How-To Series: Min/Max Ordering in Purchasing

How-To Series: Min/Max Ordering in Prchasing

The contents of this docment are for informational prposes only and are sbject to change withot notice. Epicor Software Corporation makes no garantee, representations or warranties with regard to the enclosed information and specifically disclaims, to the fll extent of the law, any applicable implied warranties, sch as fitness for a particlar prpose, merchantability, satisfactory qality or reasonable skill and care. This docment and its contents, inclding the viewpoints, dates and fnctional content expressed herein are believed to be accrate as of its date of pblication, December 2017. The sage of any Epicor software shall be prsant to the applicable end ser license agreement and the performance of any conslting services by Epicor personnel shall be prsant to applicable standard services terms and conditions. Usage of the soltion(s) described in this docment with other Epicor software or third party prodcts may reqire the prchase of licenses for sch other prodcts. Epicor, the Epicor logo, Eagle, and CompassÔ are trademarks of Epicor Software Corporation, registered in the United States and other contries. All other marks are owned by their respective owners. Copyright 2017 Epicor Software Corporation. All rights reserved.

Table of Contents Compass Monthly Tip... 2 Defalts... 2 Dialogs... 2 Miscellaneos... 3 Overview... 3 Eagle Options... 4 The Advantages of Using Eagle Min/Max Ordering... 5 Advantages... 6 Disadvantages... 6 Order Point Fields... 7 Order Point... 7 Minimm Order Point... 8 Max Stock Level... 8 Additional Order Points... 9 Example of Min/Max Order... 10 Smmary... 16 FAQ s... 16

How-To Series: Min/Max Ordering in Prchasing The How-To series is presented by the Epicor Professional Services team for Eagle Atomotive cstomers. This program is a prodct of the Professional Services for Eagle Atomotive team and is not spported by the Epicor Eagle Advice Line. This month we will be sharing a How-To docment on what is commonly called Min/Max ordering in prchasing. The docmentation will be designed to give yo as mch detailed information as possible, bt additional assistance is available from the Eagle Ato PS team at an horly rate. Sections: Compass Monthly Tip Overview Eagle Options The Advantages of Using Eagle Min/Max Ordering Order Points Example of Min Max Order Smmary FAQs 1 December 4, 2017

Compass Monthly Tip Compass User Options control many Compass fnctions that resolve cstomer complaints. Defalts If yo do not like the defalt color scheme of the Compass screen nder User options in Defalts yo can change to another color scheme on the Defalts tab, which only changes Compass on yor screen. When yo try to drill in a Compass qery, it wants to open a New Page. Yo can change the Drill to Defalt Action to Crrent Page. Dialogs The Compass screen does not remind yo to save a qery, page or layot before it lets yo exit bt yo can review and set choices in the Dialogs Tab. 2 December 4, 2017

In this same area, yo can control Compass Active Viewers to not allow yo to delete data too easily; check box for delete Confirmation. NOTE: We recommend that all of these be selected. Miscellaneos Under Miscellaneos yo can control Compass start day of week. If it is different than yo wold like it to be, we sggest that yo DO NO TOUCH START DAY OF WEEK WITHOUT COMPASS ADVICE LINE ASSISTANCE. Overview A min/max prchase order process allows yo to handle material less freqently. The objective is to sell the prodct down to a low enogh qantity to have stock on the shelf ntil yo get yor order back in and to prchase a larger amont of stock so that yo handle the prodct less often. Many sppliers offer disconts when yo se this practice as it redces their efforts to ship prodct to yo. This process is often sed as a seasonal or drop ship order. If yo shold fall short between orders, yo are able to fill the shelves sing a local vendor to maintain the order point. This has always been referred to as Min/Max ordering which we will call it in this docment. A min-max ordering system in Eagle ses the Order Point field and the Maximm Stock Level field in Inventory Maintenance to determine order qantities; not the Minimm Order Point field; we will discss sing one of the additional order points A, B, C or D and the comparable Max Order Point field in Inventory Maintenance (IMU). If there is a nmber in an item's Maximm Stock Level field, the item is on a Min-Max ordering system. When yor qantity-on-hand falls below the order point, the Epicor Eagle sggests yo order enogh to pt yo back p to the maximm stock level ronded p to the next appropriate order package qantity. 3 December 4, 2017

If there is no nmber in the Maximm Stock Level field, this item is on a straight order point system. When yor qantity-on-hand falls below the order point, the Epicor Eagle system sggests yo order enogh to pt yo back p to the order point ronded p to the next appropriate order package qantity. NOTE: Some of yor items may be on Min-Max, and some may be on straight order point. Some items may be set p to work with both ordering methods by sing one of the additional order point fields for the Min/Max process. In other words, yo do not have to choose one method or the other. We recommend that items that yo want to order sing Min/Max Ordering wold be done with one of the Additional Order Points A, B, C or D and the associated Max Order Point in IMU. Daily stock orders wold be filled from Order Point. Eagle Options There are many options that we have discssed when dealing with prchasing, order points and creating prchase orders. These options deserve to be reviewed, as they will affect a min/max order. Please review them in Eagle Options from the browser for more detail. ID Sbsystem Description Extended Description 1057 PURCHASING Mltiple Order Points on System Ability to have p to 5 different Order Points for an item. 8115 PURCHASING Re-order when QOH is less than Order Point When set to Yes, the RSO will order an item when the QOH is less than Order Point. When set to No, the RSO will order an item when the QOH is eqal to, or less than Order Point. (Pace sers wold set this Option to N, to retain Pace behavior.) 4 December 4, 2017

8859 PURCHASING ROP Max Stock Level (Opt C) behavior when calclated OP > Max 9292 PURCHASING Inclde pending transfers in overstock calclation? 9502 PURCHASING PO Worksheet Sggested Order Calclation; Which Order Point 9536 PURCHASING RSO treats the Max Stock Level as the maximm allowed QOH This option is sed when ROP is rn with Max Stock Level C (Do not change max stock level) and the calclated Order Point is greater than the Max Stock Level, which is not allowed (max mst be > OP). Applies only to systems where Option 1091 "Inventory Balancing on System" is Yes. If calclating sggested order qantity when adding items to the PO Worksheet, which order point and maximm stock level are to be sed? Variations in the calclation can be controlled by options and can be modified per session on the Misc. Men in the PO Worksheet. This option determines if the vale entered in the Max Stock Level is the QOH to bring an item p to whenever crrent QOH falls below the Order Point (set to Yes), or if it is considered the maximm allowed QOH (set to N). Option 8115, which controls when an item is ordered: If it is Y then the qantity needed is calclated as: Order Qty = Order Point Qty Avail. If the option (8115) is N then the calclation is: Order Qty = Order Point Qty Avail + 1 We recommend that option 8115 be set to Y. When option 8859 is set to 1 the system set Order Point to the calclated vale, and increase the Max Stock Level to the OP + 1. Example: Order Point = 5 Max Stock Level = 10 ROP calclates a new Order Point of 15. Inventory Maintenance is pdated accordingly: Order Point = 15. Max Stock Level = 16. Set to 2 to have the system set the Order Point to the Max Stock Level - 1. In other words, NEVER change the Max Stock Level, even if the system calclates an Order Point that is greater than it. Example: Order Point = 5 Max Stock Level = 10 ROP calclates a new Order Point of 15. Inventory Maintenance is pdated accordingly: Order Point = 9. Max Stock Level = 10. We recommend that yo do not rn ROP to set Max Stock Level on selected items that yo want to rn Min/Max ordering on at a mch higher stocking interval then rn order point to set to yor reglar stocking level. Shold yo decide to rn Min/Max on an entire set of lines for one vendor then the RSO option on set Max Stock Level shold be set to C (do not change max stock level) option 8859 be set to 1. The Advantages of Using Eagle Min/Max Ordering This conversation is sally involved when there is a discssion abot the maximm investment yo shold have on yor shelves. The first thing to consider is how deep are yor company pockets and how mch inventory $ are 5 December 4, 2017

yo floating on loans. The more comfortable yo are with floating loans, the more money yo have invested in inventory. Or goal shold be to free that money p and improve yor retrn on investment. I wold start with the max op at 60 days; yo are not adding any investment to inventory. We want to sell down to a minimm amont of stock that shold carry yo throgh ntil yor next order and then order to a maximm stock level that makes a package that is easier to handle sch as a case or a pallet. When yo prchase this way, yor stock order is pt on the shelves faster. Advantages 1. A benefit to min/max ordering is to minimize shipments on commonly ordered parts, ths minimizing overhead associated with these parts (checking in and ptting away). Less handling of individal items redces handling the same part every week. a. If a part is ordered daily, it is checked in and pt away 7 times in a week. b. If one order is made for 7 parts, it is checked in and pt away once in a week. 2. Redces the time to pt a stock order away; yo will pt away the same nmber of nits every order bt as yo are handling fewer line items it takes less time. 3. Increases the time between orders on some of yor slower moving stock where the min and max are close together. If the min were 1 and the max 3 sing max order yo wold order it every time yo sold it. With min/max, it wold not reorder ntil yo were down to one which makes better se of yor inventory dollars. Disadvantages 1. If done incorrectly it hinders yo from making effective se of the minimm order point locks on the new parts added to inventory. Locking the OP prevents the order point from rising based on demand. 2. Increases the possibility of rnning ot of a very slow moving item, which may not be a bad thing. a. This is overcome by ordering daily from a local warehose NOTE: In Eagle, all Min/Max Prchase orders shold be done as a ftre order. Daily PO s to fill stock shold be ran at order point and perhaps at case qantities. 6 December 4, 2017

Order Point Fields Order Point Mltistore: This field is store-specific. This field on the Stocking tab of the Inventory Maintenance window indicates the point at which yo shold reorder the item. Yo can manally enter this qantity or se the Order Point Report (ROP) to calclate it. Stock Transfer Balancing sers only: yo can click the Order Point hyperlink to view and/or change additional Order Points. These additional Order Points can be pdated manally in this dialog or by rnning the ROP report. Yo can se this field in three ways. Use it as an order point. (More information) Use it with the Maximm Stk Level field for a minimm/maximm ordering scheme. (More information) Use it with Report ROR (Restocking Order Report) to indicate the point at which yo shold order this item. (More Information) To calclate a sggested order, the system does the following. 1. Add the qantities in the following fields: a. Qantity on Hand b. Qantity on Order c. Ftre Order (only if the qantity is crrent, based on the # Days Before Ftre PO Qantity Becomes Crrent field in Options Configration (or Fnction MPC) 2. Sbtract the qantities in the following fields from the total qantity in step 1: a. Committed Qantity 7 December 4, 2017

b. Cst Backorder 3. Compare the difference between the sm of steps 1 and 2 to the order point. If the order point is less than the difference between steps 1 and 2, the system does not sggest that yo order the item. If the order point is greater than the difference between steps 1 and 2, the system sggests that yo order the item (in some mltiple of the order mltiple or standard package). This field is nmeric. Yo can enter p to five nmbers, from 0 to 99999. The defalt is blank. This means there is no order point, and the system will not sggest an order for this item. Minimm Order Point Mltistore: This field is store-specific. This field on the Stocking tab of the Inventory Maintenance window to specify the minimm order point for the SKU. When yo rn the Order Point Report (ROP), the system ses this field to determine the new order point. For more information abot how the system ses this field in the order point calclation, refer to online help for the Order Point Report. Yo may want to se this field for SKUs that yo sell by the each, bt which cstomers sally prchase in mltiples. For example: Yo sell casters by the each. However, cstomers sally prchase for at a time. Yo can set the Min Order Point to 4 so that yo never rn ot of a "set" of casters. Any time yo change the Min Order Point field, rn the Order Point Report (ROP) to pdate the Order Point field. Otherwise, the Sggested Order Report (RSO) won't se the new order point in the sggested order calclation. If yo fill in this field and then rn the Order Point Report and fill in the Minimm New OP field, the system ses the Min Order Point field in Inventory Maintenance as the new order point (it ignores the minimm order point yo enter for the Order Point Report). This field is nmeric. Yo can enter p to for nmbers, from 1-9999, or this field can be blank. The defalt is blank. In earlier docments in the Webinars and the How-To series we discssed sing the min order point to lock items from going to zero. Max Stock Level Mltistore: This field is store-specific. This field on the Stocking tab of the Inventory Maintenance window is the highest qantity that yo want to have on hand for this item. If yo enter a nmber, or if a nmber exists, this item is on a minimm/maximm ordering scheme. Any time the qantity on hand is less than the order point, the system sggests an order of enogh nits (ronded to the nearest order mltiple or standard package) to make the qantity on hand eqal to or greater than the maximm stock level. 8 December 4, 2017

This field is nmeric. Yo can enter p to five nmbers, from 1 to 99999. If this item is on a minimm/maximm ordering scheme, the maximm stock level mst be greater than the order point. If yo rn Report ROR (Restocking Order Report), the system ses this field to indicate the greatest qantity of an item yo want to order at any one time. The defalt is blank. This means there is no maximm stock level. This field in the Order Point Report (ROP) applies only if yo se a min-max ordering system on any of yor items. A min-max ordering system ses the Order Point field and the Maximm Stock Level field in Inventory Maintenance to determine order qantities. Use this field to specify how an item's Maximm Stock Level field in Inventory Maintenance, the Stocking tab, changes when its order point changes. A = Adjst the maximm stock level by the same percentage as the order point changed. For example: An item's order point is 10 and its maximm stock level is 20. Yo rn the Order Point Calclation report, and the order point increases by 20% (to 12). The maximm stock level also increases by 20% (to 24). If yo don't se the min-max ordering system, leave the A in this field. B = Adjst the maximm stock level by the same nmber of nits as the order point changed. For example: An item's order point is 10 and its maximm stock level is 20. Yo rn Report ROP, and the order point increases by 3 (to 13). The maximm stock level also increases by 3 (to 23). C = Do not change the maximm stock level. For example: An item's order point is 10 and its maximm stock level is 20. Yo rn Report ROP, and the order point increases to 12. The maximm stock level remains at 20. Option 8859 "ROP Max Stock Level (Opt C) behavior when calc'd OP > Max" affects how option C works on the ROP report. The defalt is A. Additional Order Points There are a total of five order points/max stock levels available. They are stored in Inventory Maintenance, and can be pdated there, or by rnning the Order Point Calclation Report (ROP). Yo can access yor order points by clicking the Order Point hyperlink on the Stocking tab. 9 December 4, 2017

To simplify the process of Min/Max ordering yo cold se the alternate order points to create Min/Max orders; only items with vales in these fields wold appear on yor prchase orders. Example of Min/Max Order Inventory Maintenance IMU We show to have 18 on hand, 10 on order, 10 more which are on a ftre order, an order point of 20, an additional order point A of 36 and a Max Stock Level A of 144. 10 December 4, 2017

Sggested Order Report RSO Vendor/Part We are rnning this prchase order on additional order point A so that we can be selective as to what parts we are bying from this vendor. Using an additional order point of A, B, C, or D has the advantage of not interfering with yor daily stock orders. Yo can create an order on every item in a line or be selective as to which items yo will order from the manfactrer. When yo create the or yor reglar warehose. Options (Nothing niqe to set on this screen.) 11 December 4, 2017

Code Selection (Nothing niqe to set on this screen nless yo are being selective based on one of the codes.) PO Header Create the PO as Order Type F for a Ftre Order to prevent conflicts with yor daily flfillment from yor local provider. Fill any other fields that yo deem appropriate. 12 December 4, 2017

Sggested Order Report The system has decided to order 116 nits 13 December 4, 2017

Remember that we had 18 on hand, 10 on order, 10 more which are on a ftre order, an order point of 20, an additional order point A of 36 and a Max Stock Level A of 144. We ran this prchase order on order point A so the system looked at the Max Stock Level A of 144 and sbtracted the 18 on hand reslting in a New Order Qantity of 126. The process then sbtracted the 10 that are on a reglar prchase order creating the qantity to order of 116. It ignored the ftre qantity on order of 10 in this order calclation. The reslt is that we now have 126 on ftre prchase orders. Or QOH is at 18 which is below the order point of 20. When the daily PO is rn for the local vendor, the system will order the difference between Order Point QOO Qantity on Hand. In this case, it wold order nothing if a PO was created today. 14 December 4, 2017

After a few sales, the inventory qantity on hand 2 is below order point 20 mins the qantity on order 10. 20 10 2 = 8 The Eagle creates a PO for 8 additional nits to maintain the order point from the local vendor. 15 December 4, 2017

Smmary 1. Min Max Ordering does not involve the minimm order point field in the process. a. Use the reglar order point field. b. Refer to docmentation on locking minimm order point from previos webinars this year. I can still se that to lock order points on slow moving items. 2. Create order points on every item. a. EVERY ITEM that is stocked and displayed in the retail area shold have a min op of at least 1. b. Some stocking items will go to zero when they are ot of sales season. 3. Create maximm order points on every item; not minimm that yo want to order sing Min/Max ordering. a. This order point is based on a larger stocking period. b. Cold be an entire line c. Cold be selected items within a line. i. Yo wold code the items that yo want to inclde in a Min/Max Order. 4. Order sing RSO based on the order point. a. Using the Ftre Order type on all of these PO s so that none of these PO QOO are sed in other order calclations. b. Review the options and AUDITQ that trn Ftre PO s in to Normal PO s and set accordingly. 5. Order stock daily from local sppliers from the Order Point to keep a minimm amont of stock on the shelf. 6. To simplify the process of Min/Max ordering yo cold: a. Use the alternate order points to create Min/Max orders. b. Code items. c. Use Pop Code to select items. 7. If yo se the RSO at Order Point, all items will be considered for the Min/Max prchase order; only items with qantity on hand below the order point will order a qantity that will pt yo back p to the maximm stock level ronded p to the next appropriate order package qantity. FAQ s Here are some qestions to consider: 1. Are yo calclating the minimm order point or sing it as we have recently recommended as a order point lock? a. I am a big fan of sing the min op lock to make sre that I keep a new part nmber in stock for 12-24 months bt if yo never rn the min order point they never go away. b. Use order point as yor minimm order point. 2. What percentage of order point compared to max? a. This is not really a qestion to consider. b. Move on to order point calclation and set order point to yor stocking as thogh from yor reglar vendor. c. Set yor maximm order point based on the nmber of days that yo might sell the larger qantities. 16 December 4, 2017

3. How many days of stock are yo carrying in order point? 4. How many days of stock are yo carrying in maximm order point? 5. How did yo determine those nmbers? 6. Are yo ordering as often as yo can from every vendor? a. Placing an order as often as yo meet minimms, free freight, whatever yor restriction is can help redce the total amont of inventory investment that yo have to make. 17 December 4, 2017

NOTE: This docment is a prodct of the Professional Services for Atomotive team and is not spported by the Epicor Eagle Advice Line. For more information on this and other Epicor prodcts, Check ot or corporate website at: http://www.epicor.com Yo can also contact Epicor at 800-808-7423 or write atomotive.marketing@epicor.com. For Cstomer Service go to https://epicorcs.service-now.com/epiccare and click the register link there. There is also a link for How to se the portal that gives a short ttorial video on sing EpicCare. Abot Epicor Epicor Software Corporation drives bsiness growth. We provide flexible, indstry-specific software that is designed arond the needs of or manfactring, distribtion, retail, and service indstry cstomers. More than 40 years of experience with or cstomers niqe bsiness processes and operational reqirements is bilt into every soltion in the clod, hosted, or on premises. With a deep nderstanding of yor indstry, Epicor soltions spr growth while managing complexity. The reslt is powerfl soltions that free yor resorces so yo can grow yor bsiness. For more information, connect with Epicor or visit www.epicor.com. Corporate Office 804 Las Cimas Parkway Astin, TX 78746 USA Toll Free: +1.888.448.2636 Direct: +1.512.328.2300 Fax: +1.512.278.5590 Latin America and Caribbean Blvd. Antonio L. Rodrigez #1882 Int. 104 Plaza Central, Col. Santa Maria Monterrey, Nevo Leon, CP 64650 Mexico Phone: +52.81.1551.7100 Fax: +52.81.1551.7117 Erope, Middle East and Africa No. 1 The Arena Downshire Way Bracknell, Berkshire RG12 1PU United Kingdom Phone: +44.1344.468468 Fax: +44.1344.468010 Asia 238A Thomson Road #23-06 Novena Sqare Tower A Singapore 307684 Singapore Phone: +65.6333.8121 Fax: +65.6333.8131 Astralia and New Zealand Site 2 Level 8, 100 Pacific Highway North Sydney, NSW 2060 Astralia Phone: +61.2.9927.6200 Fax: +61.2.9927.6298