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To do so, the minimum amount of user data is required to quickly target the greatest value points A The six areas of data focus are: AREA INVENTORY NET & Absolute*
a.
b.
Absolute accuracy
LABOR*
e. 5
Labor %
BAR-CODE SCAN
f. 6
Labor %
g. B
Ratings of Performance in each category are based upon industry averages, and are depicted as; Good Best VisiblEdge
Simple Instructions: 1 Go to raw "Simple Raw Data" tab enter your data points 2 Review your performance against Best in class and Visible Edge Rates on "Simple Rates Tab" 3 Review estimated opportunity on "Simple Rates Tab" 4 Look at on "Simple Results Calc Tab", determine and input your level of confidence in "achievable results" * - Based upon 2005 Seber Logistics Study, 2006 Distribution FMI Benchmark Report
VisiblEdge Calculator
Description
The difference between perfect net inventory (differences actual vs. book) and resulting inventories, based upon applied inventory control measures The difference between perfect item level inventory and actual inventories, based upon applied inventory control measures This measurement is considered the measurement of inventory control skill, whereas "net" is a measurements of inventory "luck"
"On time in Full" shipping best in class performance versus your actuals Measures the right quality/item's) delivered to the customer on the agreed order delivery date, Lack of inventory controls and accuracy impacts order predictability.
Labor costs used to maintain your level of accuracy, includes are inventory controllers, auditors, validation steps, and inventory support.
Labor costs performing barcode scanning validations. This includes the calculated time to scan bar-codes for a given operation
Inventory confidence Safety Stock is the buffer against variability and uncertainty of inventory records. Because safety stock ties up cash by simply sitting on the shelves of plants or distribution centers, companies must identify the minimum safety stock required to meet service levels and avoid outages.
e in each category are based upon industry averages, and are depicted as; These rates are typically produced with advanced WMS tracking These rates are typically produced with standard WMS tracking
ple Raw Data" tab enter your data points rformance against Best in class and Visible Edge Rates on "Simple Rates Tab" ed opportunity on "Simple Rates Tab" mple Results Calc Tab", determine and input your level of confidence in "achievable results"
Raw Data 1
$4,000,000.00
Average of previous year monthly Used to calculate the value of dollar value of inventory maintained inventory control issues and to support the business including all percentage gains in control safety stock levels
Warehouse Labor Costs (burdened) Employee and contract resource pool costs including annual expenses and benefits Used to calculate the value of labor and percentage gains that control measures can make
$2,500,000.00
Order Sales Shipped Weekly Orders dollar value shipped weekly by Sales price $1,000,000.00 Used to calculate the value of orders and percentage gains that control measures can make
Invent. Confidence Safety Stock The estimated dollar value of on Used to calculate the value of hand inventory maintained orders and percentage gains compensate for inventory accuracy that control measures can make deficiencies. Most companies use inventory safety stock for 2 main reasons, to hedge against lead time delays and compensate for internal control timing confidences.
$30,000.00
Net inventory accuracy Net physical inventory result accuracy measured in dollar value increased, netted to dollar value decreases. physical inventory result accuracy measured in dollar value increases added to dollar value decreases. 88.50% Used to calculate the value of net inventory control improvement opportunity expressed in dollars Used to calculate the value of absolute inventory control improvement opportunity expressed in dollars
91.75%
OTIF Rates
97.50%
Percent of orders not 100% shipped Used to calculate the value of on time in full order fulfillment accuracy and control improvement opportunity expressed in percent of orders shipped in dollars Percent of operations labor used to manage order reconciliation, and order return process, including replacement order fulfillment, Include cost of goods and shipping costs required. Percent of labor (expressed in percent of work force hours) of the entire work force on supply operations that are used to control inventory accuracy including, cycle counts management, execution, physical inventory management control as well as execution and errors reconciliation. Used to calculate the value of reduced returns management labor requirements based upon advanced control measures provided by RFID solutions.
4.50%
Labor Hrs % maintaining Inv Used to calculate the value of reduced inventory control management labor requirements based upon advanced control measures provided by RFID solutions. This measures the value of error avoidance.
15.00%
10
Labor Hrs % Bar code scanning Percent of time determined that is used in the overall stocking and fulfillment process that is used expressed for bar code search and scan. Used to calculate the value of reduced labor requirements based upon advanced Auto ID properties of RFID solutions.
5.00%
Estimated LOSS $(86,000) $(80,000) $(400) $(330,000) $(200,000) $(120,000) $(40,000) $(460,000)
Estimated RISK 98.40% $(832,000) Percent of Filled complete (first time) 99.50% $(260,000) 97.50% $(1,300,000)
LABOR COSTS OF RETURNS4 5. 6. 4. Customer Returns/Labor Costs Best Customer Returns/Labor Costs VisiblEdge Your Rates >>> 2.60% Percent of items returned 1.00% 4.50%
4 not significantly different by industry $(65,000) typical WMS turns $(25,000) typical WMS rates with optional Bar-code scans $(112,500)
Percent used to validate counts, inventory and accuracy Best VisiblEdge >>> 12.00% 4.00% 15.00% $(300,000) $(100,000) $(375,000)
4
Percent time used to search and scan bar-codes Best VisiblEdge >>> 2.75% 0.00% 5.00% (due to inventory confidence) 0.00% $30,000.00 $$(30,000) unique by company/division/site (one time savings) $(68,750) $$(125,000)
4
Safety Stock 2. 3. Safety Stock with VisiblEdge VisiblEdge Your Rates >>>
Intangible Benefits to VisiblEdge 1 Better utilization of Bulk Storage areas - granular locating 2 Better utilization equipment with interleaving or workforce management 3 less customer dissatisfaction 4 without human intervention validation * - Based upon 2005, Seber Study, 2006 Distribution FMI Benchmark Report
be resubmitted again
Your rate Your Performance VisiblEdge Rate With VisiblEdgeEstimated Savings Achievable % Factor 91.75% $(330,000) 99.99% $(400) $(329,600) 50% 88.50% $(460,000) 99% $(40,000) $(420,000) $97.50% $(1,300,000) 99.50% $(260,000) $(1,040,000) $4.50% $(112,500) 1.00% $(25,000) $(87,500) $15.00% $(375,000) 4.0% $(100,000) $(275,000) $5.00% $(125,000) $(30,000) 0% 0% $$Annual Savings each One Time saving's $(125,000) $(30,000) $(2,277,100) $(30,000) 50% 75% Annual Savings One Time saving's 50% 30% 30% 50%
Insert a comment for each describing why you choose the achievable percent Savingsfor later discussions
$(312,000)
$(26,250)
$(137,500)
Raw Data 1
Inventory Onhand - Average $4,000,000.00
Warehouse Labor Costs (burdened) $2,500,000.00 Order Sales Shipped Weekly $1,000,000.00 Inven. Confidence Safety Stock $30,000.00 Net inventory accuracy 91.75% Absolute item accuracy 88.50% OTIF Rates 97.50%
Labor Costs - Cust Returns 4.50% Labor Hrs % maintaining Inv 15.00% Labor Hrs % Bar code scanning 5.00%
10
2. 3. 4. 1. 2. 3. 4.
Net item accuracy (holding cost only) Best Net Item accuracy (holding cost only) VisiblEdge Your Rates (holding cost only) >>>
typical WMS rates (with 100% bar code scan at each pick 98.00% $1,000 0.96 typical WMS rates with optional Bar-code scans 99.99% $1,000 0.96 with VisiblEdge 91.75% $1,000 0.96 95.00% $1,000 typical WMS rates (with 100% 97.00% $1,000 typical WMS rates 99.00% $1,000 with VisiblEdge 88.50% $1,000
Absolute accuracy (holding cost only) Good Absolute accuracy (holding cost only) Best Absolute accuracy (holding cost only) VisiblEdge Your Rates (holding cost only) >>>
Fill Rates with VisiblEdge (float costs) VisiblEdge Your Rates (enter) (float costs) >>>
Performance based upon Transaction speed and confiden DiscountTerm Days 98.40% 0.015 30 Percent of Filled complete (first time) 99.50% 0.02 30 97.50% 0.02 30
LABOR COSTS OF RETURNS 1. 2. 3. Customer Returns/Labor Costs Customer Returns/Labor Costs Your Rates (enter) Best VisiblEdge >>> 2.60% Percent of items returned 1.00% 4.50% VisiblEdge Percent of items returned
LABOR* 1. 2. 3. Labor % Fill Rates with VisiblEdge Your Rates (enter) Best VisiblEdge >>>
Percent used to validate counts, inventory and accuracy 12.00% 4.00% 15.00% Percent time used to search and scan bar-codes
BAR-CODE SCAN
1. 2. 3.
Safety Stock 2. 3. Safety Stock with VisiblEdge Your Rates VisiblEdge >>>
0.00% $30,000.00
Intangible Benefits to VisiblEdge 1 Better utilization of Bulk Storage areas - granular locating 2 Better utilization equipment with interleaving or workforce management 3 less customer dissatisfaction 4 without human intervention validation * - Based upon 2005, Seber Study, 2006 Distribution FMI Benchmark Report
alue Calculator
Holding Cost **Estimated LOSS holding cost $25.00 $(4,472) RAW Stats
% bar code scan at each pick movement confirm) $25.00 $(4,160) onal Bar-code scans $25.00 $(21) $25.00 $(17,160)
$25.00 $(10,400) % bar code scan at each pick movement confirm) $25.00 $(6,240) $25.00 $25.00 $(2,080) $(23,920)
ansaction speed and confidence. Float Days ****Estimated FLOAT Exposure 10 $(136,837) *expressed as float on COGS using a discount rate defined as interest rate * profit 10 $(42,761) margin, annualized 10 $(213,807)
$(65,000) typical WMS turns $(25,000) typical WMS rates with optional Bar-code scans $(112,500)
unts, inventory and accuracy $(300,000) $(100,000) $(375,000) and scan bar-codes
$(68,750) $$(125,000)
$$(30,000)
Assume underutilization as an expression of holding cost removing a safety stock factor. This is an example of how this calculation works: (100% - Net Accuracy) * Inventory on hand COGS Next divide above result by your per unit cost to get # units Next remove Safety Stock or # Units * (1-SS) Multiply the result by the per unit holding cost to get aggregate cost Assume on hand is 4 weeks. Multiply the per unit aggregate cost by 13 weeks to annualize Divide annual number by the number of inventory turns *** assumes full manual inventory count periodic per turn ***incremental sigma with SS factored out
Short Shipments may result in short payment. The interest earned on the outstanding monies is float and may constitute loss. Here is how the formula works. Take the annualized risk exposure = (1-OTIF%) * order sales weekly * 52 = Annual Risk Next discount it by the interest on the profit = (profit margin * interest rate) = discount Discount for opportunity cost = (discount / (1-discount)) Multiply out float percentage Discount opportunity cost * (360 / (days terms - float days) This is your float cost exposure Assume a linear loss expectancy rate HOWEVER Dont know when in time this occurs. Apply the 3/5 rule to be conservative Multiply float cost exposure by 60% = final float exposure
VisiblEdge Value
1 INVENTORY NET & Absolute* Net item accuracy holding cost Absolute accuracy holding cost 2 CUSTOMER SERVICE3 OTIF Fill Rates interest float 3 LABOR COSTS OF RETURNS Customer Returns/Labor Costs 4 LABOR* Labor % 5 BAR-CODE SCAN Labor % 6 Inventory Confidence Safety Stock Safety Stock dollar value 5.00% $(125,000) $(30,000) 15.00% $(375,000) 4.50% $(112,500) 97.50% $(213,807) Your rate Your Performance 91.75% $(17,160) 88.50% $(23,920)
each
$(51,314)
$(26,250)
$(137,500)