Tuesday, 15 November 2016

Inventory Replenishment Oracle Apps

In any business involved in the sale of goods , the business needs to keep a track of its inventory and replenish the inventory when needed. The business can use different methods to replenish their inventory.

The Inventory replenishment methods provided by Oracle include

  1. Min-Max Planning
  2. Reorder Point Planning
  3. Kanban Replenishment Planning
  4. Replenishment Counting
When Placing an order for replenishing the inventory , the business needs to answer certain quetions
  1. What should be ordered
  2. How much should be ordered
  3. When should it be ordered
  4. Which planning method should be used to decide the order
Lets see the answer to these questions:
  1. What should be ordered : The business needs to decide what products/goods it needs to buy
  2. How much should be ordered : When deciding on this the business needs to consider the carrying cost of the goods and the expected demand
  3. When should it be ordered: This will be answered by the replenishment method used
  4. Which planning method should be used to decide the order : It is decided by the business depending on Oracles offering of each mechanism
Of the replenishment methods listed above , some can be performed at Organization/warehouse level and some at sub-inventory level
Now we will look at the different replenishment methods :
Re-Order Point Planning : is an inventory replenishment mechanism in which the inventory is replenished when the inventory levels fall below a certain pre-defined level. The amount of order placed is equal to EOQ (Economic Order Quantity) . This mechanism is suggested for in-expensive items.
Re-Order Point : Safety stock + Forecasted demand during the lead time , lead time is the time in which the business expects the goods to be delivered
This mechanism can be used in cases of:
  • replenishment at Org level is done
  • for inexpensive items
  • item demand is independent of others
 Min-Max Planning: Min Max Planning is another simple method of inventory planning with the below features
  • User  defines the minimum and maximum inventory levels of the item
  • Inventory is replenished to the maximum level when the level reaches the minimum level
  • Can be applied to any number of items
This mechanism can be used in cases of:: 
  • Inventory replenishment is planned at Org or sub-inventory level
  • the items do not require strict inventory monitoring
Kanban Replenishment : Kanban Replenishment Planning is a replenishment mechanism which depends on visual cues for inventory replenishment. This mechanism is applicable for items which require shorter lead times,having a constant demand and medium to high production demand
Kanban uses replenishment signals which are easily indicative and visible : in means of color coding scheme, color cards or empty bins.
Depending on the mechanism used once the inventory needs to be replenished as per the signals business will have the replenishment.
The inventory replenishment in Kanban can be on the type of replenishment chosen:
  1. Inter Org: In this case an internal requisition is created
  2. Intra Org: In this case goods are transferred from one sub-inventory of the warehouse to the other
  3. Production : Creation or release of a production job is done
  4. Supplier: A purchase requisition is created
Replenishment Counting: Replenishment counting is used for items for which inventory tracking is not maintained. In this mechanism the counters will physically count the inventory on a periodic basis and replenish the inventory as and when required.

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