Stock Optimizer System
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The document discusses 6 steps for optimizing logistics processes: 1) ABC analysis to focus on important products, 2) XYZ analysis to classify products by demand predictability, 3) cross-analysis of ABC/XYZ results to determine strategy, 4) detecting "dead stock" to reduce costs, 5) calculating safety stock levels based on importance and demand fluctuation, 6) maintaining inventory accuracy which is everyone's responsibility and aided by software. The purpose is to simplify processes and direct efforts to the most profitable areas.
Stock Optimizer System
- 1. 2010 LOGIKO Logistics Consulting 1st STEP - ABC Analysis: Not all products are equally important. You certainly have enough work to do and therefore you can not spend the same amount of time with products that can hardly be sold as with the best-sellers. The ABC analysis is supposed to enable you to focus on the essential processes in the supply chain. Its goal is to separate the essential from the nonessential. The focus of this activity is to be directed to the most profitable area (A parts), while the costs in the other areas are to be reduced by the simplification of processes (for example, by implementing a usage control). The ABC analysis is a primary analysis. It can be used as a basis for follow-up or secondary analyses such as the segmentation or the XYZ analysis. www.logiko.hr | What can Stock Optimizer do? Page 1
- 2. 2010 LOGIKO Logistics Consulting Export to Excel: www.logiko.hr | What can Stock Optimizer do? Page 2
- 3. 2010 LOGIKO Logistics Consulting 2nd STEP - XYZ analysis Surely you agree that for some items are easier to forecast demand than for some others. This analysis helps you to find items easier to forecast so you can automate their ordering and spend more time to forecast demand for those (items) which are more difficult to predict. The XYZ analysis enables you to perform the next step of the inventory analysis and tells us about the fluctuation of demand for some products The following typical classification has been generally established: X materials - characterized by a constant, non-changing usage over time. The requirements fluctuate only slightly around a constant level so that the future demand can basically be forecast quite well. Unfortunately, experience has shown that even the forecast for X products can be poor. Y materials - The usage of these materials is neither constant nor sporadic. With Y materials, you can often observe trends, for example, that the usage increases or decreases for awhile, or that it is characterized by seasonal fluctuations. For these materials, its harder to obtain an accurate forecast. Z materials - These materials are not used regularly. The usage can strongly fluctuate or occur sporadically. In these cases, you can often observe periods with no consumption at all. The creation of a forecast is extremely demanding and very difficult. It is useful to further subdivide the Z materials into Z1 and Z2 materials, the latter being used even less regularly than the Z1 materials. This enables you to trigger detailed counteractive measures for particularly critical materials. www.logiko.hr | What can Stock Optimizer do? Page 3
- 4. 2010 LOGIKO Logistics Consulting Export to Excel: www.logiko.hr | What can Stock Optimizer do? Page 4
- 5. 2010 LOGIKO Logistics Consulting 3rd STEP - cross analysis of ABC / XYZ In order to provide a fuller interpretation of the results obtained with the ABC and XYZ analysis it is possible, and necessary to make cross analysis ABC / XYZ. From this analysis we get nine groups of products with the characteristics of ABC and XYZ analysis, to which can you make then an individual approach and determine the strategy of procurement and storage for each and every of them separately. www.logiko.hr | What can Stock Optimizer do? Page 5
- 6. 2010 LOGIKO Logistics Consulting 4th STEP - "Dead" stock How to detect "dead" stock at an early stage when we stil sell them - but slower, so that later they do not become pure cost. Analysis of the Inventory turnover allows us to detect "dead" stock on time in order to proactively reduce the costs of their care in the future. www.logiko.hr | What can Stock Optimizer do? Page 6
- 7. 2010 LOGIKO Logistics Consulting 5th STEP - Safety Stock calculation on the basis of preferred stock availability and ABC & XYZ analysis: Cost of Inventory can be a substantial amount of money. But it is possible to define a safety stock for each item based on desired availability and in accordance to importance and fluctuation of items. So this cost could be lower if you use calculation of Safety stock with Stock Optimizer. www.logiko.hr | What can Stock Optimizer do? Page 7
- 8. 2010 LOGIKO Logistics Consulting Export to Excel: www.logiko.hr | What can Stock Optimizer do? Page 8
- 9. 2010 LOGIKO Logistics Consulting 6th STEP - Having problems with inventory accuracy? Maintaining inventory accuracy must be an integral part of the attitude of the organization. Like quality, customer service, and plant safety, accuracy must be promoted throughout the organization as everyone's responsibility. Yeah, I know it's easer to say it than to do. That's why LOGIKO designed and developed this functionality to make it easier for you in maintaining inventory accuracy. www.logiko.hr | What can Stock Optimizer do? Page 9
- 10. 2010 LOGIKO Logistics Consulting Export to Excel: After selecting the day or week in which we want to make a cyclical counting by clicking the Save button, the system exports the list of items to be counted. www.logiko.hr | What can Stock Optimizer do? Page 10