Smart PO Intro

Screen Number - 4155

The Smart PO system calculates inventory requirements for BWI sold items. The requirements are based on current orders, future orders, safety stock requirements, and projected orders based on sales history. Availabilty of items is based on on-hand inventory, current Purchase Orders, and transfers from other warehouses. The available inventory is compared to the current and expected requirements and recommendations are made on how much inventory is needed to acquire. The system may recommend to transfer inventory from another warehouse if available, or creating a new Purchase Order to a vendor.

Note: With new procedures for inventory management, all requirements all calculated based on the total availability and requirements for each Division as a whole. All quantities used to calculate the requirements are a summarized number for all locations within a division. And as such, only the primary division locations will be listed on the display. This method gives better control over inventory for a division, including the division twigs, to the division manager. The division manager can then decide when and where inventory needs to be moved within his division. And purchasing agents are only required to manage inventory for the division as a whole, not each individual location.

Exception: Vendors identified as Exception Vendors for a location are managed separately for that location. Exception vendors sell special inventory items are are better served by a particular location. The available quantities and requirements are calculated separately and are not included in the Division summarized requirements calculations. The Exception Vendors will be displayed in Pink on the requirements list.

The initial display of the suggested items has the extended display. F11 will switch the screen to single line display. This will display more items on each page of the screen.

You can filter it by vendor and by branch.

The Projected Sales From and To dates in the top right corner can be adjusted. This is the date range that the initial screen will display the requirements. It defaults to the current month from last year to last month.

Additional note: The order by date is the date the program generates, that you need to order by in order to reach the needed delivery date. This is calculated based on the lead-times in the system. It will be highlighted red if that date is before today’s date, indicating that it should already be on order.

The screen will default to your buyer number, and it will only show you items under your buyer number. You cannot see other buyers’ items.

You can sort by V-Vendor, D-Date, I-Item, and T-to separate the P's (purchases) from the T's (transfers).

On each items line you can: 5-Detail display, R-Recalculate, O- Clear Overrides, P- Select for PO, C- Select for Combined PO, T- Select for transfer, and U- Unselect.

Additional notes:

If the quantity available is less than 0, the item number will be red indicating a B/O.

If the item is for a regional warehouse, the branch and vendor code will be hi-lighted (white).

If the branch and vendor code are displayed in pink, that vendor is an Exception vendor for that particular warehouse.

If an item is marked as Obselete or Inactive, the item number will be displayed in Reverse image.

If an item is marked as Obselete or Inactive, and the quantity available is less than 0, the item number will be displayed in red and Reverse image.

When a line is selected to be included on a new PO or Transfer, the entire line will be blue.

(Some colors may vary depending on the setting you have your AS400 session set to.)

Function Keys:

F11 – switches between item single line display and extended data display.

F14 - will show Total Available quantities less than 0. These will be your backorders that need to be covered ASAP. These item's will also be highlighted Red.

F13 – The initial requirements screen will only display items that have suggested Order/Transfer quantities, OR items that have negative available quantity (Backordered, in Red).

F13 will show ALL items including those that the suggested Order/Transfer is 0.

F15 - will show all items that you have selected for a Purchase Order or Transfer.

F8 – Mass change of recommended Order By Dates.

If a user does not want to look at the requirements for an item until a later date, they can change Suggested quantity to 0 and set the recommended Order date to a future date. This way, the display will ignore any items with 0 requirements, and the 0 requirements override will remain in effect until the override Order Date is reached. Then the override will be deleted and the item will return to the recommendations routine.

F8 will allow you to change the Order date for all entries for an item, or all entries for a specific vendor. This will allow you check the recommendations for that item or vendor at a later date.

Press F8 and the window to select the item or vendor will display.

This is the window to make a Mass change of recommended Order By Dates.

The vendor code and branch will default to the vendor and branch that was selected on the browse screen. They can be changed by keying over the defaults, or the vendor and be removed and an item# be entered.

Only items for vendors under your Buyer Code will be changed.

Enter a date you want to push the requirements to, or enter a number of weeks to push the requirements out.

Then enter a Y or N to clear the Suggested quantities. Clearing the quantity will prevent showing the item(s) as current requirements.

Press ENTER to proceed.

A message will display to confirm your selection.

Press ENTER to process the Order date changes, or F12 to cancel the changes and return to the browse screen.

When complete, the window will display the number of changed items.

Press ENTER to return to the browse screen.

F9 - will generate the PO and transfers based on the lines you have selected for a new Purchase Order or Transfer.

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This breaks down the formula that is being used to suggest orders or transfers. You can see what is available, current PO's, and transfer's in place, giving you the total available inventory. This is the number used to highlight items on the main screen that are less than 0.

The order by date can be adjusted and then the deliver by date will recalculate.

The rest is information about the item in relation to creating a PO. Buying increments, minimum order quantity, pack size, item class, current weight of the PO, UOM quantity, number of pallets, target, and number of PO's.

The calculated Available, Current PO, Total Available, Projected Sales, Future Orders, Total Required, and Suggested quantities are based on the total quantities for all locations in this division.

Note: When a vendor is designated as an Exception Vendor for a branch, the quantities for that branch are NOT included in the division total calculations. The requirements for this branch/vendor are calculated and listed separately on the display.

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From the detail display screen:

Safety stock is a calculated figure based on Daily Average Sales for the item (see Safety Stock calculation below).

It recalculates at the beginning of each month and is only for Class 1 items.

Projected sales is based on past sales history or expected future sales. (see Projected Sales calculation below). Projected sales numbers are only used in requirements calculations (and displayed) for Class 1 and 2 items only.

Future orders only show orders with ship dates within the next 90 days.

The next part of the formula takes the total required minus the total available to give the quantity short.

Days of inventory is calculated by monthly average divided by days in the month. Then the total available is divided by that number, to tell you approximately how many days of inventory are in stock.

Suggested quantity is the same as quantity short. This is the number that will be used for transfers. This can be adjusted.

PO UOM and PO UOM quantity are based on the buying increments in the system. If you change from a “T” to a “P” this is the quantity that will be added to the PO.

PO or Transfer is the suggestion on what action to take for each item. It can be switched between the two. The next blank is the transfer from location. In the next blank you can make it a Must transfer. A transfer to cover backorders will auto generate an “M” for a must load.

The Trending line gives a quick reference of how this item’s sales are performing compared to last year.

The first number displayed is the total of the past 3 months sales for last year, the second number is the total of the past 3 months sales for this year. Then a percentage of change (either up or down) is displayed.

Function Keys:

The requirements Detail Display has the option to recalculate the Required quantity by removing the Future Orders quantity.

F7 will zero the Future Orders quantity. This can be useful if the Future Orders may be overstated by special orders.

F19 will replace the Future Orders quantity (for the next 90 days) with the All Future Orders quantity. This will allow the buyer to forecast sales out

When the Future Orders quantity is removed from the display, the Suggested quantity, and PO UOM quantity is re-calculated to reflect the new Requirements.

Pressing F7 again will return the Future Orders quantity to the display and Requirements quantity to the original quantity.

F13 - Shows a 12-month history for that item and location.

If the F13=Sales History command is shown in Reverse image, then at least 1 month of the history has a negative sales quantity.

The display shows the family history including the main division and twigs.

Ex. History for 02 = 02 + 07.

F14 - takes you to screen 4920 which is PO inquiry by item number.

F15 - takes you to screen 1960 which is customer order by item number

F4 - Will show you all the inventory across the company that is available to be transferred.

This display window will list the total available quantity at the displayed division, if the division has available inventory. Then the individual quantity of each location is listed under the division total.

A division will be displayed if that division has enough inventory available to cover the required quantity of the branch being checked.

If the branch being checked does not have a suggest quantity, then all branches with available inventory, OR has any Aged inventory on hand

will be displayed.

If a branch location has inventory available for transferring, that location can be selected by entering a ‘1’ in the selection column and press ‘ENTER’. This will set the Transfer From location as the suggested transfer location.

Available to Transfer is calculated as:

Total Available (Available + Current Pos + Transfers In) -

Greater of:

1) Projected Sales (Sum of monthly sales for next n months sales based on the next n months sales from last year.

(n = determined by item Lead Time.)

(Sales Totals are reduced by the total quantity of Future Orders for that time period.)

(Projected Sales quantity is rounded up to the next Minimum Order Multiple for that item.)

Class 1 or 2 items only.))

Or 2) All Future orders quantity.

Creating POs:

Once you have reviewed all the items in the main screen, place a “P” next to the ones you want to put on a PO. Hit F9 to generate. You will see a pop up letting you know the vendor and division. If those are correct, hit F9 again. A warning will appear on the pop up if the quantity selected does not reach the PO target, but will still let you create the PO.

You will get another pop up with the PO number and option to review or print. Review takes you to 4110 so that the PO can be edited but will be auto populated with the defaults for that vendor and dates from the smart PO system.

If you select “Y” to review it will take you to screen 4110 to review and edit the PO.

Creating Combine POs:

This generally follows the same steps as creating a PO. Once you have reviewed all the items in the main screen, put “C” next to the ones you want to put on a PO. (Make sure they have a “P” in the PO/Trf column, or it will not be added to the PO.) Hit F9 to generate. You will get a pop up asking which branch you want to be the primary ship to location. Once selected, hit F9 again. A warning will appear on the pop up if the quantity selected does not reach the PO target, but will still let you create the PO.

This takes all the items you have selected and puts them on a PO to the primary ship to location you selected. The total quantity of each item is added up then broken out through 4210 with transfers to the locations you need the inventory for. All of this can be reviewed and adjusted in 4110.

Creating Transfers:

Once you have reviewed all your items in the main screen, enter a “T” next to the ones you want to put on a transfer. Hit F9 to generate.

You will see a pop up letting you know you have selected items for Pool Transfers. Hit F9 again.

The next pop up lets you know transfers have been created, and you have the option to review. If you select “Y” to review, it will take you to screen 3611 to review and edit the transfers.

Notes regarding Do-Not-Transfer items: If an item is marked in the item master as Do-Not-Transfer, this item cannot be transferred between different divisions. Transfers can still be made within the same division.

When calculating whether to transfer or purchase a necessary item, a Do-Not-Transfer item will not suggest a transfer outside of the requiring branch. If the only inventory available for transfer is outside of the requiring branch’s division, a new Purchase Order will be suggested.

If the user tries to select a transfer branch in the detail display screen that is outside the requiring branch’s division, a warning is displayed and the selection is ignored.

A Do-Not-Transfer item is identified by DNT next to the PO or Transfer field.

If the user selects a Do-Not-Transfer item to be included in a Combine PO and the Ship-to branch entered is outside of the required items division, a warning is displayed when the Purchase Order is generated to notify the user and the Purchase Order creation is canceled.

The item selected can then be un-selected and the Combine PO created.

Important notes:

Please make sure the setup of your items is correct. Having the correct buying increments, class, lead time, etc. are essential for the success of this program. If the setup is wrong, then the suggestions it makes will be wrong. Please update these when they change, the most critical being lead times. The entire calculation will be wrong if the lead time is incorrect.

This system is meant to be a suggestion. You will still need to review and agree with what it says. It is not meant for you to go in and do exactly what it suggests every time. There is human knowledge that cannot be programmed into the system. Your product knowledge allows you to know when it may be suggesting too much or not enough.

Safety stock can be turned on and off based on the vendor. So be sure to work with the Marketing Managers on these settings. You should know by working with your lines every day which ones need safety stock included or not.

All the information and calculations on the screen will be recalculated and refreshed every hour. This is to catch any manual transfers entered, PO’s created, customer orders entered,

and PO’s received. This gives you as “Real Time” information as possible.

Formulas for Smart PO calculations:

Safety Stock calculations:

Safety Stock: Daily Average Sales for the Next 3 months of sales based on the next 3 months sales from last year

* item Lead Time.

(If no Lead Time is established for the item, use the default Lead Time for the item’s primary vendor.)

Rounded up to the next Minimum Order Multiple for that item.

(Only for class 1 or 2 items; Item status = ‘A’.)

Runs on first day of each month.

Lead Time calculations:

Lead Time: Based on the last 5 receipts for an item, find the average days to receive (Received Date - Order Date).

Based on receipts within the last 18 months.

(Default of average 30 days if no receipts.)

Smart PO Requirements calculations:

Available Quantity: Total quantity on-hand - Total quantity Allocated (Allocated Quantity + Quantity Short + Quantity Backordered from IBRBIN file.).

Current Pos: Total Open PO quantity + Total Combined Inbound PO quantity – Total Combined Outbound PO quantity.

Transfers In: Total Open Transfers In quantity + Total Pool Transfers In quantity.

Total Available: Available + Current Pos + Transfers In.

Safety Stock: (Safety Stock Quantity ÷ Days in current month) * Lead Time.

(Lead Time from Buying Controls file IBRGG – 4310; or Lead Time Exceptions file POSMARTLT).

(Safety Stock is included in requirements calculations for Class 1 items only,

and the Include Safety Stock flag from file VNDUDD must be set to ‘Y”.)

Projected Sales: Sum of monthly sales for next n months sales based on the next n months sales from last year.

(n = Projected sales calculated from detail display. Determined by item Lead Time.)

(Sales Totals are reduced by the total quantity of Future Orders for that time period.)

Projected Sales quantity is rounded up to the next Minimum Order Multiple for that item.

Future Orders: Total quantity of Open, Warehouse, Type ‘F’ orders.

Orders with Future Date from Current date to next 9 months.

All Future Orders: Total quantity of ALL Open, Warehouse, Type ‘F’ orders.

Total Required: Safety Stock quantity (Class 1 items, and Use Safety Stock flag (from file VNDUDD only) = ‘Y’ +

Projected Sales quantity (Class 1 and 2 items only) +

Future Orders quantity.

Quantity Short: Total Required - Total Available.

Days of Inventory: Available quantity (Safety Stock quantity ÷ 20). 20 = Daily Average.

Suggested Quantity: Same as Quantity Short (this field can be user overridden).

PO UOM Quantity: Suggested quantity converted to PO Unit of measure.

AND rounded up to next full PO Unit of measure quantity, if necessary.

AND rounded up to Buying Increment, if necessary.

AND increased to Minimum Order quantity, if necessary.

Order by Date: Calculate number of Days to order: Days of Inventory – Lead Time. (Maximum 365 days).

Calculate Order Date: Current Date + Days to order.

(If Order by date is older than 1 month before today, force to 1 month before today.)

(If Available quantity is Negative, force Order By date to Current date)

Deliver by Date: Order by Date + Lead Time.