{"id":15622,"date":"2021-09-16T22:26:43","date_gmt":"2021-09-16T19:26:43","guid":{"rendered":"https:\/\/k-house.in.ua\/10-pravil-upravleniya-zapasami-i-ih-nalichiem-rekomendaczii-dlya-menedzherov-po-zakupkam-i-upravleniyu-czepyami-postavok\/"},"modified":"2021-09-16T23:05:09","modified_gmt":"2021-09-16T20:05:09","slug":"10-rules-of-supply-management-2021","status":"publish","type":"post","link":"https:\/\/k-house.in.ua\/en\/10-rules-of-supply-management-2021\/","title":{"rendered":"10 rules for managing stock and availability. Recommendations for Procurement and Supply Chain Managers."},"content":{"rendered":"

In the past months businesses have faced unprecedented supply chain challenges.<\/strong><\/em><\/p>\n

First came Covid-19, closely followed by container shortages and now an ongoing lack of over-priced raw materials.<\/em><\/p>\n

Each issue has had a negative effect on stock availability, leading to unhappy customers and super-stressed operational teams.<\/em><\/p>\n

Whilst there is no \u2018silver bullet\u2019 solution, this article offers 10 ways your business can help deal with stock availability challenges during times of shortage.<\/em><\/p>\n<\/div><\/div>

<\/div><\/div><\/div><\/div><\/div><\/div><\/section>

10 ways to manage stock:<\/span><\/h2>\n<\/div><\/div>
    \n
  1. \n

    Be extra nice to suppliers<\/strong><\/span><\/h3>\n<\/li>\n
  2. \n

    Track risk of run-out KPIs<\/strong><\/span><\/h3>\n<\/li>\n
  3. \n

    Up your forecasting game<\/strong><\/span><\/h3>\n<\/li>\n
  4. \n

    Remove periods of stockouts from forecasts<\/strong><\/span><\/h3>\n<\/li>\n
  5. \n

    Prioritise the right stock<\/strong><\/span><\/h3>\n<\/li>\n
  6. \n

    Allocate stock intelligently<\/strong><\/span><\/h3>\n<\/li>\n
  7. \n

    Adjust reordering calculations for variable lead times<\/strong><\/span><\/h3>\n<\/li>\n
  8. \n

    Diversify your supplier network<\/strong><\/span><\/h3>\n<\/li>\n
  9. \n

    Optimize shipping<\/strong><\/span><\/h3>\n<\/li>\n
  10. \n

    Let computers do the computing<\/strong><\/span><\/h3>\n<\/li>\n<\/ol>\n<\/div><\/div>
    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    1. Be extra nice to suppliers<\/span><\/span><\/h3>

    With everyone scrambling for stock right now (including your competitors), it\u2019s more important than ever to build and nurture strong relationships with your suppliers.<\/p>\n

    Help your suppliers to help you. The more information you can give them about your future order requirements the better. You can then have regular, open and honest discussions about the current and future risks to supply.<\/p>\n

    Start by creating and sharing a monthly order schedule. This is a demand projection, based on your sales\/production forecast, that provides a clear picture of what stock you need and by when. Armed with this information, it\u2019s then the responsibility of both parties to agree whether these expectations can be met, and, if not, what can be achieved.<\/p>\n<\/div><\/div>

    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    2. Track risk of run-out KPIs<\/span><\/span><\/h3>

    When you have supply problems you need to know what stock items are most \u2018at risk\u2019 of running out, when are they likely to run out, and by how much you are likely to be short.<\/p>\n

    If you have this critical information you can put a plan in place to help procure the shortfall and intelligently allocate remaining stock.<\/p>\n

    A basic risk of run-out spreadsheet can be easily set up using data on current stock levels, items on order \/ in transit, demand forecasts and lead times. It\u2019s then possible to work out:<\/p>\n

    \u2022\u00a0\u00a0How many days\u2019 of stock you have left until you run out<\/p>\n

    \u2022\u00a0\u00a0The total number of days you will be out-of-stock (and the longest period, if required)<\/p>\n

    \u2022\u00a0\u00a0The total amount of units you will have out-of-stock (and the largest quantity, if required)<\/p>\n

    However, such calculations are only useful if you have accurate data on your current stock levels and accurate forecasts.<\/p>\n

    If demand is consistent these calculations could be done once a week, maybe less. With more dynamic demand, they would need to be as often as possible.<\/p>\n

    Whilst this process sounds time-consuming, you could choose to just focus on your most critical or profitable items. The aim is to help your team understand their upcoming stock challenges and put a plan in place to alleviate the issues.<\/p>\n<\/div><\/div>

    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    3. Up your forecasting game<\/span><\/span><\/h3>

    Whilst forecasting right now is extremely difficult, it\u2019s important to get calculations as accurate as possible. The number one way to help improve stock availability is to understand what stock is needed in the first place. When forecasting, always remember:<\/p>\n

    \u2022<\/strong>\u00a0 Base forecasts on an appropriate historical sales\/production period that\u2019s similar to now (for most this will be a period of growth) and use that as the base forecast, instead of 2019 or 2020 data.<\/p>\n

    \u2022\u00a0\u00a0Look out for stock items with demand trends (rising or falling over a sustained time period) or with seasonal demand (annual peaks and troughs) and adjust forecasts accordingly.<\/p>\n

    \u2022\u00a0\u00a0Qualitative demand data is very important when markets are changing at a dramatic pace. Some of the most up-to-date information you can source will be from your sales team, customers and industry trade bodies.<\/p>\n

    \u2022\u00a0 Ensure your purchasing and sales\/production departments are communicating on a regular basis. At the same time, having a proactive dialogue with your major customers on upcoming requirements is essential for accurate ordering.<\/p>\n<\/div><\/div>

    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    4. Remove periods of stockouts from forecasts<\/span><\/span><\/h3>

    Over the past 6-12 months you will most likely have experienced periods when items have been out-of-stock. Make sure these are excluded from forecasts, or they will incorrectly bring them down overall.<\/p>\n

    Flag \u2018no sale\/production\u2019 periods for exclusion from forecasts or even better, make an assumption about the lost volume and add this into the forecast.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

    \"\"<\/a><\/div><\/div><\/div><\/div><\/div><\/div><\/section>
    <\/div>

    5. Prioritise the right stock<\/span><\/span><\/h3>

    We\u2019re going to assume that your business has a software system to manage stock e.g an enterprise resource planning (ERP) or warehouse management system (WMS). Hopefully it provides accurate, real-time data, as this is fundamental to helping improve stock availability.<\/p>\n

    However, whilst such systems help you manage and replenish your inventory, they are rarely intuitive enough to ensure you carry\u00a0optimum levels\u00a0of the\u00a0right\u00a0items.<\/p>\n

    It\u2019s therefore important that you do your own analysis to identify stock items that are business-critical and prioritise their management e.g check forecasts, stock levels and lead times more frequently.<\/p>\n

    A simple way to do this is to use ABC analysis. This is often used to categorise inventory items based on their sales value e.g number of sales x unit price.\u00a0 \u2018A\u2019 items have the highest sales value, so they are prioritised over \u2018B\u2019 and \u2018C\u2019 items.<\/p>\n

    For a more accurate picture, some people also include the\u00a0number of times\u00a0an item is sold. This helps prevent over-stocking of relatively high-value, slow-moving items and ensures that low-value items with regular sales are identified as ones to watch.<\/p>\n

    Stock can also be classified based on other \u2018business critical\u2019 criteria, including \u2018risk of run-out\u2019, \u2018uncertainty of supply\u2019, or \u2018importance to production\u2019.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    <\/div>

    6. Allocate stock intelligently<\/span><\/span><\/h3>

    When inventory supply is disrupted it\u2019s critical to be smarter with stock allocation and make optimum use of every stock item in your supply chain. There are a number of ways to do this:<\/p>\n

    \u2022\u00a0\u00a0If you trade across multiple sites, double-check for excess stock sat in warehouses where demand is low and relocate it to places where sales are more buoyant.<\/p>\n

    \u2022\u00a0\u00a0Be \u2018strict\u2019 when allocating stock to regional sites. People often ask for more stock than their forecast states, so they\u2019ve got that \u2018extra cover\u2019. But shipping more stock than needed to one site risks leaving your central warehouse short to supply others.<\/p>\n

    \u2022\u00a0\u00a0Understand your stock limitations (using a risk of run-out report) and then decide what to do with what you have left. This may include giving it to customers that offer the highest margin, or those that take the biggest volumes. As always, ensure plans are communicated along the supply chain.<\/p>\n

    \u2022\u00a0\u00a0If possible, centralise ordering and stock decisions. If this isn\u2019t operationally viable, make sure everyone is following the same replenishment \u2018rules\u2019, and feeding information back to a central database. This will make it easier to understand stock requirements across your business as a whole.<\/p>\n<\/div><\/div>

    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    7. Adjust reordering calculations for variable lead times<\/span><\/span><\/h3>

    Right now it\u2019s critical to closely monitor lead times to mitigate their impact on fulfillment.<\/p>\n

    Where possible, actual lead times should be tracked and \u2018action\u2019 taken when they begin to deviate from expectations. This may include increasing safety stock levels, shortening order cycles to reduce the risks associated with a delayed big order, and switching suppliers.<\/p>\n

    Some stock management systems have the functionality to take supplier lead times into account when calculating reorder points. If resources allow, these should be manually updated as often as possible – even if it\u2019s just the business-critical lines.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    <\/div>

    8. Diversify your supplier network<\/span><\/span><\/h3>

    Many companies are realising that it\u2019s time to \u2018hedge their bets\u2019 and source their goods from more than one supplier.<\/p>\n

    If you have a broad supplier base you need to continually re-evaluate it to ensure you\u2019re getting the best deals. Suppliers should be compared based on criteria that\u2019s important to your purchasing needs. This could be their lead times, unit prices and\/or minimum order quantities (MOQs).<\/p>\n<\/div><\/div>

    <\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    9. Optimise shipping<\/span><\/span><\/h3>

    If you\u2019re importing goods, you need to make every (expensive) shipment count.<\/p>\n

    Don\u2019t let suppliers ship half full containers. Don\u2019t let them fill up with items that are not business critical. Check that every shipment reflects your forecast\u2019s needs.<\/p>\n

    Alternatively, if you deal with smaller, local deliveries, you most likely have minimum order values or quantities to hit, to prevent paying carriage. Even so, it\u2019s still important to ensure orders only include items listed in sales\/production projections. Otherwise, you\u2019re simply filling up your warehouse and investing much-needed cash in stock that your business can do without.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

    \"\"<\/a><\/div><\/div><\/div><\/div><\/div><\/div><\/section>
    <\/div>

    10. Let computers do the computing<\/span><\/span><\/h3>

    Investment in technology is critical to help you manage your supply chain during periods of severe disruption. It will also keep you one step ahead of the competition as we move into a new era of trading.<\/p>\n

    Automated systems will:<\/p>\n

    \u2022\u00a0\u00a0Provide agility and control to manage the moving parts in a supply chain and to act quickly and decisively.<\/p>\n

    \u2022\u00a0\u00a0Automate every day, manual tasks, freeing-up time to communicate with customers, manage their expectations and solve their issues.<\/p>\n

    \u2022\u00a0\u00a0Ensure data transparency and improve data accuracy so decisions can be made based on facts and not \u2018guess-work\u2019.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>

    Article from CIPS”s<\/a> Supply Management Magazine 2021.<\/em><\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>\n","protected":false},"excerpt":{"rendered":"In the past months businesses have faced unprecedented supply chain challenges. First came Covid-19, closely followed by container shortages and now an ongoing lack of over-priced raw materials. Each issue has had a negative effect on stock availability, leading to unhappy customers and super-stressed operational teams. Whilst there is no \u2018silver bullet\u2019 solution, this article...","protected":false},"author":1,"featured_media":15630,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[124],"tags":[126,125,158],"yoast_head":"\n10 rules for managing stock and availability. Recommendations for Procurement and Supply Chain Managers. - \u27a4 Large knowledge base of international practices in procurement and supply. 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