1. Implementing SPOs: How
Part 2

2. Today’s Presenters Debbie Dotson Kyle Yost Aaron Wehrly
Sr. Analyst
Kyle Yost
Customer Support Assoc.
Aaron Wehrly
Sr. Customer Support Spec.
Brittanie Butterfield
Sr. Analyst
October 1, | 2

3. Services and Housekeeping
Before we get started
Services and Housekeeping
Please set all cell phones on vibrate
All SPO’s sessions besides the HOT (hands on training) class will be in this room through the next 3 days
Sessions will be running at various times and not within a structured timeframe. Double check your schedules on when the next class you are going to is scheduled to start.
Please fill out surveys (last page in handouts) and turn them into the front desk to receive your stickers
October 1, | 3

4. Agenda Things to cover Reorder Calculations Running SPOs
Recommended buy
Concept behind the reorder point
Reorder calcs
Math behind reorder calcs
Running SPOs
Branches, product group/buyer/supplier group/supplier
ABC criteria
Surplus
Reviewing SPOs
Review supplier/branch/items
Making changes
Creating orders
October 1, | 4

5. Recommended Buy Recommended Buy = Buy Point – Net Qty + EOQ
(Adjusted to meet minimum packs and order quantities)
Determined based on three factors
Buy Point (when to buy)
Order Point, Reorder Point, Minimum ROP
Net Quantity (inventory position)
Economic Order Quantity (how much to buy)
September 10, | 5

6. Concept Behind Reorder Point
Recommended Buy = Buy Point – Net Qty + EOQ
Definition of Reorder Point (ROP)
The point in time at which a PO needs to be issued to avoid using any safety stock
Timing is very important to customer service and having the material when the customer needs it
The three key elements of ROP
Usage – amount of material sold or used in a specified time frame
Lead Time – how long it takes to get material from your supplier
Safety Stock – additional material for the unexpected
September 10, | 6

7. Reorder Point Calculation Method
ROP = (Daily Usage x LT) + SS
Settings that affect usage
How to update usage
October 1, | 7

8. ROP = (Daily Usage x LT) + SS Settings that affect
The Usage Factor
ROP = (Daily Usage x LT) + SS Settings that affect
Various settings control what usage is included when calculating the reorder point.
History Start Date (Item Maintenance – Branch Settings)
If importing, overriding or converting usage, manually set the History Start Date.
October 1, | 8

9. Affect Usage Settings (con’t)
ROP = (Daily Usage x LT) + SS
Affect Usage Settings on Item (Item Maintenance – Misc Param)
When selling material, using material for Reman or Work Orders, or transferring material, various settings control if that usage will be used for reordering.
September 10, | 9

10. Affect Usage Settings (con’t)
ROP = (Daily Usage x LT) + SS
Level to store usage (Item Maintenance – Inv Param)
DW Inventory Level
September 10, | 10

11. Affect Usage Settings (con’t)
ROP = (Daily Usage x LT) + SS
Data Files > Sales Order Settings > Sale Types
Use in reorder calc setting
September 10, | 11

12. Affect Usage Settings (con’t)
ROP = (Daily Usage x LT) + SS
Data Files > Inventory Control > Reman Types
Affect usage for inputs
September 10, | 12

13. ROP = (Daily Usage x LT) + SS
Usage Data
ROP = (Daily Usage x LT) + SS
Item Activity
Sales order invoicing
Branch transfers
Work order usage
Remanufacturing
Credit memos
Data Warehouse
Data used for reorder calcs
September 10, | 13

14. View/Update Usage (icon) How to update
Stock Status
View/Update Usage (icon) How to update
September 10, | 14

15. View/Update Usage How to update
Stock Status
View/Update Usage How to update
September 10, | 15

16. View/Update Usage How to update
Stock Status
View/Update Usage How to update
September 10, | 16

17. ROP = (Daily Usage x LT) + SS
Usage Import/Export
ROP = (Daily Usage x LT) + SS
September 10, | 17

18. Usage Import/Export (con’t)
September 10, | 18

19. ROP = (Daily Usage x LT) + SS
Lead Times
ROP = (Daily Usage x LT) + SS
The next factor in determining the ROP is an item’s lead time
Lead Time = How long it takes to receive material once it’s ordered
This plays an important role in how much inventory you carry
You have the option to manually set your lead times or not have certain receivings affect the lead time (e.g. for special buys)
Stored in Item Maintenance > Item Supplier
September 10, | 19

20. ROP = (Daily Usage x LT) + SS
Safety Stock
ROP = (Daily Usage x LT) + SS
Last element in the ROP calculation
Used to account for unexpected usage or delivery delays
Determined based on Usage, Lead Time, and Delivery Delay Factor
Usage during Lead Time (Lead Time Demand)
Deliver Delay Factor (Lead Time Variability)
Safety Stock = Daily Usage x .7 x Delivery Delay
Daily Usage = Usage x Lead Time / 30
.7 = statistical constant that covers unexpected high usage
Delivery Delay = Worst Lead Time – Average Lead Time
Average Lead Time
September 10, | 20

21. Recommended Buy = Buy Point – Net Qty + EOQ
Net Quantity
Recommended Buy = Buy Point – Net Qty + EOQ
Net Quantity (inventory position) (On Hand – Committed + On Order – Backorders)
October 1, | 21

22. Recommended Buy = Buy Point – Net Qty + EOQ
EOQ = square root of [(24 * TAU * Purchasing Cost) / (Carrying Cost Factor * Cost)]
TAU (Trend Adjusted Usage)
Purchasing Cost, Carrying Cost
Cost (average cost)
October 1, | 22

23. Running Reorder Calculations
Purchasing > Reorder Calculations
Run once per month
Save criteria
Run through Automated Processing
October 1, | 23

24. Backward Method
October 1, | 24

25. Forward Method without Trend
October 1, | 25

26. Forward Method with Trend
October 1, | 26

27. What Agility calculates
Reorder Calculations
What Agility calculates

28. The Reorder Point Model
Mathematically expressed: ROP = (Daily Usage x LT) + SS
Initial Qty Received
P.O. Placement Occurrence 1 2 3 4 5 6
157
112 90 67 45
EOQ
Reorder Point
Max Avg Inventory Level (Safety Stock + EOQ)
Quantity in Units
Target Avg Inventory (Safety Stock + 1/2 EOQ)
Safety Stock
LEAD TIME 2 4 5 7 9 11 13 15
Weeks
September 10, | 28

29. SPO Calculation Worksheet

30. Reorder Calculations
Examples of usage, lead times, Inventory position, and EOQ parameters
October 1, | 30

31. Reorder Calculations
Backward Calculation

32. Forward Calculation (No trending)
Reorder Calculations
Forward Calculation (No trending)

33. Forward Calculation with Trend
Reorder Calculations
Forward Calculation with Trend

34. Running SPOs Stock, special orders, both Run SPOs for branch(es)
Criteria based on
Product Group/Supplier Group/Buyer-make multiple selections
Supplier-one or range of suppliers
Items to Include
All
A, B, C, D within product line/buyer/supplier group
Calculate surplus
If yes, choose branch(es)
Other options
Save criteria
October 1, | 34

35. Reviewing SPOs SPO header info SPO detail info Create orders
Review SPO by supplier
Review by branch
Review order totals
SPO detail info
Review items
Usage Info, reorder calc info, surplus info
Make changes
Quantities to order, costs, add and remove items
Exit to SPO header
Create orders
New order, append to existing
Review PO, send to supplier
October 1, | 35

36. Here’s what to do when you get back to work…
Action Plan
Here’s what to do when you get back to work…
Review sale type and reman types for affect usage
Review Item Setup making necessary corrections
Usage, Lead Times, History Start Date, Affect Usage History flags
Understand reorder point calcs and have plan for how to calculate all product lines
Run reorder calculations monthly
Run suggested POs regularly
Review SPOs and place purchase orders
Use suggested purchasing!
Contact Agility Support for follow-up questions
October 1, | 36

37. Thank You For Attending
Please fill out your surveys.
Presenter A
Presenter B
Presenter C
Presenter D
Kyle Yost
Customer Support Associate
Debbie Dotson
Sr. Analyst
Aaron Wehrly
Sr. Customer Support Specialist
Brittanie Butterfield
Sr. Analyst
October 1, | 37