Frequently Asked Questions

How can I reduce inventory levels and workloads by undertaking purchasing reviews every day?

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.