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Long-Term vs. Short-Term Inventory Quantity Available and Inventory with Timeline

← Inventory Management
Q - As the volume of our business increases, the complications of booking orders into the future, as well as scheduling inventory receipts into the future, has made the back order function onerous. An order that is scheduled to ship six or eight months in the future grabs all the inventory, while the shipment to satisfy that order won’t arrive for another five or six months. Meanwhile, all new orders are put on backorder.

We are looking for a more flexible method of deciding the quantity available for allocation.  We need to stop orders from being partially shipped when the reason for unavailable inventory is the allocation of inventory to orders not shipping until well into the future.

Do you have options/modules/add-ons/ideas about looking at the current stock and open purchase orders on a time line to assist in allocating inventory to orders on hand?

When only a few items were involved, they could be handled (more or less) outside the system. As the number of items in this state increases and more web orders bypass human contact, keeping an eye on the problem has grown from an irritation to a headache.

Do you have suggestions for us?

A - We have comprehensive solutions to deal with your issue.

Long-Term vs. Short-Term Quantity Available (Qty Avail)


Regarding the available quantity, in Elliott we have two kinds:
  • Quantity Available: The definition of Qty-Avail = Qty-OH – Qty-Alloc
  • Excess Quantity: The definition of Excess-Qty = Qty-OH – Qty-Alloc + Qty-BO
So let’s take a look at item A that has Qty 10 on hand. Initially, there’s no order on this item.
  • Then Customer 100 places an order of Qty 3 to be shipped tomorrow. So the Qty-Order = 3, Qty-To-Ship = 3. This will cause the item Qty-Alloc to increase by 3.
  • As a result Qty-Avail = 10 – 3 = 7. Excess-Qty = 10 – 3 + 0 = 7.
  • Now Customer 200 places an order of Qty 6 to be shipped 6 months from now. Since this is going to be shipped in the distant future, you enter the order as Qty-Order=6, Qty-To-Ship=0, Qty-BO=6. This will cause the Qty-Alloc to increase by 6 and the Qty-BO to increase by 6.
  • As a result, the new Qty-Avail = 10 – 9 = 1. Excess-Qty = 10 – 9 + 6 = 7.
From the above example, you can see that Qty-Avail refers to the long-term availability. Excess-Qty refers to the short-term availability. Throughout the system, we have various options to show or use Qty-Avail or Excess-Qty based on the Global Setup.  The Fill Backorder function always uses the Excess-Qty. For the order that’s going to ship 6 months later, you will only fill the backorder prior to when you are ready to ship.

Inventory on the Time Line - ATP


As for the inventory on the time line, we have an excellent function called “Available to Promise” or ATP. ATP is Elliott’s way of doing MRP. This is the core functionality in Elliott, and it is extensive.

If you've never used the ATP feature before, we suggest you start by performing an ATP Regen by going to I/M -> Util-Setup -> ATP Regen and Process -> Generate -> Total Regen.  Don't Create Plan Order since Plan Order is another subject.

Manufacturers are generally categorized as Manufacture To Stock, Manufacture To Order, or a combination of these two.
  • If you are Manufacture To Stock, then you need forecasting.  Forecasting often can be assisted through history statistics. 
  • If you are Manufacture To Order, then you may not need forecasting.  The ATP will advise you of the shortage of materials based on the sales order, so you know exactly what to buy in order to produce the products ordered by your customers.
For distributors, the same principle applies:  
  • Some distributors/importers in the fashion industry perform trade shows and take advance orders many months ahead of delivery.  Then they will turn around and place the orders with their suppliers. This is what we call Purchase To Order.  This type of distributor/importer has a very high inventory risk.  Their job is to order the right quantity and deliver at the right time for their customer.
  • On the other hand, if you have the inventory on hand to make the sales, then you will be in the Purchase To Stock scenario.  In that case, forecasting is important.
Once you have done the ATP Regen, you can access ATP information from the following areas:
  • I/M -> Inquiry -> Available to Promise: This inquiry will let you see your inventory future balance by time line.  It is an excellent way for a customer service representative to advise the customer if there will be inventory available at a future time.  It can also be used by the buyer or planner on an ad hoc basis to see if purchasing or production is needed.
  • I/M -> Inquiry -> Stock Status Inquiry:  You can drill down to ATP from this screen. There are also many other areas in Elliott where you can drill down to the ATP inquiry.  Since ATP inquiry shows all transactions in Sales Orders, Purchase Orders and Production Orders, all quantity allocation and on-order items are reflected in ATP with detail break down.  Therefore, it is often a convenient place for you to investigate the details of allocation.
  • I/M -> Reports -> Available to Promise Reports: There are various ATP reports you can run through this option.  ATP reports can be used by the buyers or planners for purchasing or production planning.  It can be exported to CSV so you can perform an analysis on a spreadsheet.  ATP reports can also used by the customer service representatives to advise customers if any scheduled shipment will be late.
  • I/M -> Util-Setup -> ATP Regen and Process: Generally speaking, the ATP database is updated in real time automatically.  If you're using ATP for the first time, you should perform a total ATP regen.  In addition, if you want to use ATP as MRP (Material Requirement Planing), Elliott can generate plan orders for you.  You will need to generate plan orders when you perform ATP regen.  ATP Processing is a function designed for the buyers and planners.  Buyers can you this function to create PO Requisitions.  PO Requisitions can then be posted and become POs.  The planners can use this function to create BOMP production work orders.
  • COP -> Maintenance -> Forecast Maintenance: You can use this forecast function to drive your ATP plan orders. Forecast data can be imported from an CSV file. Therefore, you can manage your forecast database in a spreadsheet.  When you are satisfied, then you can import the forecast data into Elliott.
  • I/M -> Reports -> Re-ordering Advice Reports: These reports are important for forecasting purposes. In particular, the User Defined CSV Export will allow you to extract Elliott's inventory, sales, usage and ATP data in extremely flexible ways.  We call the "User Defined CSV Export" as the "Elliott Inventory Report Writer."  You can use this function to give you the necessary information for purchasing and planning.
 Below is an ATP Inquiry screen provided as an example for you:


The above explanation is a rough sketch of ATP. Please look at the following knowledge base articles for more details:
http://support.elliott.com/knowledgebase/articles/1181563-introduction-to-available-to-promise-atp

If you need more information beyond that, we suggest that you give Netcellent a call.  It may take hours of training just to get to the beginner level of using ATP. 

EMK


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