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Inventory replenishment through automated order generation

1 Executive summary
1.1.1 Background

In a Distribution network, operations could be streamlined and customer orders can be planned
earlier if the inventory is replenished without delay accompanied with reordering manually
after each item hits a reorder point from a supplier.

1.1.2 Objectives

1. Catalog all items in the distribution network and assign a SKU


2. Integrate with forecasting outputs and determine demand for each SKU
3. Maintain supplier information and connect to supplier order processing
4. Create POs with the appropriate supplier.

1.1.3 In-scope

1. Creating POs based on the demand and monitor PO status.


2. Integrating with forecasting outputs
3. Supplier information maintenance and priority maintenance.

1.1.4 Out scope

1. Providing inputs to the forecasting software’s.


2. Evaluating supplier uncertainties in the PO generation process.

2 Requirements elicitation and Gathering


2.1 Approach overview

1. Brainstorming with key stakeholders


2. Interviewing the current inventory management personnel
3. On-floor observation of order placement at the distribution center

3 Business Model
3.1 Organization profile

A distribution center with 10,000+ items shipped every day to customers. The organization has
a large pool of suppliers to order and current processing is manual.
3.2 High level As-is process flow

1. The inventory level of an item hits the pre-determined re-order point


2. An analyst has to analyze the current supplier information and determine an
appropriate supplier.
3. The analyst prepares a PO and send to the supplier by mail
4. Supplier acknowledges the PO and send conformation

Inventory Supplier
Distribution Inventory level Analyst acknowleges
PO is sent as
Center
of item hit analyses the
mail.
the PO and Supplier
reorder point supplier send
information. confirmation

3.3 High level To-be process flow

Based on forecast
Distribution outputs and demand Software sends PO Supplier acknowleges
Center
the software predicts
a dyanmic reorder
directly to supplier,
electronically.
the PO and send
confirmation
Supplier
point

1. The software will dynamically determine the re-order point by evaluating the
demand and forecast.
2. The software will evaluate the supplier information and based on priorities will place
the PO with the cheapest supplier.
3. Supplier acknowledges the PO and send conformation.
3.4 GAP Analysis

Objective Current State Future state Gap Identified


Determine Reorder point Re-order point is The re-order point will The forecast and
determined at the be dynamically demand data
beginning of the year generated every month currently not
utilized monthly.
Evaluating Supplier The Analyst has to A large pool of supplier The supplier
manually analyze the data data will be analyzed information has to
available to determine a automatically for the be updated
suitable supplier cheapest source regularly for
accurate data
PO generation The Analyst has to The software will Determining the
manually prepare a PO generate a PO and send supplier systems
and send through mail automatically to the and evaluate
supplier online compatibility to
perform the
automatic PO
transfer to
supplier.