Product Replenishment Setup - Ranking - Detail Rank Records overview
Use this page to establish the levels associated with each rank.
When you access this page, the record type, vendor name, warehouse, or product line being maintained displays. The number of ranks you specified in the Ranks field on the Ranking page displays in the Default Ranks field. You must define detail information for each of these ranks. The number of ranks for which you have completed detail information is shown in the Ranks grid. If this number equals your Default Ranks value, you have completed detail information for all rank levels. If you are using percentages, the total percentage that has been distributed to all ranks displays. You must distribute 100% to all rank levels.
Ranks grid
The detailed ranking information is displayed for each level in the Ranks grid. Select a rank level to set the percentage of hits or minimum number of hits per rank, depending the Ranking Detail Based On selection. You can also establish a minimum and maximum safety allowance for lead time and set safety exception levels for purchase order receipts.
Settings on this page are used only if the Ranking Type option on Product Replenishment Setup - Ranking is set to Hits or ABC Stratification.
Minimum/Maximum Lead Time Safety Adjustment
During purchase order receiving, the safety percentages defined in this section are used when lead time is calculated. This applies unless lead time is overridden or frozen in Product Warehouse Product Setup. The safety adjustment settings on the warehouse Detail Rank Records window are used first. Standard safety allowance logic applies if no Product Replenishment Setup record is found or the minimum/maximum lead time settings on all records are zero.
- It qualifies for a Minimum/Maximum Lead Time Safety Adjustment
- The Lead Time Minimum (Vendor/Warehouse) Safety Amount is zero
These options define a range of lead time days for which a percentage safety is used. If the lead time falls outside of the ranges, then safety days are used. Safety percentage works well when lead time falls within a normal range. It tends to be unreliable when there are unusually low or high lead time values. We recommend that you define a lower safety allowance for rank A products. You may not want to define a safety allowance for any products ranked below C.
When the safety allowance is changed by the selections on this window, the new settings are stored in Product Warehouse Product Setup, Safety Allowance section. The Type is updated to Percent or Days, and the Amount is updated with the new value. If the Frozen option is selected, safety allowance is not adjusted.
PO Receipt Safety Exceptions
Safety allowance, also referred to as safety stock, is the additional stock you carry in inventory to protect against a stock out. It forms a pad to manage reasonable variations in usage or lead time from the anticipated averages. Safety allowance is an amount that you define for each product in Product Warehouse Product Setup - Ordering. It determines a product’s order point. It is important to check your safety allowance regularly to ensure it is neither too low nor too high. If it is too low, you risk a stock out and a hit to customer service. If it is too high, you risk carrying too much additional inventory and incurring higher carrying costs. To keep safety allowances within practical limits, define minimum and maximum percentages for safety stock remaining when you receive replenishment stock. If these percentages fall outside of the min/max ranges, the buyer is alerted by a safety review exception in Product Exception Processing Administration.
During purchase order receiving, the level of remaining safety stock for each receipt is reviewed to determine if a safety review exception has occurred. The rules that govern this exception are defined in the PO Receipt Safety Exceptions section of this window. These rules should be set up for each rank level on each Product Replenishment Setup level where appropriate (company, warehouse, vendor, and product line). Review purchase order review daily in Product Exception Processing Administration. An exception record with an Exception reason is created when the remaining safety stock is outside the ranges; however, the product is not frozen.
The safety allowance algorithm uses the safety allowance in Product Warehouse Product Setup - Ordering. You can specify a safety allowance percentage, quantity, or days. It is converted to a quantity and compared to the sales net available when a product is received in Purchase Receipt of Inventory Entry. The net available is stored in Product Warehouse Product Setup - Costs and does not include the current receipt. If the safety percentage falls outside the minimum and maximum safety percentages, or thresholds, defined on Product Replenishment Setup - Ranking - Detail Ranks, an exception is created. The formula is:
Product safety % = Net Available ¸ Safety Allowance Quantity * 100
The Product safety % is then compared to the Minimum Safety % and Maximum Safety % settings. These are generally 25% and 75%, respectively. If it falls outside these ranges, the specified number of past purchase order receipts are reviewed. It is used to determine if the minimum number of receipts have also fallen outside the min/max safety percentages. An exception is created in Product Exception Processing Administration if all current and past receipts meeting this criteria also followed the product’s authorized replenishment path (ARP).
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