Inventory Planning: Efficient And Quick
Reducing inventory by 30 percent in six months: Lamp manufacturer Trilux shows how it’s done. More and more companies recognize the potential to reduce costs in inventory management. Planning skillfully can bring fast and long-term success – company Trilux’ successful inventory planning serves as an example. However, it’s often easier said than done. Challenges and obstacles abound; volatile markets, price and cost transparency, and increasing speed of market interactions often mean that manufacturers have to deliver at ever shorter notice and at ever lower prices.
In the past, many companies have paid a high price for their delivery capacities in the form of large inventories and safety stocks. Negative effects include increased costs and capital commitment as well as a sharp discrepancy between expected and real market price.
What companies need, therefore, is being able to deliver while significantly reducing their inventories. Effective inventory planning is the first step to ensure improvements if it produces reliable results on which companies can base material requirements and production planning efforts.
Although the majority of companies already have the necessary data available in their SAP systems, almost just as many still rely on manual, time-consuming and ineffective optimization in Excel.
“We often see our customers using Excel solutions even though all necessary information is available in their SAP systems,” says Marco Fries, Manager Global Consulting, Academy and Support at GIB. “Many value the flexibility that Excel offers. However, it should be obvious even to laymen that data will be outdated before sales planning can even take place if they use Excel. Furthermore, in the course of any planning project, new frameworks, conditions and requirements are created constantly. Excel lacks the capacity to consider them in real time.”
GIB Forecast for inventory planning
Error susceptibility is also a major problem, ranging from unwanted transmission errors to typos. If you want to create and leverage consistent, interface- and error-free planning, you need an SAP-integrated tool that makes use of the most recent data to determine the best possible sales plan, such as GIB Forecast. “All our data is consolidated in one solution,” adds the expert.
Another important feature is the possibility of individual planning not only concerning factories and materials, but also business processes. The GIB Forecast, for example, enables additional sales planning if required.
Different materials require different forecasts and procedures. The ideal solution enables companies to plan for the largest possible number of materials with a comprehensive selection of reliable forecasts. GIB Forecast currently offers 20 different statistical methods, and more are added with every new release.
Customers can use the currently available version to forecast requirements for spare parts and seasonal materials, among other things. “Our recommendation is to include data from the past three years in your forecasts in order to get the most reliable forecasts and statements,” Fries continues.
The GIB solution calculates how consumption fits together with different forecast scenarios and takes into account internal tracking signals, meaning mathematical deviations such as standard deviations, the forecast percentage error and others. The solution utilizes a scoring card to determine the procedure that best matches observed consumption patterns. This procedure is then also applied to future forecasts. Comparisons like these take place weekly or monthly, depending on companies’ requirements.
It is furthermore possible to connect sales and marketing systems so companies can take promotions and more into consideration. The solution also offers the possibility of adding manual planning. To make results more comprehensible and clearer, users or administrators can display forecast calculations in graphs and define parameters for the system.
Usability and simplification
Besides functional scope, service and SME specificity, small and mid-sized companies rely on usability as deciding factor when purchasing software, as usability is often what can make or break a solution.
“In our current projects, user-centric design is one of our most important focus points. We therefore increasingly rely on Fiori interfaces as they make using GIB Forecast and other features of the GIB suite even more pleasant,” Fries says. “In the future, we plan to adapt other solutions as well, as far as it makes sense. With GIB SCX, we are going one step further. The frontend of our new S/4-Hana-based solution will be entirely designed with Fiori. Our solution is based on a different, complex logic with algorithms and intra-system intelligence. Additionally, GIB suite, our proven software solution, makes use of various heuristics. In the future, we plan to increasingly focus on this intrinsic logic in order to be able to understand and meet the requirements and need of our customers.”
Usability also means that every company should be able to display their own organizational structures and requirements and get forecasts based on this information. GIB Forecast offers this level of freedom regarding sales planning.
All data are presented in graphs in a clear dashboard. The solution also enables collaboration between different departments involved in the supply chain process, including sales, distribution, supply chain management and production. Different departments can prioritize plans and information according to their specifications, supporting the operative planning results in the process.
Improved usability saves time, just like fast installation and implementation. The GIB Forecast solution was developed following SAP’s Rapid Deployment Solutions approach and consequently offers all three of these advantages.
Fit for the future
The most important question: can the solution be upgraded to S/4? The answer to this question is a resounding Yes for SAP-integrated and certified GIB software. The GIB suite is already fully operational in S/4 with all known and proven modules. GIB is SAP silver partner and has already achieved SAP Certified Integration with SAP S/4 Hana. The company is hoping to achieve its biggest success yet with a process-oriented suite specially optimized for S/4 – GIB SCX for 2020!
The new solution promises a new intrinsic logic that is even better adapted to SCM processes, increased performance and innovative functionalities not feasible in the R/3 world. In sales planning, companies will above all profit from near-real-time analysis based on the most recent data available.
GIB SCX’s core, however, is the process-independent control and optimization possibility. This opens up new opportunities in inventory management, service, and in identifying and leveraging process optimization potential more quickly and efficiently than ever before – an important aspect of effective competitive and cost advantages.
Author: Jana Hasse