How do I structure my inventory management?

Almost all companies attach great importance to product costing and purchasing. Only very few act with efficient control and the appropriate tools.

The beginning of a control cycle

We begin at some point with the determination of the actual state of affairs and relate this to a point in time: 10 portion bottles of water on 01.06.2019. The bottles are basicitems which we can record (touch). The associated date 01.06.2019 defines the so-called startstock. From now on, we want to use the sales with the POS system and the resulting consumption to calculate the theoretical stock and checkit against the actual stock at the end of a cycle using a control entry.

How do I divide my storage capacities?

In addition to the storage location at delivery, the mainwarehouse, your company also has several areas with its own stocks. In our example a bar and a drinks counter for the service. The portion bottles of water are stored in these three places.

Standard variant for global total stock:

You count these individual stocks together into one stock and enter this total stock as one value. The total in comparison with the target stock regulates the demand for the respective vendor. At first glance, this variant has the following advantages:

  • simple approach
  • No internal reposting necessary
  • few demands on the employees
  • suitable for small businesses

Best practice with individual points of sale

You set up the system in exactly the same way as you handle the goods in practice. Using the example above, proceed as follows: next to the main warehouse, define the point of sale Bar and the point of sale Beverage issue.

You can now store the daily target stock for each point of sale. The target stock in the main warehouse determines the requirement for order quantities from your suppliers in comparison to the actual stock, so that the CONTROLLER automatically calculates order proposals.

The CONTROLLER can automatically calculate the daily stocking of the bar and the drinks dispenser from the main warehouse on the basis of the separated stocks and automatically transfers it to the points of sale for you. If your consumption estimates are correct and if there is enough storage capacity for buffer stocks, all internal goods movements would be automated (there are various methods available for reordering during operation, which will be described later).

 

This approach has so many advantages in practice, for example:

  1. By creating individual areas of responsibility, loyal employees can distinguish themselves from others and losses are clearly allocated. The employees control each other and automatically (tips for exceptions such as shifts and group responsibility will be described later).
  2. Time saving through target stocks per point of sale, because the placement can be automated.
  3. Incorrect stocks are booked automatically and are immediately replenished automatically so that the stocks are correct for the next cycle.
  4. Promotion of quality through optimally prepared points of sale (no unnecessary gaps).
  5. Negative example: Without this method you will neither establish goods responsibility with loyal employees, nor operational automation through digitization (since the digitization of inventory movements requires accurate inventories).

See in this context also: Best practice: Different place of consumption of goods

The internal transport

Have you ever thought about describing the procurement and transport within your company to a flexible logistician in such a way that he could manage your business? Because this is how we will proceed, we will describe your specifications and delivery routes to the CONTROLLER, so that it can take over the automation of the internal goods movements for you.

First, you determine the target stocks of the skin plague, the packagingunits, the purchase prices and suppliers. On the basis of this information, the CONTROLLER can take over the automatic supplier orders.

For the best practice method with individual points of sale, set up the individual points of sale with the corresponding items and target stocks. Using the Load function, the goods are then transferred from the MRP monitor and lists are created so that your employees can deliver the items internally.

There are several ways of posting goods to the points of sale during ongoing operations:

  1. The employees order via routing slip or telephone in the warehouse and from there it is manually booked (and delivered) in the CONTROLLER.
  2. The employees order from the cashier mode in the warehouse. These orders can be printed automatically (e.g. in the warehouse) and then delivered. The transfer posting of the goods takes place automatically.
  3. The MRP monitor orders automatically on the basis of current requirements and creates delivery instructions. The transfer posting of the goods takes place automatically.

Best practice with automatic ordering

The best approach is a mixture of several techniques. It is assumed that you fill up the sales points daily with supplies (these can also be production points in the kitchen).

If you think about it, then you know that the target stock at individual points of sale per item is not static. At the beginning of a day this is usually higher than at the end. Therefore, the MRP monitor can process different target stocks according to time.

You store these target stocks according to time at your points of sale and the MRP monitor copies the internal order. Your employees receive delivery instructions and only carry them out. The reposting takes place automatically.

Certain items or points of sale where this procedure does not fit order items manually (for example, from cashier mode).

The sales variants

The sales variants (different sales items which contain the purchased basic item) represent everything that happens with the portion bottles of mineral water in your company during sales. They usually sell the bottles in portions, but at the bar they can also be used to make mojitos or spritzers.

Another possibility is to create your own products and to distribute, store and control them - more about this later.

What does the POS System do with the merchandise management system?

The cash postings are the information about a sale at a certain time and at a special price. We call this sales data, or better here cash bookings. You can evaluate the sales data with other Hypersoft programs in a variety of ways. Here, however, we are now only concerned with the economic interface to the basic items. This relationship is regulated by the ingredient list of the recipe item. This ratio is defined directly in the item master using pieces, portions, grams, or liters (the units) between the base item and the sales item.

The consumption quantities are calculated retroactively on the basis of the sales postings and the stock parts lists. This is because the sales postings have a retroactive effect on the inventory, since consumption or withdrawal postings for the base items have not taken place. The cash postings therefore generate the theoretical goods movements on the basis of this information. On the basis of the starting stock and the cash postings, a theoretical target stock is created just in time. The inventory service of the controller does the work for the calculation. It permanently calculates the theoretical target stock of your basic items on the basis of the cash postings and records these for you in accordance with the time schedule.

Let us define the term recipe item for sales items that consist of several basic items. A recipe item contains the information of the base items it contains (that is, the items you purchase) and their proportions in a number of units that you have made known to the respective base item.

Because we call self-manufactured items products, we refer to the instructions that you use to supplement the parts list with transaction instructions for production instructions, just in case you want to use this useful tool.

Internal needs

Here will be your second. Decision will take place:

Determine whether you want to place the order with one or more suppliers first (variant 1), or whether you prefer to book externally created orders into the controller just as conveniently (variant 2).

With variant 1, the MRP monitor notifies you of items that you can order from your vendors. It uses the results of the inventory service and the inventory specifications. The stock specifications easily reflect every plannable situation of your company through their time-dependent gradations. If the minimum stock level for the situation is not reached, there is a requirement to reach the target stock level. This requirement quantity is reported as a request to the ordering program. There, the actual order quantity is determined on the basis of the packaging and order units. For orders that are not dependent on the time, but should be calculated automatically at your request, we have the function Fill as an alternative to time. With this you order such marked items fully automatically, but only if you want it.

With variant 2 from above, you have the functions of variant 1 plus automatic transfer posting of goods between your warehouses and points of sale. To accomplish this task in a masterly manner, the disposition monitor informs you with clear written work instructions, which it displays and can automatically print out at the point to be delivered. Work instructions can be an invitation to manufacture your own products, or simply the delivery or collection of basic items. If your time planning does not correspond to reality, you can adjust the theoretical time or the demand to the situation with a simple intervention.

Points of sale without warehouse (restaurant)

When recipes are posted, the quantity of the base items from the stock parts list is adjusted. The controller searches for the basic items in the point of sale in which the recipe was also belly up. If the base item does not exist in this point of sale, the inventory is adjusted in the point of sale assigned to the item under Storage Location.

A "restaurant" point of sale sells recipe items whose basic items are stored in the "kitchen" point of sale. If the restaurant also has its own stock of beverages, these are usually stored in the main warehouse and the basic item is also assigned to the "Restaurant" point of sale.

Control

"In fact, there are many reasons why you should turn the theoretical inventory back into secured actual inventory. To do this, you count the base items and compare the theoretical stock with the actual stock.

We're coming to the third. ruling

Determine how exactly and how often you control how many of your items:

Once a year the entire stock, a few items a day, all sales points a week, the stock a month? We call this answer a control concept.

Your decision on a joint or separate inventory, which we described at the beginning, now has a new impact on control. Although in both cases you must check the items everywhere, in variant 2 you retain the information of the separate storage locations and thus the clear assignment of responsibility.

In order to save time and not to control more used items than to sell them, you assign your basic items to any control groups, so that you only have to control the most important items depending on the situation. For all other items, their (theoretical) target stock remains decisive until these are next in line.

Let the controller evaluate the unavoidable inventory variances according to your specifications and he will only provide you with critical information. Simply select the desired evaluation group and force information from the responsible employees during your absence in case of relevant deviations in the multiple-choice procedure.

Control remarks

Once the master data is correct and the actual situation has been entered correctly, all automation transactiones are successfully maintained with regular checks and benefits far exceed your expectations. The saving of working time, through optimal organization, is already an effective profit factor without the saving through control (by reducing the loss). The increase of the turnover by optimal goods - quality management will strengthen you additionally durably.

Another decision is pending: Either you plan a 100% start from the beginning and create the necessary employees for the start - resources or you start (for example with the automatic order) with only one supplier and you control only a few simple recipe items. In any case, it is a remarkable and equally worthwhile project to use a merchandise management system such as the controller. Everything in the right place at the right time - and it's already booked. The prospect of this success should be worth you the necessary training of your personal controller!

Orders to suppliers

The CONTROLLER can trigger orders based on current situations. Several variants of target stocks and percentage adjustment options are available for this purpose. Of course there are different procedures, from which you can choose the one that suits your processes in the section Order centerplease.

Check and Post Goods Receipt

Goods receipt increases your stock and leads to goods being invoiced to you. Practical experience has shown that around 5% of losses can already occur at the time of goods receipt. Since we are not dealing here with saleable goods, you are not actually missing the turnover, but only the cost of sales. In the case of tax audits, however, this shortfall can be recognised at sales value. This is not the only reason why incoming goods should also be regulated accurately.

The CONTROLLER has several programs for posting goods receipts, of which you usually choose one:

You can also call goods receipt using the POS function incoming goods inspectionat the POS.

Best Practice for Goods Receipt

The first reflex lets you search for a way to scan the goods for goods receipt. You can do this, for example, with the goods receipt for touch and a scanner.

Normally, however, your goods receipt has little in common with a supermarket checkout and the above procedure has shortcomings in controlling. The actual task consists of the following subtasks:

  1. Make sure that exactly what was originally ordered was delivered.
  2. Make sure that the delivery note corresponds to the delivered goods.
  3. Comment on the goods receipt in such a way that (usually later arriving) invoices are undisputed and correct as soon as possible.

If you master these three things, you will save money and those involved unnecessary work and disruptions in operations.

Simple scanning is not enough for the tasks and even distracts from them. It is also a waste of time (if I may say so: of course you may have certain reasons to scan and work differently, but in over 90% of cases it is so).

The solution is that you teach the CONTROLLER to order 100% automatically (more about this elsewhere). These purchase orders result in a goods receipt expected by the CONTROLLER for each vendor (or purchasing channel). This can be printed out as a list or in the order of the delivery note in order to be checked parallel to the delivery note and the incoming goods. This activity should be carried out by someone who is otherwise responsible for the inventory. At the end of the process, you adjust the expected goods receipt by only a few deviations and have the CONTROLLER automatically post the entire delivered goods.

  • In practice, deviations will decrease as the supply chain will notice that you notice deviations over time. Finished picked goods are not always adequately guarded on the way to you, since you usually pay the invoice without complaint.
  • If order pickers do not have goods in stock, you must of course ensure that these items are not on the invoice and delivery note, but they are still missing in the operation and disrupt the process. Shortages noticed on delivery can be demanded in your interest immediately and also at short notice for subsequent delivery.
  • Pass on clearly noted changes to the delivery note to your invoice control department in the same way, as these remaining deviations are responsible for more than 90% of the remaining invoice differences.

Back to the parent page: Choosing the optimal inventory management system