Product Replenishment Setup - Usage overview

General Usage

The General Usage options are important to distributors using a central warehousing distribution system. These options apply to products with an authorized replenishment path of Warehouse. They define the method by which the parent warehouse’s average usage is calculated. These options are set at the company-level only.

Stock Out Usage Control

Use the options in this section to determine whether to correct a 15-day stock-out situation automatically. During Product Administration Month End Processing, products with a 15-day stock-out are frozen. Using these options, you can prevent the product from being frozen and fix the condition.

Use the stock out parameters if you are not disciplined in recording lost business in Sales Order Entry. Although these options do prevent the product from being frozen, it is considered a reaction to stock-out situations. A more proactive measure that ensures more accurate usage and, therefore, stock levels, is to record all lost business transactions properly.

Exceptional Usage Control

Use the options in this section to control whether exceptional usage is corrected automatically during Product Administration Month End Processing. Normally, products with exceptional usage are frozen. If these options are selected, the product is not frozen. Instead, the exceptional usage condition is corrected and an exception is created . Exceptional usage is defined during Product Administration Month End Processing by comparing the usage for the last month to the total usage of the previous user-defined number of months. If the last month is greater than the total, then the product is showing exceptional usage.

Low Usage Control

The options in this section help you to manage products for which you always want to have 1 or 2 on hand.

If the annual usage for a product is less than the amount specified in the Annual Use Minimum field, the product is experiencing low usage. Its order point, line point, and order quantity is corrected based on the values entered in the Usage Rate - Cost Matrix window. These corrections occur during Product Administration Month End Processing, but the product is not frozen. An exception type of low usage override is created. You can view it in Product Exception Processing Administration.

Seasonal Trending Demand

The settings in this section allow a more accurate seasonal product ordering quantity. This is done with a usage calculation that accounts for early or late season trends. The standard seasonal trending calculation reviews the usage for the previous year and then forward the number of months. These values are specified in the Usage Months field in Product Warehouse Product Setup-Ordering or Product Replenishment Setup-Ranking-Detail Ranks. Refer to the table for clarification on which usage month’s value is used. The seasonal trending calculation determines the usage for the past number of usage months one year prior. This value is compared to the immediate past number of usage months to derive a percentage. That percentage is considered the trend.

Example

Assume it is currently November and that last year in November, December and January, an average of 100 snow shovels were sold each month. Based on average usage last year, this year's usage expected would be 100. For seasonal trending demand usage, the usage for August, September, and October of last year and this year are used to determine the trend factor. If the average monthly usage last year was 10 and is 15 for the same months in the current year, then shovel sales increased 50% over last year moving into the season. The trend for this year is 150%. Multiply the expected usage by the trend factor, the trending demand is for 150 snow shovels per month.

Required Parameters

For the Seasonal Trending Demand calculations to take place, these conditions must be met.

• the Use Seasonal Trending option in Product Replenishment Setup-Usage must be Yes
• the Usage Method field in Product Warehouse Product Setup-Ordering must be Trend %

The minimum and maximum trend percentage override fields in Product Warehouse Product Setup-Seasonality are reviewed. The seasonal trending percentage is applied based on the product’s parameters if:

• these are set to values greater than or less than 100% respectively
• the Minimum and Maximum trend Percentage Limits and Last/This Year Units are met

If no maximum seasonal percentage is entered at the product level, the parameters in Product Replenishment Setup-Usage are used. This assumes the same min/max percents and units are met.

The usage months used in the calculation are obtained either from Product Warehouse Product Setup-Ordering, or Product Replenishment Setup-Ranking-Detail Ranks based on the qualifying rank. This table shows which usage month’s value is used when the seasonal trend is calculated during Product Administration Month End Processing.