How to understand and make incremental changes to improve the stock ordering.
A re-order category code is held on the Description tab of each part on the stock file, and is used to maintain stock levels. The system will automatically re-assign re-order categories during Parts Month End processing. Any parameter changes made during a month will not be reflected until the Parts Month End Processing is run. These are set per Franchise.
There are 3 types of reorder category codes and all are used in the setup:
- User-defined and System-assigned codes
- System-assigned codes
- User-defined and User-assigned codes
1. User-defined and System-assigned codes
The user has the option to design the classification of parts by franchise. Classification can be based on average monthly demand range and/or the average cost price.
For current Autoline dealerships, the classification is based on average monthly demand only.
- Category A – Fast moving
Monthly average demand is 4 and above.
- Category B – Medium moving
Monthly average demand is between 4 and 0.5.
- Category C – Slow moving
Monthly average demand is below 0.5.
Note : The average monthly demand values shown above are what is recommended as a starting point. Altering the values will affect the the mix between A, B, and C parts, ie if Category C was altered to 0.25, the parts with an average monthly demand between 0.26 and 0.49 would become Category B parts. These categories will be overridden by Category O parameters if both Category O conditions are met (see below)
2. System-assigned codes
The system uses pre-defined reorder category codes.
- Category S – Superseded
This category is assigned to an old part from the supersession process.
- Category O – Obsolete
Parts will move to Category O if:
- There is no movement in the last 4 months. A parameter exists, (SM System Parameters, Other – “Min Month No Movement”.
- The total requests are greater than 3 during a specified period (SM System Parameters, Other “Maximum Obsolete Period” or if this is zero, SM System Controls “Max History Periods”). The “Maximum Obsolete Period” and “Max History Periods” is normally 37. A parameter exists to control the number of requests (SM System Parameters, Other – “Obsolete Min Qty Requested”).
- Category N – New part
Due to the lack of history on a newly created part, the system provides the option to the user to fix a maximum and minimum limit at the time the part is created on the stock file. Such parts can also be set to default to reorder category N with a maximum set to 1.
The part will remain at N category until:
- Specified numbers of days have passed (default 180 days). Parameter exists, SM System Parameters, Other – “Days before Calculation”.
- The part has had less than 3 requests since it was created. A parameter exists, SM System Parameters, Other – “Min Req Override for New Lines”.
3. User-defined and User-assigned codes
Category M – Manual controlled part
This category is used when the user would like to manually control the setting of the maximum and minimum levels. Parts set to M will remain at M until changed by a user.
4. Adjusting the Re-order Categories
Before adjusting any of the categories, you must determine that there is a genuine issue with the re-ordering. The question to ask first off is, "Is the system under-ordering, over-ordering or ordering about right?" How severe is the issue?
If the answer is under or over ordering, there are two parameters to check for accuracy.
Note: there is an Excel Min/Max Re-order calculator available from Systime Support. This should be used to determine the severity of any issue. Contact the Support Centre if a copy of this is required
- Days Between Orders. A daily stock order is 1 day, weekly is 7 days, etc
- Lead Time. This is the number of days from the time the order is submitted to the supplier until the order is available for sale. A daily order might be set to 2, ie the order is placed today and received tomorrow. A weekly order may also be set to 2 depending on what day the order is placed. If the order was placed on a Monday it could be availably for sale by Wednesday. If the order was placed on a Friday, extra time should be allowed for the weekend.
If the above two parameters are correct and only a small increase or decrease is required, the safety coefficient may be enough to do this. The standard values for the safety coefficients are, A=3.2, B=2.5, C=1.0. It is best to use the above mentioned Min/Max calculator to determine the outcome of any change.
- For courser adjustments, increasing or decreasing the default lead time by 1 day will increase or reduce ordering. Again it is strongly recommended that this is run through the calculator.
WARNING. Adjustments become active after a month end. If an incorrect adjustment is made, it will be in effect for a month. A correction will not take effect until after the next month end. Use of the calculator over a variety of parts will reduce the chance of a mistake being made.