2005 grant w. howard company 1 grant w. howard 13214 wallace road manchester, mi 48158 (734)...

2005 Grant W. Howard Company 1

Grant W. Howard

13214 Wallace Road

Manchester, MI 48158

(734) 428-0529

[email protected]

Profitability, Longevity and Growth

The Next Level


Our Discussion Today

The Big Picture The Replenishment Process Getting Results:

– Customer Service:» Path to Success» Getting Results

– Profitability:» Path to Success» Getting Results

The Power of Your System Summary - Some Final Thoughts

Through Slide 33 - “Lite” System and Summary

“Discussion”

Today is different from the last two days… Day 1 - How it Works, Day 2 - How to Use it

Today - Less whiteboard and system, and more how to

make it all come together to GET RESULTS!


Profitability

Longevity

Growth

Warehouse

Sell

Procure

Customer Service

Vendor Performan

ce

Employee Happiness

Education and

Understanding

Communication,

Structure, and Team

Systems and ToolsProcesses and

Procedures

Owner’s Returns

and Happines

s

The Fundamental Tree

Service, GM Improvement, Asset Manage-

ment, Efficiency, Accuracy


Profitability, Longevity and GrowthProfitability ($&%): GM Improvement ($&%):

– Sales Increase - Loyalty:» Sell Price x 2» Lost Business and Backorders» More of Customer’s Business» New Business

– COGS Decrease/Supplier Negotiations

Expense Reduction:– Asset Management:

» Freight Reduction» Cost to Carry Reduction

• Rifle Approach• Surplus, Safety Stock, RC/OC/OQ

» Replace Freight & Inventory with ...

– Efficiency and Accuracy:» Cost to Replenish Reduction» Replace Costs with ...

Longevity: Customer Loyalty:

– Customer Service:» Fill Rates» Backorder Handling» On-Time Delivery» Accuracy - Product, Price, Quantity,

Terms

– Ability to Solve Customer Issues– Use Technology to ...

Dynamic - its Critical:– Adaptability to Market Changes– Use Technology to ...

Growth: Existing Customers:

– Lost Sales and Backorders– Depth of Customer’s Business

New Customers


Procure: Inventory

Management/Control Operations Sales Marketing Systems and Technology

Warehouse: Operations Inventory Management/Control Systems and Technology Sales Marketing

Sell: Sales Marketing Inventory Management/Control Operations Systems and Technology

Seems to be a Pattern?

Where does Management fit into all

of this?



Customers: Availability Backorder Handling On-Time Delivery Accuracy

– Product

– Quantity

– Price

– Terms

Win-Win MEASURE

Vendors: Win-Win Not Just Price MEASURE

Employees: Want to do a Good Job Balanced Objectives/Team Tools, Processes, EDUCATE! Remove Stress, Give Method Win-Win MEASURE



Communication, Structure and Team: Companies need to have a team concept, KNOWN balanced objectives, with a way to get there - Management!

Systems and Tools: Companies need to understand and use more than 20, 30, 50% of their systems!

Processes and Procedures: Companies need to have closed-loop, actual working processes and procedures!

Education and Understanding: Companies need to education their people and help them be part of the solution!



Inventory Management

Getting ResultsWhen, What, How Much


The Replenishment Model

A Good Replenishment Model addresses the two objectives of

Customer Service and Profitability

WhenWhen to Replenish? to Replenish?

What What to Replenish and to Replenish and How muchHow much??

What is incoming and will be late?What is incoming and will be late?

What is incoming and will be early or is not needed?What is incoming and will be early or is not needed?

What is not needed?What is not needed?


PNA/Level

Surplus Point

Line Point or Max/EOQ

Order Point or Min

EOQ

Order Cycle

Lead Time

Safety

When to Replenish?

What is not

needed?

What to replenish and How Much?

When, What, How Much?

What is not Needed?

The Basics - Make Sure


“When and What” “When to Replenish”

– Target/Incentive and RC - Profits– BOP with Target/Incentive and RC considerations

- Profits and Service “What to Replenishment”

– Line Buy (Make Target)– Fill In/Emergency Buy– Transfers– Do Nothing

Cost to Carry versus Freight, Price and Service


“What and How Much”

Line Buy/TransferItems Below LP

Order Quantity:

1. Up to LP

2. Compare to SOQ

3. Minimum Run

4. Vendor/Transfer Package

Fill-in Buy/TransferItems Below OP/“Cycle*”

Order Quantity:

1. Up to OP/”Cycle*”

2. Compare to SOQ?

3. Vendor/Transfer Package

* It is important to replenish items not only below OP, but also the items below the “Cycle”. These items should be replenished at least back up to

the “Cycle”. Cycle is the days left in the cycle (OC - (Today - LLB))


Data

Usage - OE/WT

Lead Time - OE/WT

Level/PNA Info - OH & Paperfloat

Purch Hist

Set-up

“Smart” Set-up

Co. and Whse.

Product Pline

Product Master

Product Whse.

The Numbers

Hits/Ranking

Order Cycle

Ave Usage, Safety, OP, LP, Order Quantity

Replenishment

Buyer’s Ctrl Center

Items BOP/Priority

Timeline Analysis

Too Late

Too Early

Surplus Inventory

External/Lng. Term

Internal/St. Term

Measurement

Fill Rate, BO’s

Turns, Excess, Mix

T&E, GMROI

Maintenance

One Stop Inq/Maint

Proofs/Mass Update

Exc Control Center

The Tools

Data to Info


Data

Usage - OE/WT

Lead Time - OE/WT

Level/PNA Info - OH & Paperfloat

Purch Hist

Set-up

ICSR - “Smart”

ICSD - Whse

ICSL - Pline

ICSP - Prd Master

ICSW - Prd Whse

The Numbers

ICAI - Rank

ICAR - RC

ICAMM - AMU, Safety, OP, LP, OQ

Replenishment

POERR/WTERR

POERA/WTERA - BCC

Timeline Analysis

ICRIG - Too Late

ICRIG - Too Early

Surplus Inventory

ICRIS - Ext/LT

ICRIS - Int/ST

Measurement

ICRIF - Fill Rate

ICRIT - Turns

ICRIR - T&E

Maintenance

POERA - One Stop

Proofs/Mass Update

ICAMU - ECC

The Tools

Data to Info


Getting Results!


Service - Fill Rates? How well a business meets its customer’s needs - pulse

of customer’s happiness/loyalty. What to measure:

Fill Rates = Shipped/Ordered

Quantity: 9 out of 10 = 90%

Line Item SC: 9 out of 10 = 0%

Order Ship Complete?

What should Fill Rates be? The report is broken?


Profits - Turns? ROI?

Freight, Cost to Carry and Cost to Purchase

Maximize the Bottom Line

C to P Turns

80’s $10.00 2-3

90’s $5.00 3-6

00’s $2-3.00 6-10

EDI/VMI $0.13?

Many companies are increasing the turns, but the infrastructure does not support it; bottom line, longevity and growth are all suffering! Customer

Service, GM Improvement, Efficiency, Accuracy, Asset ManagementP

rofi

tabi

lity

Turns


Know the Right Things to Do

Do these Things Right

Inventory Management is at the Time of Replenishment, the

“When, What, and How Much”. Everything else is Reacting.


Service and Profit - Balance

Hits H H L L

Cost L H L H


Inventory Management Objectives

Customer Service Availability (Fill Rates)

Proper Backorder Handling On Time DeliveryAccuracy: Item, Quantity, Price

Profitability (ROI)GM Improvement (Sales and Cost)

Freight Considerations - OC AnalysisEfficiency & Asset Mgt: CtoC and CtoPSurplus Inventory & Safety InventoryTurns/Days supply, ROI/T&E/GMROIWatch the C to P

(Purchasing/Replenishment, Receiving &

Put-away, A/P)

Watch the C to C

(Warehousing, Handling, Obsol. &

Shrink, Taxes, Ins, Interest)


The Path to Success - Service1. Accurate Order Point:

– Usage:» Data Collection, Lost Business, Inputs» Method and Window» Seasonal Trending, Advance by Lead Time,

and Shift» Roll Up» Correct Paths» Usage Forecast Accuracy Analysis

– Lead Time

– Safety:» Safety by Rank/Hits/Velocity» Safety Method by Lead Time» Safety Analysis

– Customer Buying Habits

– Data, Parameters, Forecasting

2. Accurate Level:– On-hand Integrity

– Paperfloat Control

– BIIS

3. Replenish at Order Point:– BOP and Prio

– POERA

4. Monitor Changes/Timeline:– Timeline “Gap”/”Too Late”

– ICRIG


The Path to Success - Service

5. Closed-loop Backorder Process - Service

6. Keep it Working - Maintenance:– Get out of the “Yellow Sticky World”

– Watch for Suppressed with Activity

– POERA, WTERA, ICAMU

7. Measure and Monitor:– Drill in, Rifle Approach - Don’t Shotgun Approach it, just $$$ and

disappointing results.

– ICAMU, ICRIF

8. Receiving, Put-away and Backorder Handling - Service

9. Picking, Shipping and On-Time Delivery - Service

10. Billing - Product, Quantity, Price, Terms - Service


1. Right Inventory not Suffering because of Wrong

2. Controlled Replenishment

3. Stocking Policy

4. Good Numbers and Proper Use of Them (OP, Level, LP, and OQ) - Path to Service:– Replenish at Order Point - Prio

– Usage: Lost Sales, DP

– Freight/C to C vs Service

– Line Buy vs Emergency Buy

– Understand LP and OQ Effect

Customer ServiceAvailability, Backorders, OTD, Accuracy

5. Operations:– Backorder Policy and Handling

– On-Time Delivery

– Accuracy of Shipments and Billing

6. Fill Rates - Monitor, Drill Down, Find Areas of Improvement

Back to Basics


7. Understand and Use:– Customer Buying Habits

– Timeline Analysis

– NOOS Policy and Procedure

– Smart Selling/Transferring

8. Follow LP and EOQ Suggestions:– Too many Fires

– BOP but not at Target Problems

9. “Never-Arrive” Incoming

10. Safety Stock Increase:– Safety Analysis (Over

Utilizing)

– Safety Increase:» Use a Rifle Approach

» Watch the Profits

Stellar Customer Service does have to drive your inventory through the roof, it just has to be done smart.


Keys to Good Fill Rates



Customer Service Improvement: Availability Backorder Handling On-Time Delivery Accuracy - Product,

Quantity, Price, Terms

GM Improvement, Service, Efficiency, Accuracy, Asset Management


Inventory Management Objectives

Customer Service Availability (Fill Rates)

Proper Backorder Handling On Time DeliveryAccuracy: Item, Quantity, Price

Profitability (ROI)GM Improvement (Sales and Cost)

Freight Considerations - OC AnalysisEfficiency & Asset Mgt: CtoC and CtoPSurplus Inventory & Safety InventoryTurns/Days supply, ROI/T&E/GMROIWatch the C to P

(Purchasing/Replenishment, Receiving &

Put-away, A/P)

Watch the C to C

(Warehousing, Handling, Obsol. &

Shrink, Taxes, Ins, Interest)


The Path to Success - Profits1. Accurate Line Point and Order Qty:

– Accurate Order Point

– Usage:» Data Collection, Exceptional Business, Inputs» Method and Window» Seasonal Trending, Advance by Lead Time,

and Shift» Roll Up» Correct Paths» Usage Forecast Accuracy Analysis

– Accurate Review/Order/Transfer Cycle

– Proper OQ Parameters and Controls

– Proper Understanding and Use of LP and EOQ

– Data, Parameters, Forecasting

2. Accurate Level:– On-hand Integrity

– Paperfloat Control

– BIIS

3. Replenish the Correct Qty:– Line Point, OQ, Pkg

– Making Targets Properly

– POERA

4. Monitor Changes/Timeline:– Timeline “Too Early”

– ICRIG


The Path to Success - Profits

5. Surplus Identification and Disposition Process

6. Keep it Working - Maintenance:– Get out of the “Yellow Sticky World”

– Watch for slow/inactive stock items

– POERA, WTERA, ICAMU

7. Measure and Monitor:– Drill in, Rifle Approach - Don’t Shotgun Approach it, just $$$ and

disappointing results.

– ICAMU, ICRIT, ICRIR

8. Receiving, Put-away and Backorder Handling - Efficiency

9. Picking, Shipping and On-Time Delivery - Efficiency

10. Billing - Product, Quantity, Price, Terms - Efficiency


ProfitabilityGM & Expenses (Freight, CtoC, CtoP)

1. Stellar Customer Service

2. Controlled Replenishment

3. Stocking Policy

4. Good Numbers and Proper Use of Them (OP, LP, OQ, Level) - Path to Profitability:– Up to LP, OQ, Min, Package– Usage: Exceptional, DP– Targets/Incentives Properly– Line Buy vs Emergency Buy– Availability (Sales, GM, Fires)

5. Vendor Performance and Negotiations

6. T&E and/or GMROI - Monitor, Drill Down, Find Areas of Improvement

Back to Basics



7. Excess and Defective Control:– Prevention

– Disposition

8. Order Quantity Reduction:– OC/RC (LP) Reduction:

» OC/RC Analysis/Paths, Watch Freight

» Lower Targets - Negotiate» C to P Departments Tools/ Efficiency

– Suggested OQ Reduction (EOQ):» Watch C to P Departments» Proper C to C

9. Safety Stock Reduction:– Safety Analysis (Not Utilizing)

– Safety Reduction:» Improve the Process

» Use Rifle Approach

» Watch the Service

10. Other Reductions:– “Never-Ship” Committed

– Duplicate Products and Lines

Turns the Right Way!Balanced Objectives - Increase

turns/decrease inventory but DON’T EFFECT SERVICE!

Reduce Inventory/Increase Turns


PNA/Level

Surplus Point

Line Point or Max/EOQ

Order Point or Min

EOQ

Order Cycle

Lead Time

Safety


Understand the Impact Areas: Excess and Defective:

– No one wants or needs– Control the Feelings– Let it Roll, Let it Go– Be Careful - C to C/Mix

Line Point and Order Quantity:– “What” and “How Much”– Be Careful - C to P Departments

Order Point - Safety Stock:– “When”– Be Careful - Customer Service


Vendor Performance and Negotiations - It’s not just Price

Lower COGS Lower Freight Minimums Multiple Drops for Freight Combined P/O’s for Minimum Freight Paid Fill-ins

Fill Rates Consistent Lead Times and OTD Accurate Shipping (Blanket

Receiving) - Product, Quantity, Price

Good Backorder Handling

EDI/VMI/2-Way Information Flow - B2B

Automated Product and Pricing Updates

RGA’s on New Items Excess Inventory Returns

Win/Win - Partnership



Profitability Improvement: GM Improvement Expense Reduction:

– Freight

– Cost to Carry

– Cost to Purchase

GM Improvement, Service, Efficiency, Accuracy, Asset Management


How Much of the System Are You Using?

Good System - Over 80% of Items Listed


“Best Practices” Inventory ManagementImprove Customer Service, GM, Asset Management, Efficiency, and

Accuracy Better SKU Coverage - System and Buyers

– 60 - 80% SKU Coverage to 85-96%– 5-25,000 SKU/Buyer to 40,000-100,000+

Improved Time Management Improved Priority Setting Improved Efficiency Improved Accuracy Technology and Core Replace Inventory with Information Rifle Approach Better Numbers and Better Tools Ability to Balance Profits and Service


“Smart” Parameters

Product Record

Product Line Record

Vendor Record

Warehouse Record

Company Record

Table Driven/Automated

Depth

Watch Hardcoding

Balanced


Economic Order Quantity (EOQ)

The EOQ formula minimizes the “Cost of Reordering or Purchasing” and the “Cost of Keeping or Carrying” which develops the lowest total hidden inventory costs - the lowest total inventory costs. The “How Much”

decision affects your bottom line and service!

24 x Avg. Monthly Usage x Cost to Purchase (“R”eorder cost)

Unit Cost x Cost to Carry (“K”eep cost)

C to C C to PCos

t Per

Uni

t Ord

ered

EOQ

Total Cost

Cost to Carry

(“K”eep Cost)

Cost to Purchase

(“R”eoder Cost )

Quantity Ordered1. Not less than “x” weeks supply (1 week)2. Not more than “x” weeks supply (1 year)


Paperfloat Control


Buyer’s Control Center/Workbench

On-line, Priorities, One-Stop, Drill Down, Maintenance,

Targets


Making Targets ProperlyGeneral rules of thumb: Days Dollars 1/2 way through OC/RC

Cost to Carry vs Freight, Price, and Service:

Key is equal days supply Increase or Decrease Use for Proper Emergency

Buys/Fill-ins

LinePoint

OrderPoint

Out ofStock

SafetyStock

xx

x

x

x

xx

x

x

x

x = Products in Product Line

New line pointafter adjustingreview cycle days

xx

xx


$Dis

coun

t/In

crea

se$C

to C

$C to C

$Discount/Increase

Quantity

Negative

Positive

Break Even

Max. Potential

Discounts and Price Increases

Break Even (Days) =(2 x Discount% / Monthly C to C) x 30

Maximum Potential Savings (Days) =(Discount% / Monthly C to C) x 30

This is total days supply to have on the shelve, not to buy. Use the “up to vendor target logic*” (change order cycle days) to meet the days supply.*This method works well for periods less than 90 days supply (seasonal or large swing items - be careful).

Be aware of future freight, minimum considerations, fill ins, NS and OAN items. If targets are involved, be sure to fill in the entire line not just the fast movers or work a deal.


Time Line Analysis

In Out

7-30 days

Ideal

Timeline

Out In

0 + days

Too Late

Timeline

In Out

30 + days

Too Early

Timeline

Identification and Prevention are the KeyDoesn’t matter if late if didn’t need

Doesn’t matter if on time if needed earlier


Surplus Inventory

Responsibility Coordination

Prevention

Identification

Disposition

Goals/Plan

CONTINUOUS


“Smart” MonitoringSafety Stock - Service and Turns

Safety Stock Level

X

X

XX

X

X

X

X

X

X

X = Actual stock available at time of receiving

Stock out

X

Properly managed safety stock will result, over time, in this configuration of remaining stock levels at time of receivingthe replenishment PO. Impossible task if done manually.

75%

25%

50%

Enhancement automates the monitoring.


“Best Practices”Better Numbers - Order Point

Usage Data and Calculation:– Lost Sales/Exceptional Sales Capability

– “Smart” Exception and “Auto” Correction

– “Path” Exception Reporting

– Flexibility to Where Usage Placed for Shipments, Backorders, and Credits

– DP/MRP Capability

– Flexibility with Method and Window by Rank

– Seasonal Capabilities:» Individual “Parameter Driven” Seasonal

Trending

» Lead Time Advance for Seasonal Items

» Season Shift Capability

» Dual Usage for Seasonal with Long Lead Times

– Threshold Minimums

– Rollup Capability

– Usage Forecasting Accuracy Analysis and Correction

Safety Stock Improvements:– Safety Days or Percentage– Safety Control by Rank– Method Control by Lead time– Safety Stock Analysis

Lead Time Improvements:– Minimum and Maximum– History File with Maintenance– History/Parameters by Path (Int/Ext)– Exceptions w/ Automated Ignore– Manual Exceptional Lead Times

Customer Buying Habits, Threshold Minimums and “Automated” Overrides

Use of Hits and “Smart” Item Ranking “Smart” Parameters and Controls


Review/Order Cycle Improvements:– Based on Purchasing History or Extended

AMU– Min, Max and Exception– Transfer Cycle Days– OC/RC Analysis

Order Quantity (EOQ) Improvements:– Co, Whse, Pline, Product level

– Vendor vs Transfer (Path)– Min and Max Supply– Calculate but do not use (SP)


Cos

t Per

Uni

t Ord

ered

EOQ

Total Cost

“K”eep Cost

“R”eoder Cost

Quantity Ordered

“Best Practices”Better Numbers - Line Point and OQ


“Best Practices” - Better Tools Buyer’s Control Center - BCC

– Priority– Targets– “Smart” Rounding– Drill Down/Maintenance– Proper combination of the three models and use of EOQ– “One-stop” Thinking

Time Line Analysis– “Too Late”– “Too Early”

“Smart” Surplus - “True” Surplus Exception Control Center - ECC

– “Smart” exception reporting– Mass Update– “One-stop” thinking

Safety Stock at Receipt Analysis Measurement and Monitoring

Rounding Control and Smart WT Three buying methods and WT’s:

– LP with or without OQ

– WT Cycle and Set weeks supply

– Full control and Works together

– Proper products, Proper quantities Improved Stock Levels:

– Orders, PO’s and WT’s Control

– Future Sales Orders

– Future P/O’s

– Strong Suggested Count Program

– WMS Flexible Product Merge Utility Stock Balancing Tools



Some Final Thoughts


It’s not just good Software and Systems

It’s not just good Processes and Procedures

It’s not just good People and Education

It’s not just good Management

IT’S ALL OF THEM!

It’s not just good Usage

It’s not just good Order Points

It’s not just replenishing at Order Point

It’s not just the Timeline

It’s not just working the Surplus

IT’S THE ENTIRE PROCESS

Same Company Different Software


Use measurement and monitoring reports to confirm results and to

drill down and find areas of improvement.

Be sure to use a rifle approach rather than a shotgun approach,

or it will be lots of $$$ and probably disappointing!


Measure ResultsCustomer Service:

Fill Rates/Availability (ICRIF)

Accuracy - Product, Quantity, Price (CM%)

On-Time-Delivery

Backorder Handling (ICRIN)

Profits and ROI:Surplus - Disposition (ICRIS)

and Prevention

Safety Analysis (ICAMU)

Review/Order Cycle:Freight Dollars - As percentage

of sales

Turns - Really C to C and C to P (ICRIT)

Turn and Earn - ROI (ICRIR)

Replace Inventory with Information

Do better on both sides!


Replace Inventory and Costs and Improve Service with Technology.

Improve the Bottom Line with Technology

Information, Efficiency, Accuracy(If it is not helping Service, if it is not helping Profits…)


Keys to “Getting Results” - Top 101. Hits/Ranking and “Smart” Parameters

2. Order Point, Line Point and Order Quantity Accuracy:

– Usage:» Lost/Exceptional Utilization» Usage Exceptions and Maint» Proper Method and Window» Seasonal Trending & Adv LT» Roll Up» Usage Accuracy Analysis

– Lead Time Exceptions and Maint– Safety Set-up and Safety Analysis– Order Point Adjusters– OC/RC Analysis– Proper EOQ Parameters– WT “Smart” Rounding

3. On-hand and Paperfloat Accuracy:– SC/CC Program and

Address the Issues, Good Processes

– Paperfloat Control– WMS, BC, RF


4. Buyer’s Control Center:– Priority - Replenish at OP– On-Stop, On-line, Paperless– Making Targets Properly - Keep

Equal Days Supply

5. Timeline Analysis:– “GAP”/“Too Late”– “Too Early”

6. Surplus/Excess/Defective:– “Smart” (Long and Short Term)– Visibility, Utilization and

Disposition– Incoming with LT Surplus

7. Backorder Policy and Procedure - Closed-loop

8. Exception Control Center:– “Smart”/”True” Exceptions

– On-Stop Corrections– Mass Update

9. Measurement and Monitoring:– Service (Fill, BO, OTD, Accuracy)

– ROI

– Mix

– Excess

– Freight

– Vendor Performance

Keys to “Getting Results” - Top 10

10. Controlled Replenishment and Stocking Policy


Spend your days reacting to the fires... you may be efficient, but

will you be effective?

Where are Your Systems, Procedures, and Objectives S(p)ending Your People?


Back to BasicsMost distributors DON’T: Set the system up properly Feed the system good data Understand or Use the system properly Clean up bad processes and procedures Educate their people on the system or processes Help departments work together Help work towards common goals

Yet they think it will all just magically work


“Branch Participation”It’s Essential! Sell

Service the Customer Controlled Replenishment (PO’s and Transfers) Good Data and Information (Rifle vs Shotgun)

– Lost and Exceptional Sales

– On-hand Integrity and Paperfloat Control Proper Backorder Handling Surplus Prevention & Disposition

– Controlled Replenishment

– Help utilize the Surplus “Smart” Selling and Transferring Eyes and Ears

Train the MassesTeach Them Benefits

Give Them the Tools


The Big PictureLon

gevi

ty Grow

th

Profitability

Customers

Employees

Vendors

Service, GM Improvement, Asset Management, Efficiency, Accuracy

Replace Inventory and Costs and Improve Service with Technology


REMEMBER!

When to Replenish

Order Point

Service

What and How Much to Replenish

Line Point and OQ

Profitability

There is Always a Left and Right Side

Balance


Things to Think AboutService: Fill Rates - Having the RIGHT Inventory:

– Shotgun - $$$, Poor Results and not Balanced

– Rifle - Smart $$$, Great Results and Balance

– Replace Inventory with Information Understanding “When” Controls Service -

NO GAMES, REPLENISH at Order Point

The Importance of Order Point Adjusters The Importance of Controlled

Replenishment Buying a 90 day supply and it lasts 60

days

Profits: Turns Maximization is not Profits Maximization - The

Right Way to Turns:– Excess/Defective: 5%– Safety Stock: 15-20%– Review/Order Cycle and Order Quantity Reduction -

Caution (BCC, ECC, EDI/VMI, WMS, BC, RF, Blanket Receiving- Internal and External, EDI Invoice/Trans$, Automated Pricing, Maintenance and Updating)

Understanding “What and How Much” Controls Profits - NO GAMES - Order what the system recommends. Watch topping the truck, pre-buys, discounts/price increases

The Importance of “Equal Days Supply” The Importance of Controlled Replenishment Buying a 90 day supply and it lasts 120 days


The Things I Hear... We know it’s at OP, but... LP and EOQ are just suggestions, they don’t really mean any thing... It doesn’t matter how you get to the minimum, the important thing is

getting the P/O placed and not paying freight... It doesn’t matter if anything is BOP, we can place a P/O every day... We keep upping the RC, but it hardly changes the P/O... Items keep going BOP or GAP sooner than they should, stupid

computer... The quantities are always wrong on the RARRs, really stupid

computer... Stocking policy, backorder policy, what policy… Increasing turns is easy, we just buy less or don’t buy at all…


The Things I Hear... We understand service - everyone can buy and transfer inventory and

they do... We measure things, our turns are 4.2394702... We’re wondering how the computer invested so much in inventory

and we got so little... We don’t have time to prevent fires, we are running around all day

putting them out... Usage is correct by special magic; lost sales and exceptional sales

logging are just a waste of time, talk to customers... We have to have more people, look at all these THICK reports we look

through. We even find something sometimes… We review our lines at least monthly, many weekly... We understand the process and maintenance; as long as we push the

right buttons… (10 steps)


The World is Changing!

Yesterday Today TomorrowBuyers/Inv. Control Inventory/Asset Managers ???

Turns Dominated Customer Service Oriented If you can’t

Inaccurate Data Data/Information Managers handle today,

Four Glass Walls Communications & Team how will you

Learned from “Bill” Education & Understanding handle

Pencil and Paper Technology and Efficiency tomorrow?

If your company is stuck in Yesterday or having troubles with Today, how will it survive Tomorrow?


GWHCO

www.gwhco.org

Grant Howard:[email protected]

734-428-0529 Phone

734-428-0593 Fax

John Cason:[email protected]

256-830-0676 Phone

256-830-0481 Fax

Our approach involves tailoring the best practices in distribution to the specific needs of our clients. Our working philosophy revolves around building a strong and self-maintaining infrastructure by developing a working plan based on processes and procedures, education and understanding, implementation of tools and technology; and through communication, organizational structure and team environments.

2005 grant w. howard company 1 grant w. howard 13214 wallace road manchester, mi 48158 (734)...

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