New Ways to Painless Inventory Management Ugne Kontare Business Development Manager ugne@soft4.eu +370 682 55216 www.soft4.eu
Introduction What is Softera Baltic Softera Baltic is an enterprise resource planning (ERP) software provider, located in Lithuania, Europe. Softera Baltic is a trustworthy Microsoft Dynamics Business Solutions Gold partner, delivering highquality IT services related to the Microsoft Dynamics NAV, CRM and Business Intelligence solutions. 2
Introduction What is SOFT4 SOFT4 is a registered brand describing software solutions for Distribution companies, Financial and Property Management sectors. There are 3 main verticals and 1 horizontal covered under SOFT4 brand: Soft4Leasing, a software solution for the asset finance companies; Soft4Microfinance, a core banking system for small and medium-size financial institutions; Soft4RealEstate, a property management software for the commercial property management companies. Soft4Inventory is a solution for the effective stock level management within NAV according to the best practices of the Theory of Constrains and LEAN methodology. 3
Introduction SOFT4 Partner Network There are about 3 500 Microsoft Dynamics NAV partners worldwide. SOFT4 has partners in more than 30 locations and the network grows fast we add in average 5 partners per year. 4
Introduction Why Distribution companies, together with Manufacturing companies, take the biggest part among MS Dynamics NAV customers. Inventory management savings and improvements reflect significantly at the bottom line. There is programmed conflict regarding inventory management process in the company. Sometimes other inventory management concepts and tools, such as Min/ Max or Forecasting, do not work. 5
Inventory Management Approach
Inventory Management Approach Pull vs Push 7
Inventory Management Automation
Inventory Management Automation Inventory Management Automation Methods 1 Automated Forecasting Forecast quality is based on history, expecting it will be repeated in future. 3 Dynamic Buffer Stock buffers are monitored against consumption and dynamically readjusted accordingly 2 Min Max Specify minimum and maximum inventory levels; when the inventory level drops below the minimum, the action is required in order to bring the balance back up to the maximum. 9
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Automated Forecasting Historical data is seldom reliable and repeatable. When stock is out, this leads to lost sales. 10
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Automated Forecasting Historical data is seldom reliable and repeatable. When forecasting is made upon special deals and offers, this leads to overstock. 11
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Automated Forecasting Summary: Data quality issues can t be solved 100% automatically; Each algorithm setup performs well only in certain cases and in certain periods of time; Forecast errors are unpredictable and could be significant; Therefore forecasts for every item must be revised by high competence staff. It is a costly and time consuming procedure. 12
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Min - Max Main challenge is to find which item requires Min - Max level adjustment. Summary: Min and Max levels for each item must be adjusted manually; Min - Max levels must be adjusted after demand, lead time or replenishment cycle changes; Automatic Min and Max adjustments could be done using forecasting algorithms, with all the earlier described problems. 13
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Dynamic Buffer PRINCIPLES 1 2 3 Order ONLY what s been sold Stock is enough ONLY till the next replenishment Adjust inventory levels ONLY when the situation changes 14
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Dynamic Buffer Adjust inventory 3 levels ONLY when the situation changes Demand changes Lead time changes Unreliable supply occurs Permanent customer is lost End date of item life-cycle changes Promotion campaign starts Reacting to the actions of the competitors Other factors 15
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Dynamic Buffer: typical chart 16
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Dynamic Buffer: changed situation 17
AUTOMATION METHODS 1 Automated Forecasting 2 Min - Max 3 Dynamic Buffer Dynamic Buffer: changed situation 18
Soft4Inventory www.soft4inventory.com
Soft4Inventory Watch Soft4Inventory video 20
Soft4Inventory Software Features SKU Data Management Feature Visualization Inventory Level Management Periodic Activities Replenishment Procedure Management Other Features 21
Soft4Inventory Periodic Activities Daily Workflow: Role Center 22
Feature Visualization Check Items Black and Red Cases: check the Items with critically low inventory level 23
Inventory Level Management Buffer Management Operation type: Manual/ Automatic 24
Periodic Activities Software Features Monthly Workflow Data for KPIs It is recommended that an ongoing improvement process should be launched in order constantly to increase inventory efficiency. Soft4Inventory provides unique data for a customer s BI system; with this data, KPI reports can be set up: Overstock and Lost Sales. Recommendations for these KPIs are incorporated into the Soft4Inventory documentation. 25
Value of Soft4Inventory
Value of Soft4Inventory Reference Profile AD Baltic is the representative for the Baltic States and Belarus of the leading international automotive parts wholesale group of companies AD International. The Company s annual turnover is more than 40 million euros. more than 50,000 item positions stock being managed from a central warehouse and 23 other divisions more than 400,000 SKU in total 27
Value of Soft4Inventory Results Achieved During the 2 months following Soft4Inventory implementation: Decreased inventory (about 39%) Increase in sales (about 20%) Increased service level (from 87% to 93%) Increase of Turnover ratio (x1,5) Decreased inventory relocation costs (near 0) Decreased amount of overstocked items We chose Soft4Inventory software solution, using dynamic buffer technology, which resolved our trade-specific challenges better than previously used automated forecasting and MinMax tools. Soft4Inventory is built into our operational Dynamics NAV system; as a result, the IT system load decreased, and we now also have faster access to all the necessary information. 28 Executive Director Andrius Rinkevicius
Value of Soft4Inventory Reference Profile Founded in 1931, today Audimas is the leading brand of clothing for active leisure and sports in Lithuania with more than 30% market share. 6 branded stores in Lithuania, 11 shops operating on a franchise basis, e-shop, wholesale, export to other European countries. more than 250,000 SKU in total. yearly turnover more than 11 mln. Euro 29
Value of Soft4Inventory Results Achieved During the 3 months following Soft4Inventory implementation: Decreased inventory level for certain item groups (about 40% with service level kept at 97%) Only up to 1 hour per day is needed to plan inventory of 250 000 SKUs Inventory ordering and distribution is planned in unified system; this allows planning item quantities more precisely Great variations of items, strict seasonality, short product life cycles and long delivery times are key challenges which our company's inventory management system must deal with. We chose Soft4Inventory as a system based on the dynamic buffer principle, which mastered challenges caused by our trade specifics much better than previously used inventory management tools. Brand Product Manager Ramunas Sadauskas Visualization tools allow to diagnose fundamental problems and take appropriate decisions fast and easy. 30
Value of Soft4Inventory Other Targeted Companies Soft4Inventory brings benefits to massproduction manufacturing, distribution, wholesale and retail companies: Motor vehicle parts and accessories merchants Construction material merchants Various equipment merchants Household appliance, electric houseware, and consumer electronics merchants Stationery and office supply merchants Drug merchants Grocery merchants - dairy products, meat and poultry, fish and seafood, confectionery etc. Beer, wine and distilled alcoholic beverage merchants and more! 31
What s Next?
What s Next? Customer s Expectations Reduced amount of lost sales Higher ROI Improved turnover of goods Lower inventory managing costs 33
What s Next? Procedures Implementation period: 3-4 months Concept development Revision of procedures Initial set up Process implementation Support Project payback: because of Reduction of lost sales Reduction of inventory level < 6 months Reduction of inventory management costs 34
What s Next? Sales Tools Use Soft4Inventory Benefit Calculator and get more precise evaluation of what results to expect! www.soft4inventory.com/calculator 35
What s Next? Sales Tools Simulation Actual Simulation 36
What s Next? Sales Tools Simulation Actual Simulation 37
What s Next? For SOFT4 Partners Marketing materials Sales training with process consultant Standard documentation and implementation procedures during the project Margins from Soft4 licenses, implementation and support. 38
Let s talk! Soft4 booth #S4 For more info, please contact us at ask4soft@soft4.eu +370 682 55216 or visit www.soft4inventory.com