In order to have an optimal replenishment it is necessary to know the indicators and the appropriate dynamics that will make it possible to obtain a suggested amount of repurchase or reorder that will allow to have an inventory at its point, that is to say, enough to not be oversupplied and not to fall into depletion .
The fields are presented in four sets: "Reorder OptThe fields are presented in four sets: "Reorder Opt", the main set containing the information related to the reorder. It is followed by auxiliary groups intended to support the quantity to be reordered, which are: "Inventory", "Safety Stock" and "Reorder Point and Demand History and Forecasts". The reason for these groups is that they contain an indicator that, when interacting dynamically with each other (within the optimization line), will result in the suggested purchase.
The break-even point for our optimizer is the minimum reorder point (MROP), which will take into account two indicators: Min Suggested Forecast and safety stock.
Main indicators in the optimization line
The Suggested forecastwill be the demand to be met, demand obtained from the Forecast AI module, taking the suggested forecast as a basis, and then adapting it to the days of coverage that, according to the business rule, must be met.
On Min Suggested Forecast will be the minimum demand to be met, demand that is obtained from the Forecast AI module, taking the suggested forecast as a base, and then adapting it to the days of coverage that the business rule requires.
The safety stock (SS) is the amount of inventory that will be reserved to face any eventuality, it takes into account the average and maximum fulfillment time of the supplier (Leadtime Max and Leadtime prom) and the average and maximum demand that has been had in a day for the reference under review (Dias Uso Prom and Dias Uso Máx); it will then have that
SS = Tiempo de entrega máximo x Demanda máxima - Tiempo de entrega promedio x Demanda promedio.
When and how much to reorder
Once the Minimum Reorder Point (MROP), which marks the break-even point in inventory levels, has been calculated, the crucial question arises: how to determine whether we are above or below this point? Furthermore, how to identify the right time to initiate a buyback or replenishment process?
In order to address these issues, it is essential to consider the indicator of availability. Availability refers to the resources at our disposal to meet demand, which includes both what is present in the current inventory and what is in transit (Inv+Tran).
If availability exceeds the MROP, we can say that we are in a stocked position. However, it is important to avoid maintaining excessively high availability, as this could lead to the risk of overstocking.
In contrast, if the availability is below the MROPit is time to seriously consider the need for a reorder to reach the Reorder Point (ROP). An insufficient level of availability could potentially lead to inventory depletion and, consequently, the inability to meet demand.
The Datup model will provide you with an alert via the "Status" column in the Dashboard web (labeled as "ReorderStatus"in the exportable file). This column can have two possible values: "Order" y "Hold". When the availability is lower than the Minimum Reorder Point (MROP). (MROP)the alert will be set to "Order", indicating that it is time to purchase. Otherwise, when availability is above the MROP, the status will be shown as "Hold", suggesting that a replenishment is not required at that time.
The quantity to be reordered is found in the indicator Suggested Reorderwhere Suggested Reorder = ROP-(Inv+Tran). The determinant that will guide the decision to place a replenishment order or not is found in the Minimum Reorder Point (MROP). This value is calculated by the sum of the Minimum Suggested Forecast (MSF) and Safety Stock (SS).
Coverage considerations: consider supplier delivery leadtimes, production leadtimes, demand leadtime, to have a complete coverage when placing the purchase order. If the coverage is defined by the customer you must take the above into account.
Transit considerations: the model takes the information from the data source so this indicator must be updated from the user system to have the information in the datup results updated in the same way.
Safety inventory considerations: safety inventory can be managed on specific days defined by the customer, in specific quantity or according to leadtimes demand as shown above.
Suggested Reordering ConsiderationsWhen the status is "Hold", both "ReorderQtyBase" and "ReorderQty" will be set to '0', indicating that it is suggested to refrain from making the purchase.
In the case of "ReorderQtyBaseIn the case of "ReorderQtyBase", there is no purchase multiple or factor to be considered in the replenishment calculation. This means that the suggested value for the purchase will not be affected by such a factor. However, in the case of "ReorderQtyHowever, in the case of "ReorderQty", there is a purchase multiple or factor that will be taken into account during the calculation of the quantity to be reordered. In other words, the suggested value for the purchase will be adjusted according to this factor.
To learn more about each of the indicators that make up the module , click here. Inventory Opt the following documentation is available: How-To: Interpreting Datup Optimized Inventory cubes.