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StockPlan In Detail

The Basics of the Plan

Taking the planning to the next stage

Planned Purchases

Purchase Order Creation

Production Planning

Component Requirements and MRP

Component History

Machine Time Planning and Scheduling

Further Reading

StockPlan plans your purchasing to ensure your stock levels are held within your desired optimum range. With the Purchase Order Creation module it can take this planned information and provide the opportunity to manually amend the on screen re-order list it will then create all the purchase orders for you in the Exchequer Accounts system.

The Basics of the Plan

Firstly StockPlan predicts what your demand will be on each period, by subtracting this from your current stock level it can determine what your available stock will be on each period and plan purchase orders so that the predicted available stock never drops (or exceeds) your chosen levels. For example if its January and you have 100 in stock with a demand of 30 then you would have an available stock of 70 (100 less 30). In February you have a demand of 25 so your available stock for February is 45 and so on. The demand is the predicted qty required to fulfil sales, we will go into more detail on demand and how it is calculated for each period a little later in this chapter. In order to calculate your available stock, StockPlan must not only include the demand but also incoming stock on existing outstanding purchases. It determines when the purchase is due and applies this to your available stock. Using the above example again but this time including outstanding purchases - its January, you have 100 in stock and you have a demand of 30, therefore, available stock of 70. In February you have a demand of 25 but also an outstanding purchase order due to arrive of 60 so your available stock for February is 105 and so on for future periods.

Lets take a quick look at the plan screen in StockPlan, this screen shows how the plan is calculated. You can select from over 35 columns to be displayed in this screen to enable you to quickly see how the figures have been arrived at. You can also drill down to the sales orders and purchase orders that make up the quantities.

Here we can see the plan displaying the example we mentioned above. Starting with 100 in stock (this is shown in the bottom left of the screen), a demand of 30 in January, a demand of 25 in February and a Purchase of 60 arriving in February.

As you can see the demand is a very important part of the planning, so lets take a look at how its calculated. Initially the basis of the demand will be your sales history, you can choose if an average of your historical sales should be used or you can use 'Trend History'. For average historical sales StockPlan scans back a determined number of periods and divides this to arrive at an average. With Trend History StockPlan sets the demand for each period to be the historical sales qty for that period last year or the average of that period for several years. So January this year is based on January last year and February this year based on February last year and so on. StockPlan then looks at your current outstanding sales orders and totals this per period. If these should exceed the qty derived from history then this sales order qty will become the demand qty. Therefore if you have an average sales qty of 50 per period but in March you have enough outstanding sales orders to exceed this historical qty then your demand for March becomes the sales order qty. It does this because the sales order qty is based on actual outstanding sales orders and therefore you must account for this qty on this period instead of the historical qty.

Lets take another look at the plan screen but this time we will include historical average sales of 28 (displayed in the bottom just right of centre). You can see that StockPlan now predicts we will need 28 on every period and this becomes the demand except for January as our sales orders qty for January (30) has exceeded that. Currently we are only showing 4 columns on the plan screen to keep things simple. However, you can select from over 35 different columns to let you see in detail how the figures are being arrived at. For example we could include a Sales Order column so that we can see the qty we have on sales orders due per period.

Taking the planning to the next stage.

We know that demand is based on history (average or trend) and will take the qty from outstanding sales orders if they exceed the historical qty on any given period. There are several other elements that effect the demand. You can apply a monthly and/or annual percentage factor to this demand, for example, you decide to run a promotion running up to Christmas and expect your sales to increase above your usual sales. You could apply a factor of 10% for October, 20% for November, 30% for December. The demand will then be increased by these percentages. In the options you can select what the factor percentages should effect - History, Sales Order qty's, and Manual Demands.

Manual Demands also effect the Demand. A manual demand is a manual entry you add into StockPlan to say on this period we need a demand of this qty. You enter the date of this demand, the qty and optionally a location code and/or a customer code. These demands are a very handy way of altering the demands to cope with unforeseen circumstances. For example, you have a new customer and they have told you that they plan to purchase 10 of this item next month (February) and then 20 the following month (March). You enter these into StockPlan as manual demands, one for February and one for March (there are facilities to import these). StockPlan will then add these into the existing demand for those periods. So in our example above the demand for February becomes 38 and for March becomes 58, remember the available qty is constantly taking this into account. Lets take a look at the plan screen again taking both the factoring we entered in the paragraph above and also the two manual demands for the new customer. You will see a few more columns have been added to help us see what is happening.

Just a quick recap on this plan, we start with in stock of 100, we have a demand of 30 (this comes from the outstanding sales orders as the sales order qty for this period exceeds the historical qty) that leaves us with 70 available in January. In February you have a demand of 38, 28 from history and 10 from the manual demand we entered for the new customer. The sales order qty for February is currently ignored as its less than the historical qty. We also have a purchase order due to arrive in February so the available qty in February is 70 less 38 plus 60 = 92. In March we have a demand of 48, 28 from history plus the manual demand of 20 for March from our new customer. If you look down to the later periods Oct, Nov and Dec you can see the factoring we applied for the Christmas promotion increasing the demand by 10% then 20% then 30%.

The Hist Trend qty Column has just been included so you can see how the historical average was arrived at and to let you see your past sales at a glance. It displays the qty sold in each period but relates to the sales from that period last year. We did not start selling this item until October so the average calculation threshold (set at zero) has not kicked in until we started selling some.

As with most of the figures in StockPlan you can double click on the cell in the plan screen to drill down and view the sales orders, purchase orders or manual demands that make up any periods qty.

There are several further features that can effect demand.

Sources let you obtain demand from other items and combine into the plan for another item. A couple of examples where this can be very useful. Firstly, when you have a new item that supersedes an old item you can set the old item as a source of the new item so the new item sources its history from the old item. You can enter a revert date so the new item automatically reverts to its own history once its had a chance to build up its own sales. Secondly, you have a situation where you have several Exchequer stock records that relate to the same item, the only difference being on one record its sold in a different pack size. You can enter this other stock code into the sources for the master item (usually the code its purchased under) each source item can have a multiplier attached to it. Therefore the master item receives the sales demand from all its source items with each source item having its quantities multiplied out accordingly. You can select what information should be taken from the source items (history, outstanding transactions, manual demands)

Omissions lets you remove a customers or a locations transactions from the plan. You will still see these transactions in the various drill downs but they will be flagged as omitted. The omission effects all transactions current and historical and also manual demands for that customer. Omitting a location omits all transactions for that location and also excludes its in stock quantities from the stock level of the plan. Omitting a customer is very useful when a customer decides to not purchase an item from you anymore. By omitting that customer the plan will remove their transactions from the demand and hence prevent you from incorrectly planning on the basis of the customers past purchases. Omitting a location can be useful when you use a location to hold returned stock that should not be assumed available for sale in StockPlan, at least until its been checked and transferred out of returned stock into a normal location where it will immediately become available in StockPlan. StockPlan deals with omissions instantly, if you decide to remove a customer or location you can do instantly without having to run any lengthy update procedures.

Back to the plan.

Planned Purchases.

As you can see on the image above by May 2005 we are in trouble! Even with the outstanding purchase order arriving in February we are not going to have enough stock to satisfy the expected demand. This is where StockPlan's ability to plan purchase orders comes in. Within the options you can specify a minimum and maximum number of cover periods for which you would like to maintain your stock level. If you specify a minimum of 1 period then StockPlan will always try to ensure you have at least 1 periods worth of stock available and if your maximum cover is 2 it will ensure you never have more than 2 periods worth thus maintaining your available stock between 1 and 2 periods.

To determine what these cover periods of stock mean in terms of qty StockPlan looks at the demand qty per period and not simply the average historical sales. So with a minimum cover of 1 period and maximum of 2 periods and using the example from the image above on January your Min Cover would mean holding no less than 38 and your max cover would mean holding no more than 86 (38 + 48). In February the min cover equates to 48 and max cover equates to 76 (48 + 28).

If your available stock drops below the qty indicated by the minimum cover then StockPlan will plan a purchase order to arrive on that period to prevent it. When it plans the order it will order enough to take you up to the qty represented by your max cover periods. Hence it keeps your available stock within the minimum and maximum cover periods. The quantities it plans to purchase can also be effected by minimum order multiples and minimum order quantities that you have specified in the options. If you have a high minimum order qty for example but a low maximum cover period it may be forced to take you overstocked as it has to purchase in order to stop your available from dropping to low. It also takes into account lead times so that it can tell you when you should be ordering so everything arrives just at the right time to maintain your stock within the minimum and maximum cover periods. If you prefer StockPlan lets you choose to work with absolute fixed minimum and maximum quantities instead of in terms of cover periods.

Lets look at the plan screen again but this time with the planned orders  included.













Now we can see StockPlan has planned purchase orders to prevent the potential stock shortage we would have had in May. The Plan Del qty column shows us when the planned purchase order quantities will arrive and hence go into the available stock. The Plan Ord qty column shows us based on leads times and ship times and stock allocation delays which period we would need to order these.

The Min and Max Cover columns show what the minimum and maximum cover periods mean in terms of qty on that period. StockPlan will maintain the available stock within these two qty's. Don't forget it is taking all the other factors into account which we have mentioned so far. If a new sales order is entered into Exchequer or a customer is omitted in StockPlan this is reflected instantly.

Purchase Order Creation

Using the optional purchase order creation module StockPlan will collate all these planned purchases for all or a selection of items into an on screen list. You specify up to what date you would like to create orders for and StockPlan checks all the plans to determine the items you need to order and includes them in the list.

You can then amend this list, changing the suggested quantities, adding new items, etc. StockPlan provides on screen weight and volume totals on this screen in case you want to adjust the orders to ensure you fill a container or do not exceed a weight limit. Facilities exist for you to print or email this suggested order list.

Once you are happy with the list, click on a button and your purchase orders are automatically created in Exchequer . As soon as this is done StockPlan will see all the new outstanding purchase orders it just created, the available stock is effected by what are now real outstanding purchase orders and the Planned Del and Planned Ord columns are also updated accordingly.

Production Planning

First having read the above you will have a pretty good understanding of how the planning engine works with regards to predicted future sales and planning your purchases to satisfy them.

Production planning works in pretty much the same way with the following differences.

1 - If the item is a Bill Of Materials type item then the planned orders are planned works orders not purchase orders.

2 - The lead time against the BOM item becomes the production time.

3 - Existing outstanding Works Orders not yet completed need to be taken into account.

4 - The demand for the BOM items works the same as for normal products with the exception of sub assemblies which will include an element of demand from other BOM items that they are used in.

5 - Plans for Components need to be effected by both the actual current works orders and planned works orders. See What About Components and MRP later in this chapter.

So now when we look at the plan for a BOM item the Plan Delivery column is showing when the works order should be completed and arrive in stock and the plan order column when you should begin the works order. StockPlan uses the lead time to calculate how long it takes to build the item. The Works Order In qty (WOrder In qty) shows any quantities due on outstanding works orders that have not yet been completed. We still have a Purchase Order qty (POrder qty) column available should we need it for example we decide to purchase some items that we normally build.

Using the optional StockPlan Works Order Processing module you can collate all or a selection of the Planned Works Orders into an on screen production list. You specify up to what date you would like to create works orders for and StockPlan checks all the plans to determine the BOM items which need to be ordered (to be built) and includes them in the list. You can them amend this list, changing the suggested qty's, adding new items, etc. Facilities exist for you to print or email this suggested order list.

Once you are happy with the list, click on a button and the works orders are automatically created in StockPlan. As soon as this is done StockPlan will see all the new works orders it just created, the available stock is effected by what are now real outstanding works orders and the planned del and planned ord columns are also updated accordingly.

Lets take a look at this plan, this is for an Alarm System which we build.

Lets run through the plan - We start with 18 in stock, we have a demand of 10 (coming from sales orders as they exceed the historical) in the first week (we are working weeks instead of months with this item) leaving us with an available of 8 in week 1. In week 2 the demand is 6 (based on historical) BUT we also have a qty of 4 due on an existing works order leaving us with an available in week 2 of 6 (8 less 6 plus 4).

On this item the cover has been set to minimum 1 period and maximum 3 periods, looking at the planned (works) order delivery and order columns we can see StockPlan is planning production to maintain the available between our min/max cover periods.

Component Requirements and MRP

If StockPlan plans that you should build a BOM item, its not much help if it does not also take into account the components you will need to build the planned orders.

The demand for component items is effected by two additional elements when StockPlan is used in manufacturing.

Firstly there is the demand coming from existing outstanding works orders that require some of the component item to build them. These are included in the plan in the Works Order Out (WOrder Out qty) column, this is combined with the other potential sources of demand such as direct sales etc. So the plan takes into account the requirements to build existing outstanding works orders. The WOrders Out qty is the total requirement from all current outstanding works orders for BOM items that use this component. As with most of the figures in StockPlan you can double click on the cell in the plan screen to drill down and view the sales orders, purchase orders or works order that make up that periods qty.

Secondly we have the demand from the planned works orders that will use this component. These are included in a Used In Demand qty column and include the requirements of all planned works orders for BOM that use this component. You can double click on the Used In Demand qty for any period to see exactly what BOM items the qty is coming from.

So lets just recap, the components required to build existing outstanding works orders are included in a column on the components plan called WOrder Out qty and are combined into the demand qty and hence effect the available stock, therefore, purchases are planned to take them into account. For planned works orders their component requirements are included in a column called Used In Demand qty and also effect the available stock and will be taken into account in the planned purchase orders. Because the component requirements route through the planning system they take into account the current stock level, existing purchase orders, cover, lead times, etc.

So the full story. Your demand for the BOM items is driven by your past sales, manual demands, factoring etc. StockPlan maintains your desired available stock of the BOM item by planning (and creating) works orders. While this is happening it is taking into account the requirements of all the components to satisfy both your actual works orders and planned works order, includes any historical or direct sales of the components, looks at current outstanding works orders of the components, your current stock holdings, cover and lead times and hence can plan the purchasing of the component stock maintaining your required stock cover throughout the whole chain.

Lets take a look at the plan below for a battery which is used in the alarm panels we build:

Lets run through the plan, we start with 53 in stock and nothing brought forward to deal with. In week 1 we have a demand of 33 which leaves us with an available stock of 20. This demand of 33 has come from 10 on a direct sales order selling this battery, 9 required to fulfil outstanding works orders for this week and 14 to satisfy the planned works orders of BOM items that use this component.

In week 2 we currently have a demand of 12 but a purchase due in of 12 so we have an available stock of 20. The demand of 12 has come from the historical demand as the current other sources of demand combined are less than the historical.

In week 3 we have a demand of 18 and so our available stock would have dropped to 2 but as this is below our minimum cover of 1 period StockPlan has planned a purchase order for 39 to arrive so we have an available qty of 41 in week 3.

Component History

Remember the very starting basis for a plan is its historical sales but for components you may not have any historical sales at all.

StockPlan provides several methods to provide an indication of what the basis of demand should be for components. Some may work for some situations and some may not. They each have a set of benefits and drawbacks.

1 - StockPlan can scan your Exchequer History for outgoing ADJ's. It will have posted these when you created works orders and so these give some indication of the usage. This is how StockPlan version 1 worked so if you have previously been used to how v1 operated this may have benefits for you. This method however has several potential problems, one is that if you from time to time create manual adjustments in StockPlan then these may be incorrectly picked up by StockPlan.

2 - StockPlan can scan the works order history to obtain exactly what was used this is very accurate and records precisely what was used. The drawback is that you may not want future plans to be based on history that recorded exactly what was used. For example due to unforeseen circumstances you run out of a component and were forced to substitute that component. Using this component history method the demand for the items you should have used goes unaffected and instead the demand for the item you were forced to use will be effected. That's not good news in the future as really the demand for the item you wanted to use needs to be effected to ensure you have enough of the right items next time and this whole substitution is avoided in future.

3 - StockPlan can source the components historical demand by collating the sales of all the items that it is used in by using the current builds. For example if this item is used to make several different alarm panels StockPlan will scan the history for these alarm panels, then look at the build for each one and multiply out the quantities to determine how many in total of this component would have been required.

This method has the benefit of always basing your history and hence future demand for components on the sales of all the BOM items that used but using the latest build information. In this way the demand for the right components based on the current build is effected for the future.

The only downside of this option is that it does understandably increase the workload on StockPlan as to calculate the plan for a single component can mean reading through the history of several items.

4 - There is also a fourth option which basically switches off any historical demand for component items with the exception of their own direct sales. Bear in mind that they are still effected by the WOrder Out qty and Used In Demand qty from BOM's that use them so it can also work in certain situations.

Machine Time Planning and Scheduling

A level of Machine Time Planning and Scheduling can be achieved by the following. Set up a description only item as a machine or unit of labour, etc. add this to your build and set the qty relevant to how much machine time or labour it takes to build the item. You can then use the plan to see a complete schedule for the machine time over the forthcoming periods. The qty being the total hours or days usage that has been scheduled for that machine. Its not ideal but it can be quite useful to get some basic labour or machine resources planned.


Further Reading

The items and their plans are navigated primarily by using the plan list. The plan list lets you use powerful filters to work with just a selection of items you need. see Plan list chapter in the manual.

For more information on drilling from the plan screen to more detailed information - See these chapters in the manual Transaction List, Plan Notes, History List, Manual Demands, Used In Demand qty, Recent Purchases, BOM, and Options.

You can set the periods to be any length you like from 1 to 100 days or calendar months.

The various options such as period length and cover periods are set against each item not globally, so one item can have a different cover or period length from another. Powerful tools are included to update specific options for all items in a certain stock group or from a certain supplier.

Options can be exported (to Excel) modified and re-imported. - see Options and Options Updater in the Manual.

Manual Demands can be exported and imported - see Manual Demands chapter in the manual

StockPlan has user permissions per user and a password based login, so for example a user can be granted permission to view a plan and use the purchase order creation to build a list of suggested purchase orders but NOT be able to amend options or actually create the purchase orders.

StockPlan has its own multi-company manager that automatically lists all the companies in your Exchequer system to make it extremely easy to work with many companies. - see user list chapter in the manual

Many of the columns have value representations so that you can see for example what your available stock means in terms of value, so you can see how much cash you will have tied up throughout the year on any period in terms of stock. You can see your predicted sales in terms of value. You choose for each column how you want it valued (at cost, selling prices, values from actual transaction, etc) - see available plan columns in the manual

You can view the first period information from a selection of items at the same time in one screen which is great for perusing the immediate stock situation of several items. This list type screen lets you use advanced criteria (see the filter screen) to select the item items.- see Plan Summary chapter in the manual.

To read more about the optional StockPlan Purchase Order Creation module see the Purchase Order Creation chapter in the manual.

To read more about the optional StockPlan Works Order Processing module see Works Order List and Add New Works Order chapters in the manual.

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