Well it is when you sell commonly in ones …

There are many products of course which are sold in ones. We might have two feet but we have one left foot and we have one right. We drive cars with one steering wheel. We usually buy one wallet, one handbag and one belt at a time. So yes, in these cases one may well be the right answer. But how often do our customers buy in quantities that suit our system’s abilities to calculate stock levels using such overly simple assumptions?

But it isn’t when your products are used in twos …

So many products are bought and sold in twos. You don’t often buy one coffee mug. More often you buy one each for you and your partner. Cars have two front wheel disc brakes. Many kitchens have two sinks and therefore two plugs.

Stocking one would clearly not be the right answer most of the time. One would be one too few. Three would be one too many. The stock level should perhaps be two, or for a higher usage product, four.

How often are your inventory levels out by just one? When you add up all the ones how much of your working capital are you wasting? In one typical customer branch we found that products sold commonly in quantities other than one represented nearly 30% of the stock (by product count and by value). Getting the levels right for such a large amount of stock can make a big difference to your balance sheet and your bottom line.

And it isn’t when your customers use the products four at a time …

Many beds have four castors. Cars have four tyres (not counting the spare) and all four will often be replaced together, or at least often enough to be very inconvenient for the customer and a lost sales opportunity if there are only two in stock.

Of course in this case stocking one would be absolutely useless. In fact it would be worse than useless, because the inventory is adding to your cost of working capital without adding any value. And don’t expect pack sizes to solve the problem all the time. Your supplier sells them to you in 12s.

And sometimes it might be prudent to stock nothing at all ...

And if perhaps your forecast of 0.5 per month really means just half a dozen each year or a dozen every other year, then perhaps it is wiser to stock zero. The carrying cost might well overwhelm the need to immediately service a customer in this case. It might be more profitable to transfer the stock in, or pop it in an air-bag when required by the customer. This might just produce a better return on assets. It would be nice of course if a system could help you determine when not to stock a low usage item like this, especially when you typically have tens of thousands of them.

And what about when the customer requires the product for preventive maintenance? They might be a mine or a factory planning a Christmas shut down. Perhaps the part is for a surgeon planning elective surgery in one month’s time. If there is time to ‘forward’ order the product for when it is actually needed, and that is the common scenario, then again, the right stock level may well be zero, even for a relatively high usage item.

So how can you make the right stocking decisions?

And what happens when you have a product that might be used in twos some of the time, fours another and perhaps even be sold in tens, 12s and even 20s, although rarely. Think about a set of car seat covers. For all four seats? Or just the two front ones? Spark plugs? Four, six or eight? It is important that you can easily determine what the most common frequencies are so that you can make prudent stock level decisions. And perhaps some markets buy in different quantities. A retail consumer might buy in twos, a small business in tens and a large remote business in 100s. Wouldn’t it be nice if you had something that helped you consider all these factors largely automatically? 

If a downturn hits ...

If a downturn hits and hits quickly it is often all you can do to cut and cut quickly. It is often crude and can hurt the business, your staff, your customers, your suppliers and you, personally. The C (of the ABC) items are cut back hard. The problem is that the C Items are where you made a lot of your gross margin and where service reputations are often won and lost. It is hard to do much more than that at times however as there can be many different factors to juggle.

... it can be hard to make the best decisions

Any one factor might be easy enough to comprehend. In the downturn interest rates might come down, often too slowly for your liking maybe, but they will still come down. Your customers will repair more than they replace. Plant utilisation will drop so planned maintenance and the forward orders for the Christmas shutdown will fall off – your customers will shift to break down repair and want replacement parts quicker than before. The product you used to sell in volume to the manufacturer collapses. The good news is that supply lead times improve as does supply reliability. The bad news is that it is just one of a dozen or so factors that you need to manage across all your products, suppliers, warehouses and market segments.

But then things turn for the better ...

Your manufacturing and building customers return to your order books. You survived the downturn better than some of your competitors. Lead times begin to creep up again. The bad news is that you have to translate all these changes in business conditions down to ‘days cover’ and other overly simplistic assumptions about how to manage your stock levels.

... and you can stay ahead of the business cycle

The good news is that you can manage these complex factors so that you can tune your inventory investment and purchasing decisions to stay ahead of the business cycles. micq-if can help you set overall and specific policies and then has the flexibility to help translate your objectives into inventory levels that make sense in the business environment in which you are operating. It can help you balance the breadth and depth of product your are holding, given the needs of your customers, the capabilities of your suppliers and your supply chain, and the profitability, service level and Return on Assets objectives that you have.

Read more on likely responses to downturns and upturns via the following questions:

1. How can I set the right branch or store inventory levels as business conditions change?
2. How can I adjust my inventory to the service levels provided by my suppliers during downturns and upturns?

Importantly micq-if can give you the confidence to ask the questions and find new answers to the challenges your business presents.

In normal times …

In the normal course of business you will probably have:

• Some items that are sold in reasonable volume, but a lot more that are sold or used relatively infrequently for breakdowns and repairs.
• Some products that might be very expensive that are ordered well in advance by customers so you don’t need to carry stock.
• Some items sold in twos (and maybe fours) where you either carry none, two or four, but not one or three. 

Your processes and systems are hopefully balancing the need for service levels, profitability and return on assets and getting the inventory range and depth decisions fairly right. You are comfortable with your inventory levels and the number of emergency orders when you do not carry the stock.

What happens (and should happen) during a down turn?

Risk needs to be avoided. Every dollar of inventory investment has to be stretched as far as possible. True for you, but also true for your customer.

Customers and users experience falls in the demand for the products and services. Larger OEM sales fall off. Production capacity and utilisation is less important. It is less important to conduct planned maintenance and there is a shift to breakdown repair. You are expected to stock vital parts and supply them quickly to even remote customers.

You may actually need to increase stock levels for some products (you might even see a revival of some older parts). In general however you will need to supply a broader range of parts at least in sufficient (although smaller) quantities to get the customer’s machinery and equipment back on line.

What response is needed as the economy recovers?

Customers and you will probably be fairly risk averse. There will be a reluctance to invest until confidence returns.

However now is the time of opportunity:

• Build on the customer loyalty generated as you ‘stuck together’ during the downturn.
• Some of your competitors will have struggled. Use your superior market and business intelligence and ability to get inventory depth and range right to create new customer relationships.
• Accelerate new products into the market.
• Retire the older lines that will no longer be needed, and use your cash for growth. 

Does it sound hard to do all these things with one system? It needn’t be. micq-if can help you manage:

• New ordering and carrying costs as business conditions change. What is right in one part of the business cycle, may not be in another and micq-if can help you adjust relatively automatically. In a downturn you may be happier to do replenishments more frequently. In an upturn interest rates will rise, and your spare capacity will be reduced.
• New service level targets and customer order lead time profiles – they may want products faster than normal, or they may shift to a planned maintenance approach giving you time to get the stock to them.
• New profitability and return on assets targets. At all times you want to make every dollar go as far as possible but especially when cash is tight. You also don’t want to have your people tied up manually overriding system generated min-maxes when a broad policy change is needed.
• Automatically recognise and shift pockets of excess as your existing inventory holdings cope with changes across your network … it is hard to get it perfect, but …

micq-if can help improve your ability to anticipate and respond to business changes, and to do so better than others. Why not get on the front foot?

See also:

• How can I adjust my inventory to the service levels provided by my suppliers during downturns and upturns?

A Downturn needn’t be all Doom

Maybe you have just got off the phone from your Marketing and Sales Director. You have just been advised that one of your fairly large customers to whom you supply a large volume of OEM parts has cut back dramatically. Unfortunately you reflect that this is the third call of a similar nature in the week. Conditions are tough.

Clearly in situations like this you will need to cut back on your own orders to preserve cashflow, but it need not be all doom and gloom. Your suppliers are experiencing similar problems. Their capacity is freeing up. Where once their lead times were months they might now be days. Plant capacity constraints for them are less of an issue now so they can actually improve their service levels. They can often improve their reliability during tough times as change overs between product runs are easier to do with less pressure on plant utilisation.

Now is the time when it would be nice if you were able to quickly tell your planning and purchasing systems that:

• Lead times will be shorter, and
• Supplier reliability is likely to improve, and
• Your warehouse staff, while you had to cut back a bit, now have more time to manage more frequent receipts, and
• While credit might be tight, at least the interest rates are coming down, and

… then have the purchase order recommendations and inventory and supply plans adjust accordingly (and easily).

Of course with micq-if you can quite easily adjust the profiles for the overall business climate and for your suppliers to reflect the changed conditions. And then you can get on with managing and rebuilding your business. A downturn can be a time to improve the resilience, capability and competitiveness of your business, by quickly adjusting to the new circumstances.

How to ride the upturn even faster

If upturns are not managed well there can be missed opportunities.

As the recovery starts you will see supplier lead times start to creep out again. There will likely be shortages for some products, and interest rates will start to rise. It will be important to anticipate longer lead times and pressures on suppliers, especially when rebuilding safety stock.

It is too late to order extra safety stock when you are ‘surprised’ by supply problems. Safety stock needs to be ordered in advance. What tools have you got to ensure that you can:

• track and adjust expected supplier lead times and reliability, and to the level needed?
• factor in the changed supply conditions so you can ‘stay ahead of the game’?, and
• tune your service level, profitability and ROA responses to improving conditions.

It will be important to have the supply when you need it. Using micq-if you can manage the emerging issues and opportunites proactively.

See also:

• How can I set the right branch or store inventory levels as business conditions change?

What happens when inventory is NOT matched?

How often does a similar conversation play out in one of your sales branches or retail stores? It mightn’t be a camera and a special lens. It might be a bearing and a seal. It might be a nut and a bolt. The mouse to go with the laptop. The staples for the stapler.

Why can’t customers buy things in the combinations we determine? In the ‘kits’ we have on the shelf?
Of course when potential customers come into the store they often know what they want and need. They have something to repair or fix and need items A, B and C. If you have A and B but not C, you can get C in but this means:

• The cost of ordering and time to follow up the emergency order
• Air bag and courier charges (a concern, even if the customer pays)
• The inconvenience to your customer, and damage to your service reputation (and in turn your gross margins)
• Loss of sales staff productivity

… all because your inventory was not ‘matched up’. Maybe kitting can help?

Kits and Matched Items Compared

One solution to ensuring you have the right inventory can be the use of Kits. However Kits, while an important capability falls far short of the potential of a genuine matched item capability.

Kitting can be a solution some of the time, however analysis from one situation with over sixty stores and thousands of products highlights that:

Only 6% of items which were identified as members of matched item sets had overlaps sufficient to even consider the possibility of kitting.  Matched Items can typically support over ten times the products that a conventional Kit capability can reasonably manage.

and …

of the top 35,000 items sold, 10% were in matched item sets but the items in the matched item sets represented some 30% of sales – important to get the range right.

How can inventory be matched and managed?

micq-if can help you recognise and track matched item sets. You typically only require monthly analysis at most because micq-if will bring significant patterns and any changes to your attention. With a small amount of effort you can review and set matched items for your entire sales network, because after all, the stapler will use the same staples irrespective of where it is sold, the photography enthusiasts will want similar combination of lenses across the country and machines will still wear out and need to be repaired in similar ways irrespective of whether they are in Melbourne, Auckland or Singapore.

The Perils of Overly Simple Approaches

Many ERP packages employ some very simple techniques to handle what are unfortunately very complex issues.

Comprehensive Solutions are needed

To handle supply planning properly you need to consider all the relevant factors.

Realistically it would be virtually impossible to consider all the factors that micq-if takes into account when preparing a supply plan. Things like:

Status of downstream warehouses (excess or deficit)

… and there are more factors like forward and back orders, display stock, costs (product, ordering, carrying), product popularity and risk profiles, shelf life, excess elsewhere in the network, changes in expected arrival of incoming supply, supplier and local holidays … all up, rather more than you can reasonably take into consideration with a simple ‘in the head’ or ‘days of cover’ type calculation.  Rather than making overly simplistic assumptions, micq-if recognises that supply planning is often difficult and complex.  micq-if can integrate the different factors, and help you arrive at a much more considered position on what your safety stock and supply plan position should be.

With micq-if you can spend less time on individual supply transactions and more on setting the overall policies and parameters which control the way your supply plans operate.

Forecasting is not the only factor to fix

Forecast sales is not the only factor that must be adequately estimated. micq-if also considers factors such as:

• the quantities in which products are commonly sold and with low volume products that may be even more of important factor than the forecast
• the variability of supply lead times might be more of a factor than demand variability and micq-if can help monitor and manage this very effectively too.

Is it worth getting the forecasts all right. It depends. In the case of higher volume products with some history the effort is probably not that great and the value may be high, especially for a seasonal product. If seasonal products represent just 10% of your range they will often generate 20% of your revenue and maybe more of your inventory risk

For a lower turnover product, the forecast may be less important than properly understanding other aspects of retail demand … and for those products, other features of micq-if and their effective use will be more important in creating value. micq-if can provide you with a comprehensive and integrated set of capabilities. Importantly it is not a ‘one size fits all’ system. It will adapt to the product, forecast, supply and supply chain situation … and apply the appropriate tools to help you make better purchasing and inventory management decisions.

Forecasting is not necessarily that easy … but it can be made easier

There are many issues that conspire to make things tougher for supply planners. Sales didn’t advise that they won the BIG order until yesterday. And they want all the stock when? Well that is hard to manage, but maybe you could manage that better if you had the time.

micq-if can help you improve your forecasting capability by:

• applying a variety of methods (Box Jenkins, moving averages, exponential smoothing, regression, and some special techniques for seasonal products)
• selecting the best techniques for the different time periods and lead times
• detecting and analysing seasonality even when seasons start at different times from one year till the next, often because it rained earlier or later, or was unseasonably warm in one year
• optimising the orders that need to be included in the forecast based on customer lead times and order sizes, and considering the relative costs of stock transfers as opposed to carrying costs
• recognising where there are step changes in demand (it would have been nicer if sales told you about the loss of those customers earlier though)
• highlighting via a simple review score and colour coded warning system to help you focus on where perhaps the system might have struggled to come up with a ‘right enough’ answer. This can be presented when you are reviewing the forecasts that are potentially relevant to imminently important purchase order recommendations, or else highlighted when the purchase order recommendations are placed in front of you – sort of “I think that this recommendation is right but you might just want to check the forecast.”
• linking your forecasts to external data to help improve forecasting quality, and
• helping you manage manual overrides and mark abnormal orders and record reasons where necessary

So the effort need not be that great, once you set up the system and ensure the staff are equipped to take most advantage from what the system can deliver.

The Challenges of a Large Product Range

Managing tens of thousands of products across a network, even just a thousand or more in a branch can raise many challenges, including: 

• As much as some branch, warehouse and product managers might like to think they can, it is beyond human comprehension to effectively manage that many products
• You have to find ways to manage often very low revenue items at low cost. The overheads of product management will defeat you if you do not have the right tools in place.
• If you have many branches and warehouses, the subtleties of regional variations can escape you because there is simply not the ‘bandwidth’ to deal with the complexity.

You break the problem up into manageable parts but the scale and the complexity conspire to raise your overheads.

Strategies and Tools to Help you Manage

micq-if can help you manage a large range of products through strategies, disciplines and tools that include:

• Identifying matched items from retail sales history
• Automatically identifying quantities in which items commonly sold, even for items with as few as ten sales.
• Helping you manage branch product range and depth even under changing business conditions
• Conducting ‘daily reviews’ of purchase order recommendations … yes you can do this effectively and efficiently, and achieve substantial benefits.
• Automatically identifying excess stock and moving it before it becomes too much of a problem, and do so via ‘business case’ reviews of every product across all your warehouses, every night.

Purchasing Reviews Every Day? No way!

You can easily be overwhelmed by the workload involved in managing a large range of products, especially where there is a long tail of low volume products. Many existing purchasing strategies try to manage the workload and organise reviews via things like:

• Buyer groups which enable products to be reviewed in sets. The buyer groups are organised by attributes like suppliers and perhaps popularity and product type.
• Purchasing officers are assigned a set of ‘buyer groups’ and then work to a calendar, so that perhaps every week they review the most popular products but then review the less popular ones, for example, only once a month or perhaps even less.

These sorts of strategies often contribute to significantly higher inventory levels through greater cycle and safety stock. However people are often very reluctant to change as these strategies have helped organise and manage the purchasing activity for a long time.
Some of the reasons commonly advanced for not changing approaches include:

• Low demand products are not ordered that often so they don’t need to be reviewed that often.
• Reviewing more often will create more workload for purchasing officers, for warehouse staff and for accounts payable who will have to manage higher transaction loads.
• We have minimum ordering quantities and this means that we cannot order too often.
• Suppliers will only accept orders once a month anyway.

The last of these reasons is more difficult to address but the rest, while they have some merit, are ultimately not valid justifications as there are far better strategies available via a product like micq-if.

Without micq-if, strategies like buyer groups and calendars also often lead to perverse effects like:

• surges in receipting activity linked back to the original ordering events. This can lead to delays in moving and managing stock.
• increased safety and cycle stock requirements. Reviewing once a month may well reduce order volumes by half but they may also raise inventory levels by 50% too.
• reduced service levels and higher emergency order costs

Yes! You can review every day!

micq-if can help you manage more regular reviews (even daily) with strategies like:

• monitoring inventory levels and sales and predicting when you will need to resupply – like a pro-active reorder point.
• Purchase order, supply plan and forecast scores to help guide you to areas which really need review

Taking advantage of these capabilities can give you the opportunity to improve purchasing productivity and service levels and reduce inventory at the same time. You can lower your costs of ordering, giving you the opportunity to increase your ordering frequency. Your inventory can be more responsive to customer needs.

The default review frequency is actually Daily. This DOES NOT MEAN that you will be being asked to review purchase order recommendations for every item for every warehouse every day. Rather it means that the system will have the opportunity to make appropriate recommendations should they be needed, rather than wait until some review calendar says the time is right. 'Daily' should not mean any higher volumes of purchase orders and 'Monthly' or 'Fortnightly' frequencies will inevitably lead to higher inventories.

What is the ‘cost’ of shipping ‘air’ versus the cost of carrying stockearlier than needed?

On the face of it, the decision can be reasonably simple. Evaluate the carrying cost of the stock that you have to bring forward to fill or partially fill the container and compare that with the savings in freight you can expect.

However is that the complete question?

But that then begs the question, when is the next container expected to ship? And how full will that be? And if it is full with bulky items is it better to keep your options open and ship some bulky items sooner? If you over-order now which products should you order and in what quantities? Does your supplier have a minimum order value? A set of discount breaks? Are you consolidating multiple suppliers into the one container? If you ship it now what effect might that have later?

Fortunately micq-if can help you balance all these decisions and the benefits could easily amount to thousands of dollars.

VS 

Purchasing Officers know that they have to remember Chinese New Year and the Italian Summer Holidays.  If they don’t then it may be several weeks or a month before there is another ordering opportunity.

They have calendars and spreadsheets with reminders to ensure they don’t miss the ordering window.  And they do things like ‘doubling’ the order to cover the holiday period.

With micq-if it can be much simpler.  The holiday is recorded against the supplier.  When the daily supply planning calculations are done they can consider any interruptions, and not only to your suppliers, but also to your own operations.

And, micq-if will also take account of the forecast and supplier lead time variability pertaining to the holiday period(s), so it will dynamically adjust the safety and the replenishment stock quantities … and you don’t need separate follow up and reminder systems.

Incentives for Bad Habits

Supplier rebates are not normally offered idly. While minimum orders and order quantity and value breaks can often be justified in terms of supplier cost management, rebates often have slightly different motivations. They can be cashflow injections or ‘profit presents’ when needed. They can be addictive. They can cause you to buy too much of something you don’t really need right now and then pay for it over time after the ‘high’ of the rebate wears off.

Winning by their Rules

Well it depends …

Where you order from depends on the merits of each case:

• If you have one years stock stuck in a warehouse but the total stock valuation is only worth $0.50 (it might be a very cheap o-ring, for example), then it is probably not worth bothering to move the stock at all. Picking, shipping and putting the stock away in the new location may just not be justified.
• If on the other hand for a rather costly product from one warehouse demand has evaporated then it will probably make very good economic sense to move the stock to fulfil a need elsewhere.
• If stock is currently in excess (say three months over-stocked) then it might not make much sense at all to move it. It will only have to be reordered sooner anyway and the three months of excess will eventually run down, and might well save the cost of an order.

Daily monitoring and management of excess

Realistically it is impossible to make forecasts perfect and you can never carry enough stock to cover every eventuality. You will lose customers from time to time. New products will take off faster than you anticipated. Poor disciplines also may lead to staff over-ordering. When they need two, they order ten. The price was difficult to resist. You will from time to time have pockets of excess stock.

micq-if recognises this certainty. Every night it can check the stock holding for every warehouse holding the product. This can be compared with the forecast and forward orders need for that stock. Where new stock is to be ordered externally it can evaluate whether that is the most appropriate decision by considering:

• the relative cost of purchasing versus raising an order to ‘move the excess’.
• the transport costs from one warehouse to another, and
• the cost of continuing to carry the stock in the location that has the excess.

This can all be being checked while you sleep. Hundreds of business cases can be raised and evaluated. If they are worth doing, next morning you will have a recommendation to move the excess rather order externally, if that is the most appropriate decision ... you just need to set the rules.

Even modest levels of Complexity: An Opportunity rather than a problem

Managing complexity is part of most distribution businesses.  How well you manage that complexity often influences the level of profitability you can achieve.  But what happens when the business is greatly simplified to just importing a few containers a month?  Well there often are still more than enough variables for you to encounter significant challenges in managing your business.  You still have to answer many questions.

micq-if can help you juggle all the different decisions that in reality need to be made.  If you think about all the decisions that need to be made and need to be made often under time and cost pressure, there are often significant benefits to be had.  micq-if can help you make the BIG decisions rather than being weighed down by all the little day to day ones.  So you can focus on managing and growing your business rather than just managing each transaction and hoping it will all turn out right in the end.

The Case(s) for Change

In spite of the fact cash might be a bit tight right now the case for change might still be fairly compelling, including:

Individually all the potential benefit areas might appear a bit small at first glance.  But add them up.  5% here and 5% there can add up to large benefits fairly quickly.

A positive effect on Cashflow

micq-if can be packaged so that you can implement it relatively easily and that means you can start to reposition your business and improve your balance sheet and profitability with an investment strategy to suit. We can help you develop an appropriate strategy that makes sound strategic sense and delivers net benefits quickly. When there is an opportunity to have a positive effect on cashflow, and quickly, can you afford not to investigate the possibilities?

Happy with most aspects of your ERP system?

Branch staff comfortable and used to order and invoicing approach but have to follow up emergency orders, lose sales, cut prices...

Basic forecasting and inventory level setting techniques which struggle to handle seasonality, low demand, long 'tail' product ranges...

You may well be happy with most aspects of your ERP system. After all, your branch staff are all trained. The system processes orders and invoices very effectively. Your investment has been mainly a good one. There is little pressure to upset this happy situation, except that the system is not so good at handling forecasting. Its ‘days of stock’ approach struggles with many low volume products. It keeps recommending you stock 1 when you know people use two at a time. You need to do a lot of manual overrides where the system cannot cope.

You might be able to ‘supercharge’ your existing ERP system?

Improved product range with fewer emergency orders, greater prductivity, improved inventory turnover, improved service, satisfaction and sales...

Advanced Inventory Mangement capabilities including: Matched Items Common Quantities Inventory Level Optimisation ...

You can greatly extend your capabilities by ‘bolting on’ micq-if, a bit like adding a supercharger to an existing motor vehicle. You can protect and leverage your existing ERP systems investment (I.T., processes, staff knowledge, culture). micq-if can use your sales history and handle your planning to produce better mins and maxes and purchase order recommendations which can be fed back into your original ERP system. The branch staff will like not having to waste as much time following up emergency orders. You can realise the potential benefits of improved inventory utilisation and profitability. You may well be able to reposition your organisation in terms of customer service, satisfaction, reputation … and gross margin opportunity.

An approach that puts you in charge

micq-if can potentially help you deliver benefits across many areas.  Importantly it can help you choose where you can save and where perhaps you should invest.  Ultimately the choices however are up to you.

Unlike many packages which adopt simple inventory management practices like ‘days’ or ‘months of stock’, micq-if can employ an array of approaches which handle the complexity of real supply chain issues.  micq-if can be tuned via a series of policies that you set, at whatever level is appropriate: overall, for a state, for a class of products or perhaps one warehouse or store.  You decide how you want to manage your supply chain and your product range and micq-if can handle the millions of detailed decisions that flow from the policies and rules that you set.

Many possible benefits

So what sort of benefits might be possible?

And there are more potential benefits:

• Standard abilities to track and react to key supply chain variables, like supplier lead times and reliability, providing you with the analyses you need to stay on top of your business.
• Rapid identification of any stock deficits, so you can take the right recovery actions as quickly as possible.
• The tools and techniques to more easily stay ahead of the business cycles.
• Managing rebates so that you gain the benefits offered by supplier incentives without over ordering and creating excesses which take a long time to work out of your inventory.
• Planning what you should order in the next container shipment, so that you can optimise ordering, transport and stock carrying costs.
• Automatic identification of any stock excesses and movement to more appropriate warehouses … running business cases on any excess stock situations every night, helping you to ‘control’ the inevitable imbalances that will occur. micq-if will not make your inventory management perfect. However it will help you get a lot closer to optimum performance.

There is no escaping the need for disciplines and cultural change

Whatever system you employ disciplines will be important. If people don’t trust the system, or if they need to inspect its recommendations, your inventory systems investment will fall short of its promise. If matched items are not periodically reviewed (albeit by perhaps just one person for the entire country), and if supply managers don’t periodically review supplier performance and adjust lead time and supply variability expectations accordingly, then you will not realise the benefits that are potentially possible, at least not for long.

micq-if can help you follow important disciplines and achieve cultural change

Perhaps you have to ask, if better disciplines can deliver you results, why have they not worked so far? Maybe applying the necessary disciplines is hard. micq-if has been developed to handle real situations where people might be suspicious of change and where they don’t always practise the best disciplines, so, for example it:

• helps you track any overrides, including the responsible person, the reason and for how long any override should remain in force
• highlights where you need to focus your forecasting and supply plan reviews, and where you can just let the system run your supply chain on auto-pilot
• tracks activities and changes so you can focus on where training, process change and other interventions might be necessary, and … it is supported by extensive help, training and video tutorials to help you enforce good disciplines.

There are however some things that no amount of disciplines and processes can deliver

Disciplines can only deliver so much. There are some things that are simply beyond the capability of human processes. For example:

• In a typical branch with 6,000 products, fully a third may be sold in common quantities that are 2 or greater. Recognising this from the raw retail sales data, and then maintaining the reference files is almost certainly not feasible without a lot of computer aided support. And then you throw in the likelihood that some retail outlets will sell in ‘uncommon quantities’ … it just becomes too hard when you have maybe tens of thousands of products and tens or maybe more warehouses. micq-if has however a proven record of handling these situations with little or no intervention.
• If you are looking out over the next 4-6 months and trying to plan out when you need to ship containers, for perhaps multiple consolidated suppliers, and maybe a couple of thousand different purchase orders there are literally millions and millions of possible combinations that affect volume, weight, transport costs, carrying costs … they are beyond human comprehension. micq-if can help handle these kind of operational decisions quickly and easily.
• You know you have an emergency order problem. The air bag bill is too high. Across millions of orders and tens of thousands of products how do you manually deduce which products need to be matched up to deliver customer solutions. micq-if can help you develop this retail sales intelligence and then apply it to your retail stock levels, so that you reduce emergency orders while still improving inventory turns.
• You can take into account the complex set of factors which in reality need to be considered for each supply planning situation. micq-if can help you evaluate the inter-play of over twenty different factors but do so in a way that enables you to cost effectively manage a large product range.
• micq-if can help you can conduct inventory and supply planning reviews effectively every day, but in so doing actually reduce your workload.