ABM Inventory

2018

Prerequisites

At the time of preproject inspection of activity Avtonova-D distribution of a trade inventory from the central warehouse on shops happened to the help of the scheme min./max. Managers on shops set these parameters for automatic formation of movements in the accounting system (1C). Orders for a covering of requirement of shops and own wholesales of a warehouse arrived from the central office to suppliers. All orders formed manually managers of TsO through forms of orders in 1C on the basis of their expert opinion and data on sales. The hostless system of inventory management and manual calculation of the necessary inventory level in the central warehouse did not yield desirable results and also took a lot of time of managers which could be used for assortment management. It became a basic reason of search of the solution which would allow to automate this process and to increase effective management of trade inventories of network. Also the tool for determination of problem areas and tracking of dynamics on key indicators of the company was required: to excesses, the missed sales, turnover.

ABM Inventory choice reasons

• The methodology of a system is based not on the forecast, and on replenishment of a warehouse according to consumption. In this approach data on recent demand and that how often the goods can arrive on a warehouse are considered. At the heart of approach – the Theory of constraints of systems;
• In addition to automatic calculation of optimum level of a stock and formation of orders a system locates the integral flexible unit of analytics which allows to keep track of dynamics of key indicators of the company: the missed sales, excesses, turnover. There is an analytics by commodity groups, suppliers, agreements, managers, warehouses on the indicators stated above and also sales, a margin, the invested capital in stocks. The separate block builds in the reporting on reliability of suppliers. At the same time thanks to the fact that the solution is cloud there is no need for large investments into the software and the necessary equipment;
• After implementation training of employees in the program is provided, training materials are provided, further technical and consulting maintenance is provided;
• Big portfolio of clients and expert experience of system implementation of inventory management of ABM Inventory in the field of auto parts;

Project Objectives

• Optimize work of purchasing department due to automation of work with orders of all network. Expand the range, without increasing number of employees.
• Implement centralization of a purchasing system.
• Receive the unrolled system of analytics for control of key indicators of inventory management.

Project Progress

Before a project startup the decision on centralization of a purchasing system was made: the staff of the central office who was engaged in orders of goods at external suppliers on TsS were appointed responsible for inventory management of all network. Diagrams of formation of orders and shipments in the ABM Inventory system as earlier they were not registered in the commodity accounting system of the client were created. Managers had to hold in the head this information on the basis of which the order for ensuring optimum level of a stock in each point of storage became. At an initial stage, based on history loaded into a system on the movement of goods in a year, target buffers (levels) of a stock for each nomenclature position on each shop were automatically calculated. Managers reviewed the first orders and modified buffers where it was necessary. And also entered restrictions on the minimum buffer for some goods for maintenance of a certain stock under irregular small wholesale sales. Approximately through 2 cycles of replenishment a system configured buffers according to the actual consumption of goods on the basis of data on recent demand. Thus the algorithm of Dynamic control of buffers (DBM) functions Further work with goods substitutes for automation of process of formation of the order of the appearing nomenclature positions taking into account a remaining balance of their predecessors was organized. The algorithm of DFO was applied to inventory management of the central warehouse (demand focused order; fig. 2). The optimum level of a stock and quantity to the order in the central warehouse is calculated so that to provide requirement of shops and also to meet demand of wholesales with TsS, for a while so far the batch will not arrive from the external supplier to a warehouse. When calculating a system considers diagrams of movements of shops and deliveries from the external supplier to the central warehouse and also net average sale on each nomenclature position (promotional and seasonal splashes, days without existence of a remaining balance of goods, etc. are excluded). For December, 2018 a system about 55 thousand positions of the active range on all points of storage are controlled. From them 68% go from a system automatically right after formation of orders without adjustments and intervention of managers. Also the company uses functionality of optimization of the order on the amount thanks to which a system adds to the order goods on achievement of the threshold specified by the manager that the order amount reached the minimum specified. At the same time a system analyzes remaining balance of goods and the target objectives on them, and first of all adds top positions (generate> 80% of turnover of the company) to minimize excesses in case of optimization of the order.

Project Results

1. System implementation of ABM Inventory allowed to optimize activity of purchasing department, to reduce time of employees for work with orders and also to expand the range on 4 thousand nomenclature units without need to increase staff;
2. U of purchasing department appeared an opportunity and time to carry out the analysis of a situation on key indicators of the company, to find problem areas;
3. there Was an opportunity to use the flexible system of analytics for any creation of the reporting and the subsequent decision making on improvement of indicators of turnover, the missed sales, excesses and also to redistribution of the collected excesses on goods in network;
4. centralization of a management system for stocks Is implemented;
5. Through the mesyatsposl of connection key indicators of the company improved:

• The missed sales are reduced by 4.8% at sales growth for 9.4%;
• Level of excesses is reduced by 16%;
• The turnover for 9.2% improved.