Description: How K3S-Replenish(R) Determines Overstocked Products
There are 24 sequential steps the K3S-Replenish software goes through to determine whether or not a product is overstocked.
These steps are listed below in sequential order.
Product Birth date > 90 days The system will check the date that each product entered the K3S system (called the birth date), to see how old the product is. Based upon APP
record K3S_3600 BIRTH_TEST, only products that have been around for X amount of time are included in the overstock analysis. This keeps
new products off the report. The default is set for 90 days which means a product must be at least 90 days old to be included in the overstock
analysis. The screen below shows APP record K3S_3600 BIRTH_TEST.
Last Received DateThe system will check APP record K3S_3600 LAST_RECVD to see if this setting is ON or OFF. If this setting is 1=ON then products that
have not yet been received will not be included in the overstock analysis. If the setting is 0=OFF then products that have not yet been
received will be included in the overstock analysis.
Example: If you have a new product that you placed a large order for but have not yet received it, then this product might be
considered overstocked due to the large on order quantity, even though you have not yet received it.
The APP record K3S_3600 LAST_RECVD is shown below. The default is 0=OFF to include products that have not yet been received in
the overstock analysis.
Include 'D' discontinued products?
Based upon the Discontinued products flag the system will determine whether or not discontinued products will be included in the overstock
analysis. This setting is found on screen K3S_9320 Locations Maintenance 2 of 3 where 1=YES (include discontinued products in the
overstock analysis) and 0=NO (do NOT include discontinued products in the overstock analysis).
This setting is shown below. The default is 1=YES (include discontinued products in the overstock analysis).
Include 'M' manual products? Based upon the Manual products flag the system will
determine whether or not manual products will be included in the
overstock analysis.
This setting is found on screen K3S_9320 Locations
Maintenance 2 of 3 where 1=YES (include manual products in the overstock analysis)
and 0=NO (do NOT include manual products in the overstock analysis).
This setting
is shown below. The default is 0=NO (do not include manual products in the overstock analysis).
Forward bought dateThe system will check the Forward bought date on screen K3S_3000 Product Maintenance 1 of 5. When a product is forward bought,
we must be past the amount of extra days ordered before this product will
be considered overstocked.
For example, if you bought 60 extra days worth of product because of a deal, then the system will know this extra 60 days supply is because
of a forward buy and will not consider it overstock.
The screen below shows where the Forward bought date is stored.
Is the product 'linked to' another product? The system will see if the product is setup in the ‘product link’ process. If it is linked ‘to’ a valid product, then we do not want to include
the product in the overstock analysis.
For example, if Product A is replacing Product B and you have linked Product B to Product A, then the system will not analyze
Product B for overstock.
Below is a picture of a link from product 967104 to product 751522, and thus product 967104 will not be analyzed for overstock.
Develop the ‘hold out’ quantityThe system will check to see if current hold out quantities exist for the product. If so, these quantities must be subtracted from the overall
quantity balance.
See example below where the product has a current hold out quantity of 100.
Calculate quantity balance
The system will calculate a quantity Balance for the product by adding On hand to Regular on order, and then subtracting Back orders
(if any exist), subtracting Hold out quantities (if any exist), and subtracting Transfer pending quantities (if any exist).
All of these values are shown below on screen K3S_3000 Product Maintenance 4 of 5.
Check Promotion Begin/End Dates The system will see if the product has any current promotions. If so, this quantity will be subtracted from the quantity balance.
Promotions are shown on screen K3S_3000 Product Maintenance 4 of 5 shown below.
Is the product seasonal? The system will check to see if the product has a seasonal profile assigned. If so, there is special logic that will be performed to determine
if the seasonal product is overstocked.
The product shown below on the K3S_3030 Product History is an example of a product with an assigned seasonal profile.
Is PR_FORCAST > zero ? If the product has no average then the system will skip the time calculations. See example below where the product has an average of zero.
Use Product or Supplier LT? Based on the Orders use less than supplier LT flag the system will determine if product lead time or supplier lead time should be used
for calculations. If this flag is set to 1=YES then product lead time will be used; if this flag is set to 0=NO then the supplier lead time will be
used.
This flag is found on screen K3S_9320 Locations Maintenance 3 of 3 shown below. The default is 1=YES use product lead time for calculations.
Calculate Safety StockThe system will determine how much safety stock the product should have based upon several variables.
Below is a picture of the K3S_3020 Safety Stock Simulator which can be run by pressing F15 from the K3S_1040 screen.
Calculate Maximum Days point The system will calculate a maximum days (Order up to) point by adding the Lead Time Days and Order Cycle Days to 2 times the Safety Stock Days.
The value for each of these variables is found on screen K3S_1040 Orders - Product Detail which is shown below.
Calculate Maximum Units Using the Maximum Days answer found in the previous step, the system will calculate a Maximum Units.
Perform test against Buy Multiple The system will perform a test against the Buy Multiple to determine if the product should be included in the overstock analysis.
For example, there is a slow moving product with an average less than 1 but a buy multiple of 36. In this scenario the system should not
consider this very slow moving product overstocked if it has 36 units on hand because we are forced to buy that many at a time.
The Buy Multiple is found on screen K3S_3000 Product Maintenance 4 of 5, which is shown below.
Perform test against Minimum Order Quantity The system will see if the product has a Minimum Order Quantity. If so, the product must have a quantity balance above the minimum
order quantity in order to be considered overstocked.
The Minimum Order Quantity is found on screen K3S_3000 Product Maintenance 4 of 5 shown below.
Perform test against Manual Minimum Units Two tests will be performed against the Manual Minimum Units value.
The first test will see if the product has a Manual Minimum Units value. If so then do not consider a balance less than or equal to the
Manual Minimum Units as overstock.
The value is shown on screen K3S_3000 Product Maintenance 3 of 5, which is shown below.
The second test will check APP record MIN_MAX AVERAGE=0 to see if testing should be done against the Manual Minimum Units
even when product average is 0.
When this setting is 1=ON then any quantity over that Manual Minimum Units is determined to be overstock.
Example: A tire product has a Manual Minimum of 4 tires. With this setting at 1=ON a 5th tire on hand would be considered overstock
of 1 tire.
Below is a picture of APP record MIN_MAX AVERAGE=0. The default is 0=OFF. Turning this setting to 1=ON is likely only applicable
to the auto parts industry.
Is quantity balance zero? At this point in the calculations, if the quantity balance is zero then the remaining routines will be skipped and the product is not considered
overstocked.
Calculate days supply
The system will calculate the number of days supply from the quantity balance. If there is greater than 999 days on hand then there is no
need to continue the overstock analysis as the product is obviously overstocked. On the other hand, if there is less than 1/2 days on hand
then there is no need to continue as the product is not overstocked.
Calculate days supply for seasonal products A special routine will be performed on seasonal products to determine how many days worth of product are on hand. The system is smart
enough to scale the quantity balance according to the seasonal profile. It will know that if we are about to enter the high point of the season
we should have extra stock on hand versus if we are coming out of the season we should have a lighter amount of stock on hand. The
product shown below is seasonal.
Calculate over stocked units If a product has a Manual Maximum Units value, then this value will be subtracted from the quantity balance.
The Manual Maximum Units value is shown on screen K3S_3000 Product Maintenance 3 of 5, which is shown below.
Calculate over stocked investment The system will calculate the over stocked investment by multiplying the over stocked units by the carry cost.
The Carry cost is found on screen K3S_9320 Locations Maintenance 2 of 3. The default is 40%.
Overstock CriteriaScreen K3S_9320 Locations Maintenance 2 of 3, shown below, contains 2 parameters a product must exceed in order to be included
on the overstock report.
The first parameter is Minimum dollars; the default is set at $100.
The second parameter is Minimum days; the default is set at 90.
These settings mean a product must have over 90 extra days worth of stock on hand and the cost of carrying this extra stock must be
over $100.
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