With the economy starting to make a comeback, your sales are hopefully increasing. Now is the time to review velocity numbers in your enterprise resource planning (ERP) system—because when sales increase, so does the forecast for the items, therefore increasing the velocity. Velocity should be reviewed every quarter to make needed changes until the economy stabilizes.
Next, look at the trend periods, as well as the average change per period. These settings dictate which items should be marked “trend.” For example, if you’ve been looking at the last five periods for when sales start to increase, but sales have actually increased for the last three, this would take much longer for items to be marked trend. By changing the setting to three periods, the item(s) would need to have an increase in sales higher than the average change per period, therefore possibly getting you to a trend pattern sooner.
Also don’t forget to look at the supplier cycle days and targets. As with purchases increasing from higher sales, these numbers need to be reviewed quarterly, as well.
Now is a good time to review your UPTO ABC classes and periods to supply, along with your thresholds and safety stock factors. You may want to examine and change all of these with increased sales.
Lastly, receipt periods to average for lead time are typically set to four periods. This should be reviewed and possibly shortened, as the lead times most likely are improving; thus a lower number of periods will reflect more current average lead time.
The settings discussed here only impact items set to a purchase replenishment of UPTO and/or EOQ, but they are still important to manually controlled Min/Max and OP OQ items, as well, for ABC classes and ranking.
It is strongly recommended that these and other system settings be changed in collaboration with an Epicor Professional Services Consultant, as every distributor will have their own specific business needs. There are also new features to learn about, such as safety stock by service level, where the UPTO and EOQ replenishment methods will calculate a safety stock for each item / location for you.
Posted by Neil VanWalbeck, Professional Services Consultant at Epicor Software Corporation