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Step D: Establish Order Cycle

Description:  How to Establish the best Order Cycle for a Supplier

This step will show you how to use the system’s Order cycle analysis program to determine the correct Order Cycle for each supplier.  
 
1. Starting from the Suggested Order Detail screen shown below,click on the Order Cycle Analysis button. 



2. You should now be on the Order Cycle Analysis screen as shown below.  This program is used to help a buyer determine the
best ordering strategy for a supplier by allowing the buyer to analyze different ordering frequencies. The buyer is able to view the total costs associated with each ordering strategy, as well as examine how each strategy will achieve a supplier’s discount bracket level (like dollar minimum, truck load maximum, etc.).  This screen gives you 5 places (labeled 1 -5) to enter possible order cycle values.  The default Order Cycle Days to analyze are 7, 14, 28, 91, and 364 days.
 
Notice how the supplier listed below has a current discount bracket in effect for a Minimum of $3,500.  When this Minimum is reached, the supplier gets $150 discount (which could be applied towards free freight).   We will be able to see how all bracket levels and their discounts affect this supplier’s order cycle; a bracket level does not have to be currently selected to have an effect on the Order Cycle Analysis program.   
                                                                                                                                                               
 
  
                                                                                                          

3. After using the 5 default values or entering your own order cycle values, press Enter .  This screen is comparing the annual net cost between the different order cycles.  The system will highlight the order cycle with the lowest annual cost.
 
Example: By comparing the annual net cost values for the different order cycles, you can see that a 7 day order cycle has the lowest
annual net cost.

    
 
4. The system will also tell you if any of the order cycles met a discount bracket level, the number of the discount bracket level that was met, and the
amount of the earned discount. 
 
Example: Look above and you can see that the 7-day, 14-day, 28-day, 91-day, and 364-day order cycles met Discount bracket level 1.
You can also see that the 7-day order cycle earned the highest dollar discount with an amount of $7,800. [52 orders x $150 per order]            


5. If you want to find the optimum order cycle that is best for a supplier, you can continue to enter possible values. From the last screen we learned
that a 7 day order cycle was better than an order cycle of 14, 28, 91, or 364 days. We will continue to enter possible values into the Order cycle analysis program until we find the optimum order cycle. 
 
Example: In the screen below you can see that values of 7, 8, 9, 10, and 11 days were entered and compared. The 7-day order cycle was found to be the winner again when compared to 4 other possible values.




6. For a more detailed breakdown of ‘how’ the 7-day order cycle is the best choice out of the 5 possible values,click Page 1 of 2 one time to go to Page 2 of 2 as seen below. 

Page 2 of 2 allows you to compare Header costs, Safety stock costs, Cycle stock costs, and Discounts earned by reaching a specific bracket level, and other factors that make up the overall Annual net cost.  



7.  After finding the best order cycle for the given supplier, you will want to compare this value to the current order cycle and possibly update the
supplier’s information to contain the best possible order cycle.

Click the Update Order Cycle button.  A window will appear that will tell you what the current Order Cycle is and also give you a place to enter a value for the new Order Cycle.  The field that lets you enter a new order cycle will default to the order cycle that had the lowest annual net
cost from the Order Cycle Analysis screen shown above.    
 
You must click the Update button  if you would like to update the current supplier’s order cycle, or you can click the Cancel button to not update the order cycle.



8.  If you chose to Update from the window, then you will see the new order cycle value appearing on the Order Cycle Analysis screen. 
                     
                  
9. Now click on the Close button and you will return to the Suggested Orders Detail screen.  You are now ready to go onto Step E: Recalculate supplier line with updated information. 


***Note***

There is another way to get to Order Cycle Analysis besides what is described in Step D above. To do this, follow these steps:


1. Click on the Suppliers button from the main menu.

2. Right click on the supplier you want to work with and select Order Cycle Analysis.

3. You are now on the Order Cycle Analysis screen.