Tag: inventory

Maxime Petit

Maxime Petit

Supply chain consultant

In an increasingly connected world, digitization has profoundly transformed many aspects of our lives, including how businesses operate. Once considered a competitive advantage just a few years ago, digitizing business processes has now become essential for any company wishing to remain competitive in the market. Gartner’s figures confirm this trend: 69% of companies have already implemented or are in the process of implementing a digital procurement solution that will enable them to achieve savings of 10 to 30%. As a crucial element of the supply chain, procurement is not exempt from the digital revolution. From supplier research and selection to invoicing, and contract management, all procurement procedures in a business present significant opportunities for digitization and even automation.

The primary goal of procurement digitization is obviously to reduce the risk of errors, centralize data, or streamline processes. However, with current technologies, it is also possible to go much further. For example, did you know that artificial intelligence can predict a potential stockout from a supplier, adjust inventory levels accordingly, and even search for alternative options on the market, all without any human intervention? Of course, all these advanced technologies are not even conceivable without the prior digitization of the company’s key procurement processes. That’s why this article presents the various possibilities of digitization, their advantages, and some future trends.

Procurement Digitization

To visualize the functionalities and possibilities brought by digital tools, we use a visualization of the “Source to Pay” process that defines the entirety of the purchasing cycle.

Depending on your needs, it may be wise to implement one or more specific solutions targeting a single procurement function at a time or to resort to the most comprehensive solutions on the market covering the entire Source To Pay (S2P) process, such as Coupa, our partner, and one of the market leaders. Whether by implementing a comprehensive solution comprising several modules or different solutions per function, it is essential to ensure that information is transmitted smoothly between the different modules, but also to other IT systems of the company (ERP, accounting information, HR, transport systems, etc.).

1.Source To Contract

The Source to Contract (S2C) function is a key step in the procurement process within a company. It encompasses all activities related to identifying potential suppliers, negotiating contractual conditions, and managing contracts throughout their lifecycle.

This part of the process generally involves many manual tasks involving multiple actors. By implementing a digital solution, we can reduce these manual tasks to focus on more strategic tasks. A digital S2P solution allows, among other things, to:

  • Send RFx via the platform.
    Collaborate among all internal parties during supplier selection.
  • Automatically create a contract draft based on the selected offer.
  • Centralize and make contracts accessible to all authorized persons.
  • Track deadlines and receive notifications as they approach.
  • Create reports that facilitate supervision.

2.Procure To Pay

The Procure to Pay (P2P) function represents all processes related to the acquisition of goods and services up to supplier payment. It includes all stages, from supplier selection to finalizing payments.

With a digital P2P solution in place, the system allows users to:

  • Make purchases as on any other B2C online shopping platform.
  • Directly see existing contracts to prioritize contract purchases.
    Approve purchase requests.
  • Track the approval of their purchase requests in real-time.
  • Automatically send an order to the supplier after approval.
  • Receive goods.
  • Create reports to control, supervise, and make informed decisions.

Regarding invoicing, a digital invoicing solution provides the ability to:

  • Receive supplier invoices automatically based on orders.
  • Digitize a PDF invoice using an Optical Character Recognition (OCR) tool.
  • Authorize payment if the invoice matches the order and receipt information.

Of course, a digital P2P solution must be adapted according to the needs of each company. Multiple parameters are customizable, such as authorizations, approval chains, automated elements with or without prior control, notifications, accounting data, etc. An implementation partner, such as Conseil 2.0, is of strategic importance to build a solution that meets the exact needs of the organization.

Advantages of Digitization

1. Reduction of Manual Tasks and Focus on Value-added Tasks

One of the main advantages of digitization in procurement is the reduction of manual tasks and the potential errors associated with them. This frees up time for employees to focus on high-value tasks such as supplier selection, contract negotiation, or expense analysis. Combined with better visibility and integration of the organization’s data, this productivity gain can quickly become exponential. Additionally, digital tools ensure reliability and traceability of actions, as well as a distribution of tasks performed among different actors, enabling easier management by managers and empowering employees.

2. Increased Data Visibility for Better Decision Making

The second advantage we chose to highlight is not limited to the procurement function but extends to the entire organization. Indeed, thanks to the digital tools in place, we can collect, store, and analyze purchasing data in real-time. This allows us to have a complete and precise view of expenses, including the most spent product or service categories, the most used suppliers, price trends, categories requiring new contracts, etc.

This increased visibility allows us to make more informed and strategic decisions. For example, we can more easily identify cost reduction opportunities by spotting categories where we can consolidate purchases or negotiate preferential rates by reducing our supplier base. The logistics department can also use this data to anticipate market fluctuations and adjust procurement strategy accordingly, optimizing performance and remaining competitive.

All this data can also be compiled into dashboards that centralize important information. For example, we can compile data into a dashboard to easily find contracts nearing expiration, for which we need to renegotiate the budget, for which market prices have decreased, etc. In turn, these dashboards can be used in a control tower, a concept we discuss in more detail in our other article.

For more information, feel free to consult our article dedicated to control towers in the supply chain.

3. Process Standardization and Cross-functional Collaboration

Implementing a P2P solution is also an opportunity to standardize procurement processes across the organization. First, the implementation of a new tool involves organizational transformation and is therefore a good time to collect everyone’s needs and redefine existing procurement processes. Then, by implementing a single tool for the entire organization, we ensure compliance with purchasing policies throughout the organization. The purchasing department, therefore, increases control over purchasing operations without diminishing the freedom of the rest of the company, or even increasing it. Furthermore, digitizing procurement through a single tool promotes collaboration by facilitating communication and information sharing between internal teams and also with external partners. This improves operational efficiency, strengthens relationships with suppliers, and better meets internal customer needs.

4. Integration of Sustainable Development in Decision Making

At a time when climate issues are becoming increasingly important, it is clear that the procurement function will have an important role to play in the ecological transition. Indeed, it is through procurement that emissions are mostly emitted, even if they are indirect emissions. According to Gartner, the lack of data is the main barrier to more sustainable procurement according to companies. Digitizing procurement functions now allows us to collect and analyze relevant data on our purchases, such as the carbon footprint of products, the ethical practices of suppliers, or the use of recycled materials. Provided that our suppliers are able to provide us with this information, digital tools allow us to compare and make informed choices in terms of environmental impact. These tools also help us to provide this information as comprehensively as possible to our suppliers. This demand for information will certainly become more frequent and rigorous in the near future.

For more information, do not hesitate to consult our article dedicated to sustainable development in procurement or our ESG service page.

If this article has piqued your curiosity or if you would like to learn more about the various ways to increase the digital maturity of your organization, do not hesitate to contact the Conseil 2.0 team. Our team consists of multidisciplinary experts in the supply chain, including procurement digitization specialists capable of meeting your needs. Conseil 2.0 contributes to value creation in the supply chain by offering solutions tailored to each company.

Audrey Lépine

Audrey Lépine

Consultant - Transportation & Networks

In an era of globalization where the supply chain must face increasingly unforeseen circumstances and uncertainties, it is crucial that it be responsive and adaptable to all situations. Recent years have taught us that managing this chain is essential to a company’s success. A malfunction at any point in this chain can have an exponential impact on the entire company. However, this chain has become increasingly complex, with suppliers, production sites, and customers spread across the globe, making it difficult to control each stage.

For some years now, a new optimization tool in this field has been highlighted by several technology solution providers to assist in daily and strategic management.

But what is a control tower in the supply chain and how can it be beneficial?

A control tower, also known as a “supply chain control tower”, is a centralized system or platform that allows stakeholders in the supply chain to control and optimize the entire chain end-to-end. The goal is to:

  • Centralize data and provide comprehensive visualization.
  • Facilitate decision-making through analysis and simulation.
  • Improve communication between different departments.
  • Simplify and automate event management.

The supply chain encompasses several departments such as procurement, logistics, transportation, planning, distribution, and customer service, among others. Each department has its own performance indicators, goals, and tools, often leading teams to work in silos. However, when an issue arises in the supply chain, such as a supplier delivery delay, all departments can be affected.

For example, the procurement department may be notified of a supplier delivery delay. It can then choose to accept the delay or opt for expedited delivery, which would increase costs. A delay in receiving raw materials can lead to delays in production, distribution, and delivery to customers. Without a control tower tool, the procurement department risks making decisions based solely on its own performance indicators, without considering the impact on the entire chain and on customers. Other departments will be informed late of these impacts, leading to multiple communications.

With access to a control tower tool, the various affected departments can be notified of a supplier delivery delay and immediately assess its impact on their operations. They can then collaborate and conduct simulations to determine how to mitigate the consequences of the delay while limiting costs. The problem is thus addressed proactively, and all stakeholders have visibility into the situation.

By aggregating data, the supply chain team has better visibility into each stage of the chain in real-time. They can monitor the movement of products and inventories regularly to identify risks and issues upstream. Many software solutions offer simulation tools that use historical, real-time, and trend data to validate decisions and assess their impacts.

This tool is used daily by all stakeholders in the supply chain to track their operations and assist in decision-making. For example, if a customer requests a product urgently, the sales team can submit the request, and each link in the chain can check if they have the capacity to respond to the demand without impacting other customers. Additionally, this tool can be used to assess the additional costs that an urgent order would entail.

Factors to Consider

While control tower solutions offer complex analysis and visibility tools, it is important to also adjust the processes and working methods of stakeholders to fully benefit from them.

When implementing a control tower tool, it is crucial to consider the various aspects of technological transformation:

  • The scope of the project must be defined, and the technology must be selected based on identified needs and objectives. The tool must integrate with the software already used in the company.
  • A change in processes and work habits is necessary to have a positive impact on the company. The tool must be integrated into daily tasks, and the interfaces must be adapted to the needs of each group of employees.
  • Employees must be trained on the new tools and supported throughout the transition. Change management strategies must be implemented to ensure adoption by all departments of the company.

Conclusion

A control tower tool in the supply chain can have positive impacts on companies. However, having a tool that provides visibility alone does not guarantee positive results. It is essential to accompany the project with change management throughout the organization to ensure the buy-in of all stakeholders and thus fully benefit from it.

Year

2023

Type of Project

procurement

Savings

Costs
and productivity

Directed by

Guillaume st-amour

Overview

Customer Presentation

Our client is one of the global leaders in manufacturing and distributing high-quality, disposable preventive products for infection control in medical, dental, industrial, veterinary, laboratory, and health and beauty sectors. Headquartered in Montreal, the company operates in 50 countries, owns 8 fully controlled manufacturing plants across North America, Europe, and Asia, and sells its products in over 95 countries.

Mandate

The project aimed to modernize the pallet labeling system by integrating Tasklet Mobile WMS. The goal was to streamline the transmission of Advanced Shipping Notices (ASN) via EDI by providing accurate details and ensuring that labels compliant with the GS1 standard were printed on the pallets.

Client's goal

The primary objective was to prevent the imposition of penalties by the two major clients on shipments. The secondary goal was to establish a standardized process that could be used for any client requiring similar information through EDI and on pallet labels.

 

Execution of the project

Conseil 2.0 conducted multiple interviews and workshops with various stakeholders to understand processes, identify pain points, and plan the execution of the mandate.

Here is the six-step methodology to achieve the client’s desired results:

The first step involved analyzing the needs and current systems at sites in Canada and the United States. This included establishing dedicated project teams and appropriately allocating resources while ensuring the development of a synchronized schedule with clear steps to ensure effective project progression.

We implemented Tasklet Mobile WMS and set up essential hardware, including scanners and printers, in both client warehouses (Canada/USA). The project teams then conducted a thorough review of EDI and labeling systems, integrating them with Microsoft 365 Business Central.

We conducted sandbox tests for each warehouse, evaluating the systems developed in Microsoft 365 Business Central. Subsequently, we gathered user feedback during working sessions and made necessary adjustments in response to their comments.

Conseil 2.0 provided training to the staff on the new systems, focusing on the features of Tasklet Mobile WMS and the new processes integrated into Microsoft 365 Business Central. Simultaneously, we developed the necessary documentation to facilitate usage and organized knowledge-sharing sessions with the warehouse teams.

Following successful tests, we implemented the systems on a large scale in both warehouses. Subsequently, we established continuous monitoring of their performance using the tools integrated into Microsoft 365 Business Central, while regularly gathering feedback to make ongoing improvements.

Results

This successful collaboration enabled the client to successfully complete the project within the deadline, thereby avoiding any penalties. Simultaneously, we preserved and even enhanced the customer experience without observing an increase in overdue orders. The standardization of the process contributed to maintaining productivity at an optimal level. Furthermore, the adaptable EDI configuration offers the opportunity to extend these benefits to other clients with similar requirements, showcasing the flexibility and added value of the implemented solution.

Year

2023

Type of Project

Inventory

Savings

274K$

Directed by

Afef bouguerra
Audrey Lépine

Overview

Customer Presentation

Our client is a major player in the tire distribution industry in Canada. Having experienced significant growth in recent years, the company now operates around twenty distribution centers. Due to this rapid growth, our client aims to revisit its processes and operational management methodology to adapt to the new volume of business and operational complexity it faces.

Because of the nature of the product, the client experiences significant bi-annual seasonality in its operations. Furthermore, during these peak seasons, deliveries must be completed in less than 3 hours. Product availability is therefore extremely important during the high season.

Numerous flows existed between each of the depots to ensure tire replenishment or when products from an order are not available at the relevant distribution center. All these inventory manipulations and movements have an impact on the company’s operational performance and, consequently, on product profit margins.

Mandate

Conseil 2.0 was commissioned to assess the operational efficiency of this client’s supply chain. During this mission, after reviewing the processes and analyzing historical data, Conseil 2.0 identified opportunities for improvement and defined recommendations for best practices to be implemented.

Client's goal

The customer wanted to optimize its supply chain to reduce costs while maintaining or even improving service quality. The team wanted to improve operational efficiency across the organization and implement best practices for their needs.

Execution of the project

The customer had defined shuttle routes between warehouses, enabling products to be transferred as and when required. Some warehouses were not linked by a direct shuttle route. In these cases, products would make up to 5 stops before reaching their destination. Two types of product movement exist: “Order transfer” is a product movement triggered by a customer order with at least one product stop in a warehouse during the route, while “stock transfer” is a movement triggered by replenishment (prevention) parameters. 

According to our analysis, 27% of orders were met by Order Transfers, with 32% of Order Transfers having more than one stop, and 24% of transfers concerned products later defined as “slow movers”. We therefore concluded that the number of movements needed to be considerably reduced, and that we also needed to review the strategic positioning of stock to meet demand by moving less stock between warehouses.  

Conseil 2.0 decided to implement a Pareto classification to apply a strategic positioning of stocks and reduce their movement. In this case, intelligent inventory management increases the availability of fast movers in all warehouses and reduces the number of movements and space occupied by slow movers.

As we saw earlier, there are too many transfers between warehouses, and they take place between each of them. We therefore decided to define Hubs that would be the source of central replenishment. We started with a data analysis. Among the 20 depots, we highlighted 4 major ones that would also serve as Hubs. These Hubs were identified by considering 3 criteria: warehouse capacity, strategic location and sales volume in 2022.

Using Pareto classification, we established 3 categories of items A, B and C to identify fast movers vs. slow movers. The aim of this tool within the project is to reposition stocks more judiciously. This general classification also enables us to compare warehouses and identify the particularities (geographical, demand, supply, etc.) of each one, in order to adapt the inventory management strategy.

Due to the wide variation in demand between warehouses and the high number of SKUs, we have also classified by warehouse. This makes it possible to identify SKUs that have very few sales in the depots concerned. Therefore, 3 new categories C, D and E have been added to better represent slow-mover products that will have to be handled differently. Many non-value-added movements were made on these products. Demand being highly volatile and difficult to predict, they generated more handling, which had a significant impact on profit margins.

In order to optimize the company’s service level, for which availability is very important and seasonal, while limiting non-value-added activities, we proposed a class-based inventory management method. We have removed D and E products from small depots and concentrated them in hubs. C products will be partially stored in small warehouses and the remainder will be positioned in the hubs. This will increase A- and B-graded inventories in the smaller warehouses.  

Product classification has also enabled us to review replenishment methods according to product. Fast-mover products will be replenished based on dynamic min/max parameters reviewed frequently according to the product’s season. For smaller demand products, initial replenishment at the start of the season will be carried out according to the above-mentioned stocking rules. In-season replenishment will be carried out through warehouses identified as HUBs only.

Results

  • Partial centralization of category C and complete centralization of categories D and E in the hubs. Given that these products account for only a small proportion of sales, this frees up space in small warehouses for fast movers.
  • By centralizing products and defining direct (non-stop) supply routes, the number of tire handling operations will be reduced by 990,576, the number of chain routes will be cut by 55% and this will reduce the distance transported by 15.4 M km annually. Considering that a truck emits 2.8kg of greenhouse gases (GHG) per liter of diesel consumed, our recommendations will reduce GHG emissions by 21,560 tonnes.
  • Adjustment of service levels for categories A and B (increase in stocks in local depots and consequently service quality).
  • Modification of replenishment methods by category: Adjustment of dynamic min/max parameters to consider seasonality and replenishment strategy. (Centralized or by warehouse).
  • Thanks to a balance between increasing the availability of the vast majority of products and reducing stock movements between warehouses, Conseil 2.0 was able to achieve operational savings of $724,000, as well as a significant reduction in GHGs.

Route diagram before the mandate

Route diagram after the mandate

Due to the quantity of back orders in many sectors, consumer habits have significatively changed. Unavailability of certain products pushed consumers to buy alternative products and brands, which enabled them to discover other available options. The question is will they continue to buy these products and brands in the future, or will they go back to their old habits?

Consumer behavior will certainly be very different according to the sales sector, especially when considering the important price increases that affect buying trends. For example, for the food and beverages industry, buying habits might remain mainly unchanged, whereas the purchase of clothing, and sporting goods, etc. might evolve very quickly according to the needs and financial situation of each family. It is therefore extremely important for retail companies to monitor any changes in their clients’ purchasing habits, in order to react very quickly, in a way that will be beneficial to companies.

Digitalizing Purchasing Processes

These past years have propelled us towards a fast acceleration in online sales, thus adding an important challenge to companies that were not prepared for this phenomenon. Digitalizing purchasing processes represents an advantage for all companies, it simplifies tracking of their clients’ purchases. Diligent monitoring of their website activity can help them understand the evolution of the demand, thus enabling them to place the necessary orders with their suppliers in order to meet their demand.

One thing is for certain, it is never too late to review tools and processes. Companies need to have the right tools and efficient processes in place to meet their specific needs. This is important in order to manage and plan demand accordingly and place orders months in advance, as requested by many suppliers. Several tools using artificial intelligence and machine learning are available on the market and are gaining in performance and popularity. Companies that are willing to improve their demand planning and maximize their profitability might have an interest in them. In addition, a study conducted by Gartner demonstrated that machine learning is most used for demand planning, in the whole supply chain.

Reviewing Processes for Better Agility

Changes, disruptions, challenges, and unexpected events have occurred in all organizations since 2020, increasing the need to perform complete efficiency audits of all processes. In fact, what we are realizing is that many companies are not ready to adapt to the new reality they are facing.  Process improvements can allow companies to target the best tools suited for them, in order to be as efficient as possible. The goal is to increase the organizations’ agility and proactivity to exceed their clients’ needs, a target that all retail companies should thrive to achieve in 2022. In fact, according to Gartner, 96% of retail companies plan to invest to make their supply chain more agile in 2022, while 90% want them to become more resilient. Counter to what many organizations might imagine, a return to your old « pre-pandemic » habits is neither realistic, nor desirable. What better time to bring your company back on the right track?

C2.0 analyzes and implements tangible solutions that have an impact on the entire supply chain. We support you in sourcing, organizing public and private tenders, selecting and managing suppliers, improving your Procure to Pay (P2P) process, optimizing your strategic purchasing, inventory, and implementing purchasing policies and procedures.

Contact us

Year

2019

Type of Project

Inventaire

Savings

3M$

Directed by

Martin Nadon

Overview

Customer Presentation

Our client is the Canadian leader in the auto glass replacement, repair and distribution sector.

Mandate

C2.0 has been mandated for a project to optimize the supply chain, more specifically in terms of demand management, purchasing and the distribution network of these warehouses.

Client's goal

Increase system usage and revalidate parameters for demand management. Ensure employee training to ensure a continued understanding of the system.

Execution of the project

C2.0 was mandated for a 16-week term. As part of the mandate, the approach proposed and adopted by the client consisted of 5 steps:

According to Pareto’s classification, we established distinct categories in order to establish adequate inventories according to the type of products and to ensure that we maintained an optimal inventory for the client’s demands.

We have adjusted the level of service in order to answer correctly to the inventory classification. Thus, we have increased the level of service for inventories classified A and B and it has been revised downward for inventories classified C or lower.

We have standardized the replenishment cycle to define the optimal reorder point calculation. This has resulted in higher inventory turns for high-volume products and also minimized orders by purchasing 3 to 6 months of inventory for low-volume items, thereby reducing product handling and reducing breakage losses.

The client had two delivery times, one contractual and one calculated. Therefore, we recommended the use of a single delivery time for suppliers, which allowed to reduce the minimum inventory level for all items. It also allowed to manage a more accurate material receipt date because suppliers deliver on time, so the additional calculated lead time that was in the system had no added value.

To optimize inventory, we set the min/max parameters based on a weekly order lead time, a safety stock that takes into account the distance between the warehouse and the distribution center, and a replenishment cycle based on the size of the warehouse.

Results

The optimization of operations that C2.0 carried out at the client’s site resulted in overall savings of just over $3,000,000.

  • Improvement of the service level and replenishment cycle for the new categories: $1,400,000 in inventory reduction.
  • Adjustment to the management of categories (Windshield and Tempered Glass): Additional inventory for the "Tempered" category of $388 000 for class A and reduction of $229 000 for classes C and less.
  • Adjustment of delivery times for all suppliers in the "Glass" category group: $1,200,000 inventory reduction
  • Modification of the inventory profile (service level, delivery time, etc.) of the warehouses for Accessories = $640K inventory reduction, representing 30% of the warehouse inventory.

We also observed, during our mandate, that the client had $1.7M in obsolete inventory, in addition to $8.3M in “excessive” inventory for a total of $10M on a $20M inventory. Thus, we suggested to the client to reduce its inventories in order to limit its costs related to its excess inventory.

When you follow a recipe, the dosage of the ingredients is essential. If you add too much salt, you alter the expected result. Inventory management is similar, in the sense that you must properly do your quantities of products to achieve optimal result in the management of your warehouses. Following the implementation of the ABC methodology, companies often take advantage of this opportunity to review their inventory volumes. The methodology for this is called “Min / Max”. This seeks to quantify the desirable number of products to keep in inventory, based in part on the categorization of the product made during ABC analysis. An approach such as the “Min / Max” allows companies to ensure the health of their warehouse(s). It tends to minimize the risk of backorders without keeping excessive quantities of products on your shelves.

Despite the importance of having good warehouse management, it is common for companies to leave this aspect aside. However, the inventory can represent up to 20-25% of the costs of the business. It is therefore essential for a company, who is seeking to be competitive, to put the emphasis on good inventory management.

The impacts of poor inventory management

Establishing a “Min / Max” methodology makes it possible to respond to common problems found in many companies. Below is a list of some potential issues that you could have if these quantities are not properly defined/applied

Over stock

• High storage costs
• Need for more space
• Increased risk of losing inventory or pending orders
• Obsolescence in your products (if applicable)
• Risk of workplace accidents

Under stock

• Inability to deliver customer orders and a long waiting period
• Lower customer satisfaction
• Better business opportunity for the competition
• Complexity of the receiving and shipping processes

In detail, the three realities that we come across are most often :

Storage cost / Space requirement

Keeping a high level of inventory represents a significant loss to your space and your finances. An unnecessary amount of product equals losses in warehousing costs on top of being sleeping assets for your business. In addition, the space unnecessarily occupied for these products could be used for other business needs. We have already seen space savings of up to 40% as a result of inventory management projects among our customers.

Poor management / Loss of inventory

Once the “Min / Max” are defined for all products, it is much easier to keep control within your 4 walls and thus reduce the risk of inventory loss. With the ABC tool, which makes it easier to define a location by class (The “A’s” should be near the loading docks for example), it becomes much easier to locate a desired product. With your minimum inventory, you should always have a volume on hand in the space assigned to your product, minimizing the risk of spillage in your warehouses.

Waiting period

Unlike the issues of excess inventory, those related to backorders can dramatically increase delivery times for customers. In addition to being unable to deliver the product on time, the warehouse falls into a reactive rather than a proactive phase. Under the influence of urgency, this change often triggers unreflective decisions that are not optimal for the business. We must therefore be careful of side effects, where the fear of running out of stock leads to the purchase of huge quantities of products. This decision changes the inventory balance and you run into excess inventory side.

How to determine its optimal quantity?

Now that you understand the importance of having a minimum and a maximum, here is how to roughly identify these values. The “Min” is based on the safety stock and the lead time of your product. Your “Max” is defined from the “Min” + the economic quantity to order (EOQ). This quantity represents the midpoint between the order cost curve and the storage cost curve.

Some of the parameters necessary for a good calculation of the EOQ are among others:

  • Annual demand
  •  Purchasing cost
  • Delivery cost
  • Storage cost
Graph demonstration about cost and quantity

Tools available to help you

There are several ways to calculate the “Min / Max” of a product, based on demand forecasts. It is possible that for some products demand follows a seasonality curve. Contrary to popular belief, your Min / Max doesn’t need to be static and can follow this curve as well. This flexibility allows you to be even more optimal in your approach. There are smart solutions to help you define these volumes according to your needs. In addition, it is essential to establish a good sales and operations planning (S&OP) strategy in your business. This allows demand to be aligned with supply capacity in the most cost-effective way possible and to control its history as well as sales forecasts.

Do not hesitate to contact us if you would like to learn more about the “Min / Max” methodology as well as the tools available to regain control of your warehouse(s).

En tant que planificateur d’inventaire / gestionnaire, vous voulez vous assurer que votre entrepôt maintienne assez d’inventaire pour répondre aux exigences des clients (internes et externes), mais pas non plus avoir un surplus. C’est pourquoi, la gestion des stocks est essentielle pour suivre le flux des marchandises entrant et sortant de l’inventaire. Chaque produit est associé à divers coûts tels que les coûts d’acquisition et/ou les frais d’entreposage, et le but du planificateur d’inventaire est de réduire ces coûts en ne manquant pas de stock.

Voici un rappel de qu’est-ce que l’analyse ABC de l’inventaire

Analyse ABC

L’ABC (activity-based costing) aussi appelé l’analyse ABC, la classification ABC, la Loi de Pareto ou la Méthode 80-20, est une méthode qui vise à classer des articles ou des événements en trois classes (A, B et C) selon leur degré d’importance: A étant les articles les plus importants et C les articles les moins importants. 

Basée sur le principe de Pareto, qui préconise que 20 % des évènements se produisent 80 % du temps, cette méthode permet de mieux répartir les efforts de contrôle et d’être plus efficace. Cette méthode est appliquée principalement à la gestion des stocks. Grace à celle-ci, on parvient à classifier les articles selon leur valeur et ainsi établir une politique de contrôle des articles, qui donne plus d’attention au 20 % de pièces critiques et moins d’attention aux pièces moins importantes. On retrouve au minimum trois classes de produits :

  • Classe A : 20% des produits ; 80% des profits
  • Classe B : 30% des produits ; 15% des profits
  • Classe C : 50% des produits ; 5% des profits

Cet outil de classement peut aussi s’appliquer dans les entreprises à d’autres niveaux, comme la gestion des entrepôts et l’analyse des causes de sous-performance. Cette méthode s’inscrit dans une démarche de gestion de la production. Les résultats attendus de la méthode, appliquée à la gestion des stocks, sont un meilleur contrôle des pièces critiques et une diminution des stocks de sécurité.

Les avantages d’une classification ABC pour votre entreprise

Pour aider les planificateurs à minimiser leurs coûts tout en optimisant leur inventaire, les entreprises ont tout à leur avantage d’utiliser la technique de classement ABC de l’inventaire. En effet, cela leur permet d’optimiser leur inventaire, d’améliorer leur niveaux de service client et d’avoir une meilleure gestion de cycle de vie de leurs inventaires. Ces améliorations ont un impact important sur la chaîne d’approvisionnement dans l’entreprise.

Optimisation de l'inventaire

L’optimisation des stocks est un avantage de l’analyse ABC, car celle-ci permet aux planificateurs d’inventaire d’organiser les articles hautement prioritaires en fonction des besoins réels des clients. En fonction des fluctuations de la demande, l’inventaire est ajusté pour répondre à une forte demande sur certains articles mais aussi pour contenir un stock limité d’articles à faible mouvement.

L’analyse ABC permet une restructuration des entrepôts de façon plus adéquate. L’emplacement de produits est déterminé en fonction de sa catégorisation, ce qui a pour impact de minimiser les déplacements fréquents, permet de maximiser la productivité et assure un bon roulement de l’inventaire. Ainsi, un produit de catégorie A serait situé près des quais de chargement, alors qu’un produit de catégorie C serait plus éloigné.

Niveaux de service

Compte tenu de leur niveau de demande, tous les produits ne peuvent pas être traités de la même manière ou atteindre les mêmes niveaux de service client. Selon la classification du produit, déterminée antérieurement, les niveaux de service pour différents produits vont dépendre de plusieurs facteurs, tels que le coût de l’article, la quantité vendue et la marge sur le produit. Lorsque l’on parle de niveau de service, il est recommandé de ne pas garder de grandes quantités des produits à faible volume, car ceux-ci sont moins vendus et cela occasionne un encombrement dans l’entrepôt, ainsi qu’une perte de revenus. Ainsi, l’analyse ABC permet aux planificateurs de définir les bons niveaux de service en fonction de la classification des produits, ce qui améliore les performances globales de la chaîne d’approvisionnement tout en satisfaisant les besoins réels de vos clients.

Par ailleurs, les données recueillies grâce à l’analyse ABC permettent de comparer les coûts additionnels d’inventaire entre deux niveaux de service. En effet, le coût pour passer d’un niveau de service de 90% à 98% (soit une augmentation de 8%) peut être, par exemple, de 55 000$. Toutefois, pour passer d’un niveau de service de 98% à 99% (soit une augmentation de seulement 1%), le coût peut être de 75 000$. En ce sens, l’entreprise doit prendre la décision, selon son point optimal d’investissement, si cela vaut la peine d’investir ou pas pour un niveau de service plus haut. Parfois, il vaut mieux investir cet argent dans d’autres projets.

Démonstration graphique du coût du niveau de service

Question à réflexion

Êtes-vous en mesure de quantifier l’investissement selon le niveau de service que vous établissez?

Gestion de cycle de vie

Chaque produit passe par quatre phases au cours de sa durée de vie: lancement, croissance, maturité et déclin. Une fois que le produit atteint le stade de maturité, il est appelé à décliner tôt ou tard. La demande des clients joue un rôle essentiel dans la gestion de la fin de vie. Grâce au concept d’analyse ABC, les planificateurs d’inventaire peuvent prévoir à l’avance la demande de produits et gérer les niveaux de stock en conséquence. Avec une bonne rigueur, l’outil ABC permet d’identifier beaucoup plus facilement les items en phase de maturité et de déclin. Cela permet une gestion plus proactive de l’inventaire, permettant un ajustement de niveau sans accumuler une quantité de stock non essentiel en inventaire, diminuant ainsi les risques d’items désuets.

Digitalisation de la méthode ABC

La digitalisation des approvisionnements est une méthode de gestion qui devra être considérée de plus en plus par les entreprises. En effet, dans un futur rapproché, grâce à l’ajout d’outils informatiques et de l’intelligence d’affaires, il sera possible d’ajuster la classification ABC et les Min/Max directement par la digitalisation. C’est par le croisement des calculs des niveaux d’inventaire, les prévisions et les ventes réelles, que l’intelligence artificielle sera en mesure de croiser les données et de proposer, voir d’ajuster, le cycle de vie, les niveaux de stock et même de générer les réapprovisionnements en direct.

Comme tout n’est pas infaillible, il sera donc important pour les gestionnaires de demain de bien maitriser les paramètres évoqués. Une bonne paramétrisation des différents systèmes permettra un meilleur résultat, en sélectionnant bien évidemment le système informatique qui convient à votre entreprise.

En 2020, des systèmes informatiques performants sont disponibles afin de vous soutenir dans votre de gestion d’inventaire. De plus, ils permettent l’optimisation de vos quantités nécessaires à soutenir vos niveaux de service clients établis.

Qu'en est-il des quantités optimales?

L’exercice d’une analyse ABC bien orchestré permet aux entreprises de venir paramétrer les quantités optimales, par SKU, à garder en inventaire. On parle ici des « Min/Max ». Ainsi lorsque vous avez établi la catégorie ABC, le niveau de service désiré et la phase de cycle de vie de votre produit, il est important de déterminer ses quantités optimales.

Chez Conseil 2.0, nous vous accompagnons dans vos démarches de classification d’ABC. N’hésitez pas à laisser un commentaire ou à nous contacter directement si vous voulez en apprendre davantage.

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Your redefined supply chain.

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