2/5/2014

Inventory Planning and Replenishment

15th December 2012

Inventory Planning and Replenishment

Inventory Planning and Replenishment

In a business maintaining inventory of goods , the business needs to replenish the stock of the sold goods to maintain the required inventory for normal business operations The Inventory replenishment is determined by the inventory replenishment method employed by the business 1. Min-Max Planning 2. Kanban Replenishment Planning 3. Replenishment Palnning 4. Re-Order Point Planning The Re-Order of Inventory raises a lot of questions which need to be answered 1. What should be ordered 2. How much should be ordered 3. When should the goods be ordered 4. Which planning method to use How Much to Order : This depends on the relation between the supply and demand and the inventory replenishment lead time. Inventory Forecasting: Inventory forecasting is the process of extrapolating the expected demand of the goods over an expected number of periods Inventory Replenishment methods 1. Min-Max Planning 2. Kanban Replenishment Planning 3. Replenishment Planning 4. Re-Order Point Planning Re Order Point Planning As the name suggests this method of replenishment will replenish the inventory when the inventory level falls below a certain decided point. The goods ordered are equal to the EOQ (Economic Order Quantity) This mechanism is recommended for the items which are not very expensive Re-Order point planning steps 1. Enter item planning attributes 2. Forecast item demands 3. Define safety stock 4. Run Re-Order point report Min-Max Planning The items are planned depending on the user defined Minimum and Maximum quantity.The items are replenished to the Maximum level once it falls below the Minimum Level. It is generally applied to low cost items which do not require strict monitoring Kanban Planning: Kanban is a pull replenishment system whose aims is zero stockouts, shorter lead times, and reduced inventory with minimal manual supervision. Instead of waiting for an MRP plan to release materials down the supply chain, with kanban each operation pulls the materials it needs from its source when it needs them, signaling with a replenishment signal or a kanban that it needs to do so. Kanban The term kanban refers to a visual replenishment signal such as a card or an empty bin for an item. In a kanban system, each work center has several bins, each containing a certain number of the same item. When
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2/5/2014

Inventory Planning and Replenishment

a bin becomes empty, the work center starts the process of replenishing the empty bin by sending the replenishment signal, or a kanban. Meanwhile, the work center can continue using the other (stocked) bins. Types of Kanban Replenishment: Inter Org: Replenishes by creating Internal Requisition Intra Org: Triggers Material movement from a subinventory in the same Organization. Production: Creates or releases a Production Job Supplier: Creates a Purchase Requisition. Kanban Elements: Pull Sequence is a group of information that defines a Kanban location, source information, and planning parameters for an Item. Kanban chain is a series of Pull Sequences, which defines the replenishment network. E.g.: Assembly to Stores. Kanban Cards are created for Item, Subinventory and Locator (optional) and uniquely identified by a Kanban number Replenishable Cards can be created automatically through Pull Sequence or manually through Kanban Cards window. Replenishment Counting Replenishment Counting is a method of ordering Items for non-Tracked Subinventory. Non-Tracked subinventories are expense subinventory, for which On-hand balances are not maintained. Whenever an Item is moved into Expense Subinventory, the Expense account is charged and the quantity is discarded. Items are replenished in Non-Tracked Subinventory by periodically counting the items physically. Posted 15th December 2012 by Biradar Shri
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