run automatically, using the Scheduler functionality.

The following parameters are available before executing the process:

• Warehouse - select the warehouse for which the minimum/maximum stock is calculated;

• Product Category, Subcategory, Attribute Set, Attribute Value, Representative - selection filters for products displayed in the report;

• Date (from - to) - sales period used for the report calculations;

• Min Replenishment Frequency - value used to calculate the proposed minimum value. If no value is entered, the frequency from the warehouse definition will be used;

• Max Replenishment Frequency - value used to calculate the proposed maximum value. If no value is entered, the maximum stock will not be updated/calculated;

• Replenishment Type - determines when a product can be replenished. The selection made here will be applied to the products in the report (Replenish tab, Product window);

• Update Min/Max Stock - if checked the minimum and maximum level will be updated after running the report, using the proposed values;

• Never Min/Max < minimum values allowed for the proposed minimum and maximum stock;

Note: The report will update the fields contained by the Replenish tab, Product window only for products with the Updateable checkbox selected, in the same tab.

The report will contain the following information:

• Product, Category, Subcategory, etc. - information taken from the product definition;

• Qty Sales = total quantity taken from processed shipments, within the selected sales period;

• Days Sales - Sales Period Days No. - Out of Stock Days

  • Out of Stock Days - days within the sales period for which the product stock was 0;

• Avg Qty Sales = Qty Sales / Days Sales;

• Min Stock Proposed = Min Replenishment Frequency * Avg Qty Sales;

• Max Stock Proposed = Max Replenishment Frequency * Avg Qty Sales;

• Min Stock - current Minimum Level for the product (value from Replenish tab, Product window);

• Max Stock - current Maximum Level for the product (value from Replenish tab, Product window).

Internal Replenishment

The Internal Replenishment report displays for a warehouse the products that need to be procured internally and optionally, can be used to generate internal inventory move documents. Report parameters:

• Warehouse - the target warehouse that will be replenished;

• Source Warehouse - the warehouse from which stock is replenished. If not selected, the source warehouse is determined automatically, as described below:

  • for each product the warehouse selected in the Product window, Replenish tab;

  • the source warehouse selected for the target warehouse in the Warehouse window;

• Locator Key - filter that is used to replenish only specific locators within the target warehouse;

  • allows the use of special characters (e.g. C1% will include any locator starting with C1);

• Product Category - filter that can be used to replenish only a specific product category;

• Only Available Items - if checked, only products for which there is stock at tenant level will be displayed;

• Only Customer Reservations - if checked, the replenishment quantity will not be determined using the replenishment type and will be determined based on the available stock (On hand qty - Reserved qty)

• Document Type - allows you to select the document type used to generate internal inventory movements (if not selected, no document will be generated);

• Available for Allocation - only locators that have Available for Allocation checked will be replenished;

The report may contain the following columns:

• Product, Product Category - product related information (available in the Products window);

• Replenish Quantity:

  • is determined based on the replenishment type: difference between the minimum/maximum stock and the available stock in the target warehouse;

  • if no replenish information is available for a product, it will still be replenished if it's available stock is below 0, with the minimum necessary amount to get the stock above 0;

• Available stock for warehouse, Available stock for source warehouse = On Hand Qty - Reserved Qty;

• Warehouse, Source Warehouse

• Total Available Stock - available stock for the respective product, calculated at tenant level;

• Minimum Level, Maximum Level, Replenishment Type - product replenishment information (Replenish tab);

• UOM - unit of measure in which the stock qty is displayed;

• In Progress Qty - the moved quantity on internal inventory move documents not yet completed;

• Available Replenish Qty - the actual quantity which needs to be transferred in order to replenish the warehouse (= Replenish Quantity - Available Stock for warehouse - In Progress Qty);

When selecting a document type, an internal inventory move with the following properties will be generated:

• Master:

  • Source Warehouse - the report source warehouse;

  • Destination Warehouse - the target warehouse, selected as parameter;

  • Source/Destination Locator - the default locator for the respective warehouses;

  • Document Status = "In Progress";

  • Description - parameters used when running the report;

• Details:

  • Product - the products included in the report;

  • Quantity - the "Available Replenish Qty" Quantity

  • Source/Destination Locator - the default locator for the respective warehouses;

• a document will be generated for each source warehouse.

Internal Replenishment based on Sales Orders

This Internal Replenishment based on Sales Orders report is similar to the Internal Replenishment report. It returns detailed information about the internal replenishment process, broken down on the sales representatives that process the sales orders. It is a new report deriving from the "Open Sales Orders" that can generate an Inventory Movement which only adds up the products corresponding to the sales order for a single sales representative.

• It will take into account the available replenishment quantity on sales representative.

• The necessary replenishment quantity per representative = ordered quantity (from sales orders used to make the procurement for) - the quantity in progress - On Hand quantity - reserved quantity (total reserved quantity per warehouse from which you subtract the ordered quantity).