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Most organiza,ons commit signicant resources in order to make sure customer commitments are met. Carrying the right amount of inventory is an important component in mee,ng customer demand. But, incorrectly determining inventory levels leads to wasted working capital and lost prots. Unfortunately, inventory determina,on methods are o@en only understood by a few people in the organiza,on. What decision makers need is the ability to visually see the business impact of inventory planning and the trade-os between inventory, demand, and the ,me to re-supply. The ANALYZE capability of the converts discreet customer demand into ,me based demand paLerns, providing an all in one picture of ,me, demand, risk and investment. Time-based demand paLerns provide visibility into where and when demand variability in conjunc,on with supplier lead ,mes run the risk of out-of- stocks. The result is an easy to understand visual assessment of the tradeos.
Summary
The
leverages
your
investment
in
ERP
and
MRP
solu,ons
by
turning
exis,ng
data
into
easily
and
ac,onable
informa,on
to
provide
greater
control
over
opera,onal
processes
(e.g.,
produc,on,
repair,
logis,cs,
vendor
management,
etc.).
The
results:
beLer
on
,me
delivery,
shorter
more
reliable
lead
,mes,
lower
costs
(e.g.,
over,me,
premium
freight,
cross
shipments,
outside
buys,
etc.).
ANALYZE
is
a
decision
support
so@ware
tool
used
to
size
inventory
buers
by
using
,me-based
demand
paLerns
derived
from
historical
or
forecasted
demand
in
windows
of
Time
to
Reliably
Replenish
(TRR)
with
varying
degrees
of
risk
associated
with
stock-out
condi,ons.
The
boLom
line:
WORKING
CAPITAL
PRESERVED
AND
INVENTORY
REDUCED.
DECREASED
RISK
OF
STOCK-OUTS
Business Issues
Variability in demand and resource availability makes it dicult to know when or where devasta,ng stock-outs will occur. Incorrectly sized buers lead to increased stock outs and missed sales, or reduced working capital and cash constraints. Inventory shorSalls lead to shi@ing workload and priori,es, over,me, premium freight, cross shipments, outside buys, etc. Inventory turns are too low. Too much inventory of some items and not enough of others.
All-in-one picture of ,me, demand, risk, and investment in a paLern-recogni,on based decision support system that provides what-if capability for analyzing tradeos and assessing boLom line impact. Time based demand paLerns provide for visual and numerical analyses of ,me, demand, risk, and investment reducing the need to rely on complex and theore,cally abstract formulae.
Business
Benets
Higher ll rates. Higher inventory turns. Increased working capital. Improved customer-vendor rela,onships.
ANALYZE
Types of Buers
In todays world, a great deal of aLen,on is given to sizing and loca,ng physical inventory buers. Inventory buers serve two purposes. First, they absorb the variability in customer demand. Second, they account for the variability in the ,me that it takes to replenish those inventory buers. Demand is sa,sed from physical inventory buers, which eec,vely decouples variability in demand from variability in supply. Iden,fying the maximum expected demand during the Time to Reliably Replenish (TRR) provides context in which to relate changes in inventory levels to stock outs. The solu,on is to ANALYZE inventory levels using ,me based demand paLerns to see the risk of stock outs in rela,on to variability in demand and supply.
There are three categories of buers in the Theory Of Constraints (TOC): (a) Time buers, (b) space buers, and (c) physical inventory buers. Time buers protect the ,meliness of delivery in support of execu,on management (for more informa,on on how the ONE number priority system can enhance your execu,on management see the MANAGE capability of the ). Space buers ensure that space is not the limi,ng factor to ow. Physical inventory buers ensure variability in customer demand can be eec,vely sa,sed while taking into account variability in the ,me to re-supply.
Determine the level of Inventory required to meet Demand during the Time to Reliably Replenish (TRR).
Physical Buer Size = The Maximum expected demand during the TRR yields the Lowest level of stock outs. ANALYZE processes historical or forecasted demand through consecu,ve windows of Time to Reliably Replenish (TRR) in order to produce what are called ,me based demand paLerns. Time based demand paLerns are what enable paLern recogni,on to play a key role in assessing inventory levels in rela,on to the level of risk associated with stock outs. The result is a simple, easy to learn, easy to use process for assimila,ng the tradeos between ,me, demand, risk, and investment when establishing inventory levels and customer ll rates.
ANALYZE
a new powerful pattern recognition method for managing inventory by properly sizing physical buffers.
ANALYZE
allows
you
to
use
pa8ern
recogniAon
to
determine
the
best
buer
size
that
produces
the
highest
sales
and
highest
inventory
turnover
by
saAsfying
demand
without
variability
geTng
in
the
way.
By
analyzing
actual
demand
variability
in
conjuncAon
with
a
Time
to
Reliably
Replenish
(TRR)
ANALYZE
provides
a
clear
picture
of
inventory
consumpAon
through
Ame.
ANALYZE
uses
a
patented
process
that
gives
you
the
ability
to
perform
what-if
scenarios
to
iden,fy
buer
sizes
based
on
demand,
varying
degrees
of
risk,
and
replenishment
,ming.
Establishing
an
actual
and
NOT
average
demand
paLern
provides
a
more
realis,c
assessment
of
inventory
levels
in
rela,on
to
stock
outs.
ANALYZE
synthesizes
complex
data
and
computa,onal
algorithms
providing
a
smooth
interac,ve
solu,on
pucng
you
in
charge,
by
providing
a
beLer
understanding
of
how
the
inventory
strategy
aects
working
capital
and
protability.
MANAGE IMPROVE PLAN SCHEDULE and how ANALYZE can put you in control of improving your inventory management; contact your AGI representa,ve today or visit www.goldraL.com. USA: (203) 624-9026
ANALYZE
capital limits an organiza,ons ability to meet short-term nancial commitments and accomplish long-term plans. It is important to understand the impact of inventory on working capital: too much slow moving inventory reduces the eec,veness of working capital, while not enough fast moving inventory means lost sales, reducing the inux of new money. The ques,ons of how much inventory to hold, and where to hold it, play a vital role in the short and long term nancial health of organiza,ons, and in the ability of organiza,ons to meet customer commitments.
and
are
service
marks
or
trademarks
of
the
Avraham
Y.
GoldraL
Ins,tute,
LP
in
the
United
States
and
other
countries.
U.S.
Patent
No.
8,433,592
and
Japanese
Patent
No.
5039025
for
ANALYZE.
U.S.
Patent
No.
8,401,905
and
Foreign
Patents
Pending
for
MANAGE
and
IMPROVE.
U.S.
and
Foreign
Patents
Pending
for
PLAN
and
SCHEDULE
modules.
Data
contained
in
this
document
serves
informa,onal
purposes
only.
Na,onal
product
specica,ons
may
vary.
These materials are subject to change without no,ce. These materials are provided by The Avraham Y. GoldraL Ins,tute, LP and its aliated companies for informa,onal purposes only, without representa,on of warranty of any kind, and The Avraham Y. GoldraL Ins,tute, LP shall not be liable for errors or omissions with respect to the materials. The only warran,es for the Avraham Y. GoldraL Ins,tute, LP group of products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as cons,tu,ng an addi,onal warranty.