Distribution

Inventory Families and Groupings

What Is?

​Forecasting refers to the process of making statements about future occurrences where the actual outcomes have not yet been observed. Forecasting is an inexact science that is an invaluable tool if the following is kept in mind:

  • Forecasts should be tracked.
  • There should be a measure of reasonableness of error.
  • When actual demand exceeds the reasonableness of error, an investigation should be made to discover the cause of the error.
  • If there is no apparent cause of error the method of forecasting should be reviewed to see if there is a better way to forecast.

Forecasting is done to reduce the uncertainty in the future and to help us prepare for that future in the short, medium and long term. This is done through scheduling, acquiring resources and determining resource requirements.

There are many types of forecasts, often interrelated. Broadly, forecasts are produced for situations that are quantitative, qualitative or unpredictable. For demand forecasting, we generally deal with time series (quantitative) and try find the patterns and then to predict their continuation. Such forecasts may be modified by qualitative input, such as the expected state of the economy or markets in which the business operates.

In evaluating the time series, does it exhibit a horizontal pattern, a trend (up or down), seasonal behavior, cyclic behavior, or a combination of some of these? The algorithms (logical steps and calculations used in determining the forecast) that are used are designed to address a variety of characteristics of the time series to find the best forecast.

The output from the forecast is the level of the expected demand into the future, incorporating any trends, seasonal or cyclic patterns that may be present. In addition, we need to know how reliable the forecast is. By definition, all forecasts have an error, but we need to know just how good our forecast is, because that will influence how much inventory we need to hold to provide the kind of service deemed necessary for a particular product.

​The quality of the forecast can be improved by accurate record keeping both of actual sales and, if possible, unfulfilled demand. It is also important to track qualitative data that can help evaluate the forecast in the context of the markets in which the business operates.

​Inventory Families and Groupings extends the functionality of the Inventory Forecasting module. As such, the business perspective is the same as for the Inventory Forecasting module but with some additions. Much that what follows in this introduction is found also in the Inventory Forecasting module. Central to the functioning of Inventory Families and Groupings is the idea of a collection, the generic name for a family or a group. Collections are setup and provide the ability to forecast a level above that of stock code / warehouse ability in the Inventory Forecasting module. Collections also form the basis for the difference in the functionality (like Pareto Analysis or Demand History maintenance) that is common to both the Inventory Forecasting module and Families and Groupings.

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SYSPRO Solution

Within SYSPRO, Families and Groupings refers to the various collections of inventory items that you have classified in a way that is meaningful to your business (e.g. you could classify a ‘filter’ as an OEM product, a spare, a paper filter, an oil filter, etc).

​The need for Families and Groupings arises from a business scenario where, owing to the number of stock codes or stock keeping units (SKUs) the forecasting of individual stock items would constitute an unmanageable workload. It also makes sense to ‘collect’ common stock codes into a family or group.

​A family generally refers to a collection of SKUs where a hierarchy and a logical relationship exist between them. For example: Apple juice is packaged in 300ml, 500ml, 1L, 1.5L and 2L plastic bottles and would also be a member of the Pure Fruit Juice ‘family’. Families are best observed by examining an organization’s price list and are mostly used in the ‘outbound’ or sales view of the SKUs.

​A group generally refers to a single level collection of SKUs that is used when arranging SKUs for storage or internal analysis. For example: the 300ml plastic bottle would be a member of the Plastic Packaging ‘group’ of SKUs. Groups are best observed by examining an organization’s logistics view and may be used to create ‘inbound’ (i.e. supplier) ‘home’ or ‘outbound’ views of collections of SKUs.

​Families and Groupings is essential to an organization in a demand-driven environment and serves as in input to MRP.

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Process Flow

​Forecasting is an essential part of all business planning. The Inventory Forecasting and Inventory Families and Groupings modules both provides sales forecasts with simple workflow to compare and validate the forecast before approval. Inventory Families and Groupings extends the functionality of the Inventory Forecast module by allowing forecasts to be created and reviewed at levels above the stock code/warehouse. This can speed up the forecasting process and produce a better quality result. Forecasts are produced and reviewed at regular intervals, namely weekly, monthly, quarterly or annually for a prescribed period into the future (the forecast horizon). The optimum frequency of the forecast is dependent upon the nature of the business and the markets in which it operates, but generally more frequent forecasts allow better response to changing conditions.

​Within each forecasting cycle a number of steps are followed. History must be accurately maintained and as up to date as possible. Unusual events should be excluded if they will distort the forecast. This may be done through the use of filters to eliminate outliers and by the manual exclusion of specific sales or by manual adjustments to sales or by a combination of some or all of these.

​The items to be forecast should be identified and reviewed periodically. Of particular importance is to identify those items that are to be manually forecast and those that the system will forecast automatically each forecast cycle. It is also important to distinguish, and flag accordingly, those items, which will not be replenished. These could be make-to-order items or back-to-back buy-outs. It may be desirable to forecast such items but not to hold any stock of them.

​The system holds two forecasts – the current forecast which is the working forecast within Requirements Planning and the draft forecast which is held in the Forecast Module until the forecast is approved and the draft then becomes the current forecast. There are two ways to produce the draft forecast, batch or manual.

​The batch forecast is usually run to forecast the bulk of the items. The manual forecast process is used to deal with items that are difficult to forecast or of particular importance to the business or require the input of market intelligence to improve the quality of the forecast. The manual forecast process will produce a suggested forecast, which can then be copied to the draft for editing. The draft forecast is then compared to the current forecast to ensure that it is reasonable. Items with high forecast error values are reviewed and adjusted as necessary. The batch forecast can also be run with different parameters to compare various forecast scenarios. Once the optimum forecast is obtained it is signed off as approved. As mentioned above, the approval of a forecast makes that forecast the current forecast in Requirements Planning.

Families and Groupings Process Flow

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Integration

​The Inventory Families and Groupings module integrates to Inventory Forecasting. This module allows forecasts to be produced at stock code / warehouse level. Forecasts products in the Inventory Forecasting module can be used and reviewed in Families and Groupings and vice versa.

The Inventory Forecasting module integrates to the following SYSPRO modules:

• Inventory

The Initial History Creation program builds forecasting sales history using Inventory Movements as its source.

• Sales Orders

Once the Initial History Creation program has been run, sales forecasting data is kept current automatically by SYSPRO. As Sales Orders are written to the Inventory Movements file, the forecast history is simultaneously updated.

Currently, only sales transactions are extracted from the Inventory Movement table into the Forecasting Sales History tables.

If insufficient history exists in Inventory Movements, additional history can be imported using the IOPSSL – IO forecasting sales history setup business object.

After an initial take-on of sales history movements SYSPRO will maintain the sales figures automatically.

• Requirements Planning

The approved forecast from Inventory Forecasting becomes the current forecast in Requirements Planning. The draft forecast is stored in Inventory Forecasting (or Families and Groupings) while the current forecast (which can be viewed in the Manual Forecasting or Families and Groupings programs) is stored in Requirements Planning. Note that any forecast maintenance done within Requirements Planning only changes the current forecast stored there. It has no effect on the draft forecast stored in Inventory Forecasting.

Inventory Forecasting can maintain and report on both the draft and current forecasts. Changes should therefore be made in Inventory Forecasting or Families & Groupings and the changes written to Requirements Planning through the approval process.

Requirements Planning is not required for the Inventory Forecasting or Families and Groupings modules to work; however, there is no benefit to having Inventory Forecasting without Requirements Planning because nothing else in SYSPRO looks at forecasts.

Module dependencies

Essential

  • Inventory
  • Inventory Forecasting

Recommended

  • Sales Orders
  • Requirements planning

Families and Groupings Integration to other SYSPRO solutions

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Syspro. Syspro Indonesia. Syspro Implementor. ERP Indonesia. ERP Small Medium. ERP Implementor. Small Medium ERP. Small Medium ERP Software. Small Medium ERP Implementor. ERP Implementer. ERP Implementation. Syspro Implementer. Syspro Implementation. Small Medium ERP Implementer. Small Medium ERP Implementation. ERP Manufacturing Software. ERP Manufacturing Systems. ERP for Manufacturing. ERP for Manufacturing Industry. ERP Distribution Software. ERP Distribution Systems. ERP for Distribution. ERP in Distributon. ERP for Distribution Industry. ERP Financial Software. ERP Financial Systems. ERP for Financial. ERP in Financial. ERP for Financial Industry. ERP EPC Software. ERP EPC Systems. ERP for EPC Companies. ERP for EPC Industry. ERP Solution for EPC Companies. Budget Planning. E-Budgeting. Financial Consolidation Software. SAP Indonesia. SAP Implementor. SAP Implementer. SAP Implementation. SAP ERP.