You need to manage some tough demands in warehousing. The business demands you reduce costs, while customers demand that you reduce your prices. Those are generally conflicting demands. Yet, with inventory planning and forecasting software, you can actually generate a positive cash flow.
Inventory management issues
Most companies face the same challenges with inventory management:
It is difficult to recognise demand variability, and if a warehouse has long lead times, then that makes the demand harder to meet anyway. Then, planning for the demand for seasonal items on top of this is trickier still.
Inventory management gets more complex where there’s a continual growth in the number of new SKUs being added. And the possibility of excess or obsolete inventory has to be factored in too.
Out of stock situations need to be dealt with quickly. And conversely, there may even be a low turnover of stock, which has to be managed.
With all these factors and variables to consider, the warehouse manager has a job to do to keep on top of things. It’s not easy to accurately forecast stock requirements and to get the right mix of products in stock at the right times. Many rely on spreadsheets and use them to set minimum, maximum and safety stock values. But it’s a manual and labour-intensive job.
Common Approaches to Setting Reorder Points
Many warehouse managers will use averages to calculate reorder points. But this can result in too little or too much stock.
Firstly, it’s not easy to know how many months of history should be used to make up the average. And using averages cannot take account of items that are seasonal or that have a sudden random demand.
Using averages can’t accurately evaluate other patterns either – for example, where an item is showing strong growth or a strong decline.
Although manual adjustments can be taken into account, to keep forecasts as accurate as possible, the reorder points need to be very frequently reviewed and adjusted. And converting that forecast into a stocking quantity is a complex calculation too.
Forecasting isn’t enough
This means that forecasting just isn’t enough. It’s a good start, but it can’t can’t take account of random demand, only steady demand.
So it can’t help with calculating how much stock is needed to protect for spikes over a particular period of time at a desired service level, and without overinvesting. And that forecast can’t easily be converted into an accurate stocking quantity.
How Valogix meets inventory forecasting and planning challenges
Valogix is an inventory planning and forecasting software solution that manages stock planning and ultimately helps companies to achieve a positive cash flow.
Valogix automates the inventory planning process, including for forecasting and planning, replenishment and optimisation of stock.
It’s easy to use and affordable. Although it’s simple and effective, it has a high degree of user acceptance. It’s also exception based, alerting users of potential future issues.
With network balance details on screen and easily viewable, Valogix provides visibility of all items and locations.
The benefits of using Valogix
Companies see clear benefits when using Valogix.
Depending on the size of your operation and the number of items you stock, the automated planning functionality brings a reduction in planning time of between 40% and 85%.
Item availability is improved. This 15-30% reduction in out of stock situations brings a knock-on increase in customer satisfaction and an increase in sales due to fewer out of stock situations..
Users estimate that they gain a – safe – reduction in inventory of between 20% and 40%. This keep costs and overheads down.
The auto-replenishment feature brings efficiencies that also save time and money.
Ultimately, customers see a 5-10% increase in sales and this – along with the other cost savings – provides a rapid return on the investment in the software.
A bit about Valogix
Established since 2001, Valogix has been an innovator and pioneer of inventory planning and optimisation software.
The software design and functionality has been driven by the founders, who have themselves been inventory planners and business managers.
Valogix has been a SAP Solution Partner since 2004 and is a SAP Global Gold Level Partner. The software is also compatible with NetSuite.
With customers and resellers in 46 countries, the software is ideal for the growing needs of SME businesses that want to optimise inventory planning.
Balloon One provides version 8 of Valogix, for implementation of either SAP Business One or NetSuite. We have many satisfied clients who are using Valogix to successfully forecast and plan their stock. For more info use the link below to download more information on the software.
Find out more about Valogix for SAP Business One
Download this brochure now to explore the capabilities of the most comprehensive inventory planning system available to the SAP market.
Enhancing SAP Business One by providing automated forecasting, replenishment planning and inventory optimisation and eliminates the need to manually enter Min, Max and Safety Stock values. Valogix provides dynamic calculations of Excess and Inactive inventory which provides for intelligent removal of this stock. Recommended replenishment orders automatically populate Draft or firm Purchase Orders in Business One.