Make Money by Reducing Your Inventory:
With Microsoft Dynamics NAV, you can take control of item inventories to maximize your inventory investments. Multidimensional inventory records mean you can identify items with as many variations and cross-references as you need. Dynamics NAV has fully integrated inventory management functionality to leverage to help save you money.
As a distributor your largest and most costly asset is inventory. Reducing inventory carrying cost and increasing margins can have a greater effect on the bottom line than increased sales. By doing both you will significantly increase profitability.
Forecasting and Procurement
The advanced forecasting and procurement ERP functionality can significantly aid in this process. We have had clients reduce their inventory by millions of dollars with this one tool alone. Any forecasting tool is only as good as the accuracy of the historical data used to derive its forecast of course.
The following methods are used to improve the accuracy of historical data:
- Filtered Usage – Only sales that are expected to recur should be considered as historical input for the forecast.
- One-time sales can be flagged by the customer service person and excluded from usage.
- Unusual usage is flagged by the system to provide the user a means of adjusting abnormalities.
- Smoothed Usage – Irregular usage can be automatically smoothed to improve usage patterns.
- Redirected Usage – Usage history from discontinued items can be reassigned to new items.
- Cloning – A percentage of Historical Usage can be cloned from an existing item to a new item. This allows you to forecast new items without waiting for historical usage to accumulate.
- Collaborative Input – Input from large customers who will share their expected buying patterns can be included.
Find the best fit
This forecasting uses a Best Fit Formula approach to ensure that the very best formula is automatically assigned to each item in each warehouse. The result is an extremely accurate 12- to 15-month forecast.
Let’s work together!
Many times it is important to collaborate with your large customers relative to their expected purchases. The collaborative forecast provides the user with a tool to import customer-provided forecasts and make them part of your overall forecast. In addition, you can use the forecasting engine to create a forecast specifically for a customer and export it to Excel. This provides the customer with input and also allows him to change the projections and return it to you for re-import in the system.
The collaborative forecast can be a valuable tool to improve the total forecast accuracy, but it is only valuable if it is more accurate than the statistical forecast. For this reason, the collaborative forecast is compared to actual to determine its accuracy.
Total it up!
The total forecast is made up of the following: Statistical formula-based forecast, Adjustments to the statistical forecast, including promotions, and the Collaborative forecast.
Multi-warehouse environments benefit even more. It is very important to deploy your inventory in the right warehouse with the right quantities, based on their respective forecast and expected inventory. Dynamics NAV handles hub and spoke replenishment as well as the balancing of inventory throughout your supply chain. The system reviews inventory levels in other warehouses for all the items being suggested for order. If a surplus is found in another warehouse, the user is notified, and a transfer can be created instead of purchasing more inventory from the vendor.
Alerts support management by exception. You are notified of situations before they become a problem. For instance, possible stock-outs within lead time, or late purchase orders trigger alerts.
You like to drive?
You always have drill downs and a view every step of the way to see where all the data is coming from and why. It takes on average about two to three months for a distributor to realize this system is better than a team of purchasing agents and their “gut feel”. After this point you should of course take a look at everything but you always have the option to change course on any item and steer towards more or less of them.
All of these strong methodologies work to provide the most accurate forecast and replenishment plans available today. The net result is a reduction in inventory, while maintaining or increasing customer service levels. Surplus inventory is reduced, and dead stock is identified and can be eliminated. Many companies currently using Dynamics NAV and Advanced Forecasting enjoy the efficiencies this provides and the cash it frees up to fund further growth.
You can easily manage your warehouse with Microsoft Dynamics NAV. Microsoft Dynamics NAV has a full featured warehouse management system (WMS) all built in.
How can this help me reduce inventory?
Do you ever send people on an egg hunt through your warehouse looking for something? Do you have items in your warehouse that have been there “forever”? Ever wonder what those crates are in the corner with all the dust on them? Do you spend a week each and every year shutting down your warehouse and sending a team of people to count all your “stuff”? No, well then skip over this section and keep going. If so, please read below.
A poorly run warehouse drains away your money. When your warehouse management system (WMS) is fully implemented with Dynamics NAV, processes are streamlined with access to real-time information, improved communication, and detailed reporting, to help you determine staff requirements, and estimate productivity levels. A warehouse management system (WMS) provides wireless support for receiving inbound documents, managing warehouse documents, production output and consumption.
Today’s warehouse managers are consistently finding that 2% to 5% improvement across various performance metrics can mean hundreds of thousands of dollars in bottom-line returns to the business. A WMS provides you with the tools to maintain better inventory accuracy as well as minimize write downs and write offs.
Bring it on in!
This whole thing starts with receiving. If you don’t put it away correctly and know where you put it, how do you ever expect to find it or even know you have it? Dynamics NAV will direct you to receive your items in against an outstanding purchase order and then tell you where to put them. Dynamics NAV will always remember where you put them.
How many of these can I sell?
You put them away correctly. Now what? Dynamics NAV ERP System will always remember where you put them and then also keep track of how many you have to sell. It will also track how many extras you have in overstock areas if you have them. If the bin that you pick the items from is low or below the quantity that you want to keep there, NAV will then direct you to get the overstock and fill the pick bin. It is that easy. The whole time it tracks how many items you have and where they are. This way you always know exactly how many you have and how many you are able to sell right away. No more running around your warehouse looking for them.
How do I find them when I get an order?
While entering a sales order you will see how many are available to sell. Once you put the ones you need on a sales order and release it, NAV will send that information to the warehouse. The warehouse will receive the order on their scanner. The display on the scanner will of course tell them how many of each item are needed and exactly where to find them. Once you pull them and place them in the box, you then tell NAV that you completed filling that order. Easy as that!
Now that NAV knows you pulled and shipped that order it will then remove those items from your inventory. Now you can order more. Just go back up to the forecasting and procurement section above to see how many you need. At this point you can place the purchase order for more and start this process over again. It is easy to see why you will not lose any inventory and always know where it is.
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