Midterm Review Slide Deck Flashcards
Raw materials (grown, mined, or made) ships to
Supplier
Supplier provides to
Manufacturer
Manufacturer makes
Products
Products are delivered to
Distributor
Distributor sells and delivers to
Customer
Customer demands
Products
Problems with Traditional Order Processing
- lacks integration
- negatively impacts customer service
- slow, time-consuming process
- increases chances for human error
Cycle Review Questions
- is my line point still valid?
- any changes in the market, customers, or competition factors: add or subtract amount stocked
- what is the lead time
Safety Stock Questions
- can we afford to have a “stock out” of this item?
- risk tolerance or aversion
- confidence in vendor
Effective Quantity Questions
- amount physically on-hand
- any on order or transfer in
- less backorders, reserved, or transfers out
- this is what you can actually sell
Inventory Management equation
Art (knowledge & experience) + Science (technology)
5S’s
- source
- stock
- store
- sell
- ship
4 support services
- IT
- HR
- Finance
- Transportation
4 critical questions catalog answers
- what is it?
- what is the cost/price?
- where is it?
- where did it come from?
Immediate Invoice
- cash, check, or credit card taken when the order is placed
- allocates stock
COD
- Collect on Delivery: pick up or delivery to customer
- allocates stock
Pick Ticket
- updates normal sales history buckets
- updates item demand
- schedule delivery
ERP (acronym)
Enterprise Resource Planning
ERP Definition
integrates:
- product planning
- development
- manufacturing
- sales
- purchasing
- inventory
- marketing
ERP is the ____ that binds or integrates the different computer systems for a large organization
Glue
4 Major Reasons to have ERP
1) integrate all your key functions as a distributor
2) helps you do what you have to to do mo better
3) enhances customer service
4) increases visibility which enhances your ability to manage
Why sales analysis? Allows for stratification of ________
PRODUCTS & CUSTOMERS
Why Sales Analysis? How well are we doing?
- optimizing inventory
- making/optimizing profit
- meeting sales goals
- how is the salesforce doing
- do we need to make changes
Sales Analysis answers 3 questions
1) what are we selling
2) who are we selling to the most
3) who are my best salespersons
4) don’t forget the why? these happened
To be effective sales analysis should be ___&____ on the ___, ___, & ___
- HOLISTIC & FOCUSED
- past, present, and future
Buyers report card
- what’s the turn on inventory? too often/infrequent)
- are we optimizing inventory?
- problem areas?
Ideal Turnover Ratio
Between 6 and 12
Too high of inventory turnover means…
not keeping enough products in stock
Too low of inventory turnover means…
company keeps to much inventory
Order Processing
Selling
Pricing
Make money & remain competitive
Inventory Control
Managing the warehouse
Sales Analysis
what, who, & whom
General Ledger
Assets & liabilities
Accounts Receivable
Customer owes us
Accounts Payable
We own Vendor
Truck Routing
When & Who do I deliver
Transfers
Move from one branch to another branch
Receiving
Inventory In
Purchasing
Buying from vendors
Inventory Management
How much do we order & when
Factors impacting Inventory Management
- Market
- Economy
- Competition
- Vendors
- Customers
- Mother Nature
- Man-Made Events
ERP gives ROQ , but distributors ___&___ can change that
Knowledge & Experience
Objective of Inventory Management
OPTIMIZE inventory
Cycle Item
Regular buying pattern based on inventory management guidelines
FOR CYCLE ITEM, if effective quantity < line point…
order up to line point
EOQ Item
buy a larger quantity less often to reduce ordering/carrying costs
FOR EOQ ITEM, if effective quantity < or = line point…
order up to line point or EOQ whichever is greater
Inventory Management or control: How much do we stock
Inventory management
Inventory Management or control: what do we stock?
Inventory Management
Inventory Management or control: When do we order?
Inventory management
Inventory Management or control: How much do we order?
Inventory Management
Inventory Management or control: How do we organize our warehouse?
Inventory Control
Inventory Management or control: Where do we put item in our warehouse - row, bin, & shelf?
Inventory Control
Inventory Management or control: What is our inventory turn?
Inventory Control
Inventory Management or control: How do we handle our inventory?
Inventory Control
Inventory Management or control: Cycle or complete inventory?
Inventory Control
Inventory Management or control: How well are our vendors doing?
Inventory Control
4 Rs of Inventory Management
- Right Things
- Right Price
- Right Time
- Right Quantity
Pricing Hierarchy based on…
- Customers
- Vendors
- Products
- Combination
What’s in charge of “stock the right things in the right quantity”?
Inventory management & Sales Analysis
What’s in charge of “Sell of the right price”?
Order Processing, Sales Analysis, and Pricing
What’s in charge of “ship the right things to the right place at the right time”?
Order Processing & Cycle Counting
What’s in charge of “Use the right technology to do things the right way”?
ERP & CRM
What’s in charge of “Make happy customers”?
Customer Service