IStudio (ABM Inventory)

2017

Prerequisites

At the time of preproject inspection of iStudio network in model of an economic order quantity the formula which relied on the sales forecast was put. All orders of network formed in a semi-automatic mode using the commodity accounting system 1C 8.2 by a method "mines - max." that increased labor costs and reduced quality of orders, in network there were excesses on some goods and the shortages of others. Delivery schedules were kept by managers in Excel therefore when forming orders managers in the manual mode considered this information. Also in the accounting system there was practically no possibility of assessment of excess trade inventories and the reasons of their emergence.

ABM Inventory choice reasons

For the choice of the program for inventory management market research was carried out, the company attracted the external consultant to assessment of systems capabilities and after detailed studying of the main product characteristics the choice was stopped on the solution of ABM Cloud in which algorithms the methodology of the Theory of constraints (TOS) is put. Unlike classical model of replenishment action according to the sales forecast, TOS uses the concept "stock buffer", the characterizing necessary and sufficient inventory level on each point of storage for each managed unit. The TOS system provides:

• Maintenance of volumes of trade inventories at the set level which provides permanent existence of goods at optimal stocks in a system.
• Assortment management
• The unrolled analytics about inventory condition and their influence on financial performance of business.

Except a methodological component,   the possibility of use of the program as services, the SaaS model became an important argument for decision-making for benefit of the system of AVM Cloud. The cloud model of a product does not assume purchase of a system and installation on computers of users, payment is made monthly, upon use of a system. It allows to save significantly: capital investments into a product are not required, there are no additional expenses on the expensive equipment and maintenance of a system in working order.  The company gets access to the system installed on the protected servers in data center where there are all payments and processes of work with stocks and orders.

Priyekt purposes

• Define an optimal batch of the order
• Reduce excesses of trade inventories and optimize the range;
• Improve indicators of turnover of the enterprise;
• Automate orders;
• Optimize working time of personnel due to process automation of work with stocks and orders.

Project Progress

During the project all main types of goods, except group of goods Juice segment were connected to a management system for trade inventories of ABM. For December, 2018 under control of a system 332 suppliers, about 108 thousand positions of goods. A system daily automatically creates from 150 to 200 orders to the central warehouse depending on the approved diagram of orders and also from 500 to 1000 orders for external suppliers, and about a third of these orders (28%) go to suppliers without participation of the manager, other orders are adjusted less than for 20%. On each SKU on each point of storage at connection the inventory level (buffer) which is calculated, proceeding from consumption from this link and the delivery schedule is established.  After several cycles a system automatically (or after confirmation by the manager) changes buffers, proceeding from real consumption (not forecast). This mechanism is called Dynamic Buffer Managemen (DBM, Dynamic buffer control) and is one of the main tools in inventory management on methodology of TOS.

Results of the proyet

• Orders are automated, process of the order, as well as inventory management in general, became transparent. The optimal batch of the order of a stock is automatically determined.
• The turnover was reduced by 1.5 times.
• The missed sales decreased by 39%.
• Excesses were reduced by 21%.
• The range of shops is optimized. The low-wrapped goods are revealed and brought out of the range, the range is reduced by 6%. As result, turnover indicators improved, the level of outdated stocks is reduced, the frozen money is released.
• The model of the optimal order of promotional goods is optimized.