Tag Archives: replenishment

Improving Stock Turnover

simms_turnover

Often we wonder how to improve our turnover rates, which are the true mark of inventory management success. Having the stock on hand to easily fill any orders made by customers is the ideal, because inventory is only worthwhile if it is available when it is needed, so that the goal of converting it back into capital as soon — and as often — as possible can be met.

Inventory turnover over a specific period of time is calculated by the following formula.

Inventory turnover = Cost of Goods Sold / Average Inventory

Inventory turnover ratios tell you how many times your inventory has sold through. To calculate, take the total cost of goods sold for the year and then divide this by the average inventory. First, choose a period of time to examine.  The most practical period for small to medium-sized retailers is one year. Average inventory can quickly be calculated by adding your inventory at the beginning of the period to your inventory at the end of the period, then dividing by 2.

With SIMMS 2013 Inventory Management software you can track the items that sell, as well as the ones that do not, and make quick improvements to your bottom line.

There are several good habits you can begin. Awareness of your inventory, its categories and which items move the best is crucial. Refer to your business plan regularly and build in a policy of stopping to think before you buy items in lot quantities; ordering smaller groups is more tedious, but it also protects your capital against over-extension. Promotions and special processes will help you move your over-stocked goods.

Contact KCSI today to learn more about the advantages that SIMMS can bring to your business.

Figuring the R Factor

Warehouse services concept

The cost of purchasing a product surpasses the actual price you have paid for it. Expenses related to purchasing include the salaries of the purchasing staff, rent, and other overhead expenses attributable to the purchasing department.

Further, the more often you buy, the greater your internal costs. For example, if you purchased one million widgets all at the same time, your purchasing or replenishment cost would be the cost per line item, per purchase order.

The cost of replenishment (R Factor) is calculated on a per item, per order basis. The reason for this is that it takes the same amount of internal effort to determine how much of each item you want, from which supplier(s), at what pricing, terms, and so on, no matter which item is being considered and no matter how many items there are on any given purchase order.


To calculate the cost of replenishment, include:

Annual cost of purchasing department labor                   $220,000

Annual cost of purchasing department overhead
   (rent, utilities, equipment allocation, etc.)                     $179,000

Annual cost of expediting stock items                            $  25,000

Total annual costs                                                         $424,000

Number of purchase orders created per year
   for stock (assume):                                                    $  10,000

Average number of different stock items
   per order (assume):                                                              x 8

Total number of times stock items were ordered:            $  80,000

 

    Total Annual Costs           R Factor       $424,000           $5.30 =
—————————— =                      =   ———— =      ————
Total Times Stock Items                             80,000           R Factor
       Were Ordered

Thus, if the R Factor is $5.00 per item, per order, and there is a single line item on an order, the replenishment cost is $5.00. If there are two items, it’s $10.00. If there are three items, it’s $15.00, etc.

SIMMS Inventory Management software has a replenishment module to help you keep the details of your company’s replenishment needs straight and accurate. Visit www.simmssoftware.com or email sales@kcsi.ca for more information.

Inventory Picking Methods

simms_picking

Zone Picking is the order picking method where the a warehouse is divided into several pick zones and order pickers are assigned to a specific zone and only pick the items in that zone, while orders are moved from one zone to the next (usually on conveyor systems) as they are picked. This method is also referred to as “pick-and-pass”.

Wave Picking is a variation on zone picking where rather than orders moving from one zone to the next for picking, all zones are picked at the same time and the items are later confirmed and amalgamated into separate orders and shipments. Wave picking is the fastest method for picking multi-item orders. However, the confirmation and amalgamation process can be tricky. Picking waves are often intended to isolate shipments to particular carriers, routes, etc. A more basic example of wave picking would simply be as the method where a group of orders is released to the warehouse for picking and the next group (wave) is not released until the first wave has been processed through the pick area.

Lastly, Batch Picking is the order picking method where orders are grouped into small batches, an order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders. However, batch picking is also very common when working with automated material handling equipment like carousels.

Utilize the following principles no matter which picking style you choose to use:

– Always replenish to 100% levels

– Eliminate “pick and pass” style picking

– Employ ABC item analysis

– Handle items once only

– Reduce amounts of walking

– Support the system at all levels of the company

– Upgrade your training and quality for all employees

– Verify on-the-fly

SIMMS’ Fulfillment Module Keeps Customers Satisfied

Warehouse

The Fulfillment Module was designed to work in conjunction with the Replenishment Module. Once a purchase order has been generated for the stock required to fill sales orders and the purchase order has been approved and received, the sales order is then listed in the Fulfillment Module waiting for the order to be picked and invoiced. Here the user can process all items on a sales order into an invoice or invoice individual items on a sales order. Also, the user has the option to invoice individual sales orders or automatically invoice all sales orders. This process is called “Recalculate Fill Quantity” (the fill quantity is the item’s quantity on a sales order).

SIMMS’ Fulfillment Module keeps all details of the stock you have ordered – or need to order – clear and concise so that you are not wasting extra time and money on stock the is not needed. Use this module to master your stock and your orders, all the while adding to the satisfaction of your customers and the efficiency of your stock management.

–          Comprehensive picking lists can be generated once selected quantities have been either manually or automatically chosen.

–          Fill quantities can be automatically filled using available stock or reset to zero, and can be recalculated at any time.

–          Order selection has been made simple, and can be filtered by customer, categories, or items.

–          Quantities of items already on purchase orders are displayed, avoiding the creation of duplicate orders for the required goods. Invoices that feature some or all fulfillment items can be generated, while any items that are already invoiced, or partially invoiced, are displayed.

–          You can manually enter only the quantities they need, avoiding investment in superfluous stock thus saving the user time and money. Once the required amount of stock is known, purchase orders can be created for unavailable stock involved in the fulfillment process, either an item at a time, or by the batch of required items.

SIMMS’ Fulfillment Module can help your business succeed owing much to its hand-in-hand link with SIMMS’ comprehensive inventory management software. Visit www.simmssoftware.com or email sales@kcsi.ca today for more information on how fulfillment can help you serve your customers with a much more accurate and higher standard than ever before.

 

Backflushing of Stock

simms_backflushing

“We finished 5 bicycles. Deduct ten tires from the stockroom inventory.”

In many companies that manufacture goods for future sale, when the production is posted against the operation, the process is known as backflushing. The operator will generally enter the production order number, operation, quantity good, scrap quantity, and labor and machine information and then issue all the materials as one transaction just as would usually be done in the pre-production phase. One often uses the option to change particular item quantities and add particular scrap quantities. When you have your issuing program working in the background without the manufacturing department ever seeing its contents, such is known as blind backflushing.

Some advantages of backflushing are:

  • When you use bulk materials like sheet goods or dry goods, bar stock or roll stock, often exact quantities cannot be picked.
  • When using point-of-use materials, post-production issuing simplifies the issuing process by making it easier to conduct counts on your point-of-use materials. If you pre-production issued these materials, the system counts would have to be reconciliation with any orders having quantities issued but not yet consumed. One pointer is that if you post-production issue, after each post-production posting you need a system-to-actual-count match.
  • When scrap content is usual in the finished item and you finally have a good quantity approximate to the ordered quantity, you find this post-production issuing simplifies the issuing process because you will not be aware of how many you run until production is complete.

Backflushing is just a method for issuing materials that works well when applied properly and poorly when applied improperly. Processes that do not employ point-of-use materials, bulk materials, or those where production scrap does not encourage an increase in run quantities find no advantage from backflushing. The concept involved is similar to the reversal of the flow of materials to drive contaminants from a filtering device, such as are what is performed at a water treatment plant, where water that is filtered through sand (to remove impurities) will have its flow reversed through the sand to force any contaminants to where they can easily be removed. In any production process, sometimes applying the backflushing concept can reveal wastage and unnecessary steps in the process that can be left out of future production runs, thus saving time, materials and labor.

Inventory Turnover and SIMMS 2013

simms_turnover

The investment of any business’ success relies on their inventory. Inventory turnover is a ratio showing how many times a company’s inventory is sold and replaced over a set period of time. If your inventory is perishable goods then your goal is to have a higher (faster) inventory turnover rate. The importance of high inventory turnover is relied upon to generate revenue AND produce satisfied customers.

Inventory turnover is a crucial detail of management efficiency. It is a measure of how often, during a course of a year, a company sells and replaces its inventory of component parts, materials and final products. As a general rule, the higher the inventory turnover rate the better it is for the business. Management must be sure to monitor all products, and guarantee that all unsalable products are pulled from the shelves.

Inventory is listed as a current asset on the balance sheet, and therefore your inventory’s valuation can directly affect your current asset value and your overall total asset balance. The increased fill rate of an item develops a well-managed inventory list, and a well-maintained items list must be monitored carefully to avoid shortages of frequently used items and/or “stock-out” situations for any goods in your system.

SIMMS 2013 Inventory Management software has every tool you need to maintain your company’s utter control of stock items, and analyze how each item is doing in regard to turnover and ultimate profitability. Visit www.simmssoftware.com or email sales@kcsi.ca for more information.

SIMMS 2012 Order Fulfillment

simms_fulfillment

Set to work hand-in-hand with its Replenishment Module, SIMMS 2012’s Fulfillment Features enable you to manage stock orders committed to replenishment. When a purchase order has been generated for the stock required to fill sales orders and the purchase order has been approved and received, the sales order is then listed in the Fulfillment Module while you wait for the order to be picked and invoiced. Here you can process all items on a sales order into an invoice or invoice individual items on a sales order. Also, the user has the option to invoice individual sales orders or automatically invoice all sales orders. This process is called “Recalculate Fill Quantity” (the fill quantity is the item’s quantity on a sales order).

When the needed quantity of inventory is known, purchase orders can be created for unavailable stock involved in the fulfillment process, either an item at a time, or by the batch of required items. The quantities of items already on purchase orders are shown, helping you to prevent the creation of duplicate orders for the required goods. The invoices that feature some or all fulfillment items can be generated, while any items that are already invoiced, or partially invoiced, are displayed. Comprehensive picking lists can be generated when selected quantities have been either manually or automatically chosen.

The Fulfillment Module of SIMMS 2012 manages every aspect 0f the inventory you order both accurately and easily to assure that you are not wasting extra time and money on stock the is not needed. Use this module to master your stock and your orders, all the while adding to the satisfaction of your customers and the efficiency of your stock management.

For more information on how to take advantage of fulfillment feature of SIMMS 2012, visit www.simmssoftware.com or email sales@kcsi.ca.

Doing Business with SIMMS 2012

With SIMMS 2012 Inventory & Accounting Management software, you can handle all the requirements of your large or small company to provide the people in your warehouse and the people who work remotely — on the highway, in the office, at the cash register, or in a hotel room anywhere in the world. Or you can stand face-to-face with a customer while you access your stock and analytical data. You can provide the best in service, information and support. Orders can be placed with vendors for m0re stock, confirmed in their counts, and shipments from your warehouse — all can be processed checked, confirmed, and shipped in moments.

With SIMMS, you can also manage the main concerns you have, such as:

  1. Find Good Leads
  2. Hire the Right People
  3. Make Sure Information is Reported Correctly
  4. Properly Train Reps
  5. Compensate Sales Agents
  6. Limit Employee Turnover
  7. Use the Right Equipment

As well as helping you handle these problems, the wide variety and versatility of SIMMS give every advantage over its competitors, therefore passing these advantages on to you and your business. Here are but a few major features that SIMMS 2012 provides:

SIMMS can help you not just keep up with your business while you’re on the road, but also how it will enable its complete control no matter where you are — even if it’s just across town for coffee with a client. To learn more about how, visit www.simmssoftware.com or email sales kcsi.ca.