Inventory management is crucial to ensuring businesses have agile and efficient supply chain operations. However, having control over every inventory item often ends up being a time-consuming and frustrating endeavor for most inventory teams, as they rarely have the right tools in place to get the job done well. This is where an inventory optimisation tool comes into play.
Inventory optimisation is the next level up from basic inventory management processes. Where inventory management helps a supply chain get by, inventory optimisation solutions help a supply chain excel and thrive.
Inventory/supply chain managers using inventory optimisation tools have the ability to lower their stock levels, boost their service levels and free up both capital and time. Inventory optimisation affects so much more than just the warehouse – when inventory is optimised, the entire supply chain runs seamlessly and effectively.
Most ERP inventory management modules have basic functionality to allow customers to manage stock across their supply chain. What most ERP’s don’t deliver, however, are the inventory optimisation features for even greater success.
This is true of Acumatica. The cloud-based ERP provides limited inventory management capabilities, which, for companies who need simple inventory control features, are sufficient. With Acumatica you can manage multiple warehouses, see what inventory you have available, classify your items as stock or non-stock, determine min/max inventory quantities, set a fixed order quantity for certain reorder points and keep track of transactions.
But these capabilities will only take you so far. For businesses with a dynamic supply chain that are continually managing fluctuations in demand and supply, they need more advanced inventory management functionality – they need a dynamic inventory optimisation system.
EazyStock is a cloud-based inventory optimisation solution that integrates directly with your existing ERP to automatically feed data back and forth. When you add EazyStock to your Acumatica ERP, you get a whole new view of your inventory. Let’s take a look at a few of the areas where EazyStock enhances Acumaticas’s capabilities.
With the Acumatica ERP you can manually set your replenishment parameters using the minimum/maximum quantity method (“min/max”). The maximum quantity is the maximum amount of stock allowed per item in the warehouse. The minimum quantity is the reorder point for an item and this is determined by how much of it you’ll need during the lead time, plus the amount of safety stock you keep on hand.
In comparison, with EazyStock, replenishment is automatically calculated for every SKU in your portfolio. Taking a daily feed of point of sale data, current stock levels and stock-on-order, EazyStock then begins to crunch the numbers.
First EazyStock will update demand forecasts – the demand for every item in your warehouse is automatically analysed and categorised into one of nine demand types, based on their position in their product life cycle. It also identifies items with seasonality and has the ability to take promotional activity into account.
With forecasts updated, EazyStock will then ensure inventory levels are optimised, to prevent overstocking and obsolescence, whilst ensuring there is enough of every SKU to cover demand. It does this by classifying every inventory item based on it’s demand type, it’s demand volatility, its pick frequency, it’s cost to sell and the target service level you wish to achieve. For example, for items that have erratic, slow sales and are expensive to sell, you may decide to set lower service level targets than items that sell consistently well and are cheap to stock. EazyStock will update these stocking policies on a daily basis, so inventory levels are always optimised.
Finally, EazyStock calculates your optimal replenishment parameters. These take into account the demand forecasts, safety stock levels, service level targets and your suppliers’ lead times, to ensure items are ordered at the right time and in the right quantity to meet demand, without leading to excess stock.
Whilst Acumatica allows you to set replenishment parameters, these must be calculated outside the system and then manually added and updated. This takes time and can result in errors, leading to stock outs or excess inventory. The great thing about EazyStock is that it automatically analyses your stock levels, forecasts and supplier constraints – on a daily basis – dynamically adjusting your replenishment needs accordingly. This means you no longer have to spend hours slogging through spreadsheets of SKUs to work out what to order. It removes the need for complex spreadsheets and frees-up time for more strategic activities.
EazyStock recommends a daily list of orders that will ensure you have exactly the stock you need when you need it. This list can be manually checked by your team, or sent automatically to Acumatica, ready for them to raise their purchase orders. EazyStock also offers a wide range of alerts and reports that help teams focus their efforts on stock items that need attention. For example, the risk of run-out report provides a list of items which are likely to run out if action isn’t taken to place an order.
EazyStock offers a wealth of functionality to help you manage your suppliers. Firstly it will track their lead times and dynamically adjust reorder points and quantities if they begin to deviate from the norm. Secondly it will produce order schedules (order projections) that you can share with suppliers, so they have a heads-up on the orders you’ll be placing in the future. Thirdly, you can create order calendars which adjust reordering to account for supplier shut downs, such as national holidays, or internal operational restrictions, such as preventing deliveries on weekends. Finally, EazyStock has the ability to work with min/max order quantities, so when you need to fill up an order to reach a maximum value or quantity, you can select from items that meet these criteria and are next up to be ordered from that supplier.
When you use an inventory optimisation tool the positive effects are felt all along the supply chain. Not only will communication with your suppliers improve, but your customer service levels will excel, since you’ll always have exactly what you need to fulfill customer orders. In addition, your warehouse(s) will become more organised since you’re eliminating excess and obsolete stock and filling your shelves with items guaranteed to bring in revenue.
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