Overstock Optimizer. Savance. Phone: Fax:

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1 Savance Phone: Fax:

2 Table of Contents Overview 3 Inventory Control 3 RFQ Columns 4 Tool 4 2

3 Overview This document will cover the in Savance Enterprise. This tool can be used to determine how much overstock you have in your inventory, and it allows you to easily initiate the return of the overstock to your vendor. Inventory Control To get started, open an Item in the Item Manager (Inventory > Inventory Manager > Item Manager). Then go to the Warehouse section at the top. On the bottom-left, you'll see the Inventory Control section. We will first draw our attention here. If you click on the Show All Information link, this will bring up the information window as seen below. These values are calculated automatically by the server on a nightly basis, but they can be manually changed in some cases. The ones that can be changed can be deployed to multiple parts through Purchasing Rules (Purchasing > Purchasing Manager > Purchasing Rules). A description of each value relevant to the in both this window and the Inventory Control section are detailed in the bullet points below. 3

4 Target Fill Rate: This is the percentage of orders that are filled without a back order. The industry standard is 98% fill rate, meaning that you want to have something in stock 98% of the time. If this is too low, sales may be lost because your inventory is low and orders are not being quickly fulfilled. If this is too high, your stock may be too high. What percentage you set here can be used in order to calculate the reorder points and quantities. Reorder Point: This is the level of inventory when an order should be made with vendors to bring your inventory back up. It is equal to Mean Daily Demand * Lead Time + Safety Stock. This allows you to order from your vendor enough days ahead of time so that you are never out of stock (but still never overstocked). Reorder Quantity: This is how much to order from your vendor when you reach the Reorder Point. This is equal to Mean Daily Demand * Lead Time. Lead Time: The average number of days between placing an order and receiving the order from your vendor. Mean Daily Demand: The average number of units sold per day of the previous number of days over the time in lead days. Safety Stock: This is derived from a complicated formula that involves the Target Fill Rate, Mean Daily Demand, Lead Time, and Standard Deviation of Demand. Warehouse Overstock: This is the amount of inventory past the Reorder Point. This is equal to Available - (Reorder Point + Reorder Quantity). If your current available amount is negative, then it is assumed to be zero for the sake of this calculation. The Reorder Point, Reorder Quantity, and Lead Time values are all suggested values based on the Target Fill Rate that you specify and the data that Savance Enterprise collects for this item. If you would like to use the suggested value, be sure to check the Use Suggested Value checkbox. Otherwise, uncheck this box and specify your desired value. Again, all 4 of these values can be deployed to multiple items through Purchasing Rules (Purchasing > Purchasing Manager > Purchasing Rules). RFQ Columns If you look at the spreadsheet columns of an RFQ, you will notice that some of these values are available to all users that create an RFQ. These columns are Average Usage, ROP (Reorder Point), ROQ (Reorder Quantity), and Warehouse Overstock. You can add or remove these columns for users through the Spreadsheet Administrator (Settings > Spreadsheet Admin). Tool Now that you're familiar with a couple of values in Savance Enterprise, let's open up the Overstock Optimizer tool. To do so, go to Inventory > Inventory Manager >. This will bring up the following window Savance 4

5 From here, you can search for inventory items based on any of the given filter criteria. Once you have an item in the list, you can see some of the basic item information show up at the bottom. Most of these values are the same that have already been discussed in the Inventory Control section. There's also the Cumulative Usage, which shows how much of the item was sold within the last 30, 60, and 90 days. Let's say that an item is overstocked. You can return some of these items to the vendor by checking the box next to the item and clicking the Create Vendor Return button. This will return the quantity of the OnHand minus the Safety Stock. So if there are 100 On Hand and the Safety Stock of 85, then there will be 15 items returned to the vendor. Once you do this, you will get the following message saying that the vendor return was successfully created. Now you can open the Vendor Return (just as you would open a quote or an RFQ). Once you've opened it up, you can convert it and ship it off like normal. Then you will no longer be overstocked on this item! 5

6 Thank you for choosing Savance! Savance Phone: Fax: SE-HG