In this (optional) training module, you will learn about the Min/Max screen in more detail. If you are going to use min/max as your primary inventory replenishment strategy, this will be your main page of Supply Visualization - the one you probably refer to the most. Even if you will be primarily using orders or schedules, you will want to refer to the min/max view because it gives you so much information and insight. It is simple to understand and use, too. When you finish this module, you will have a very effective way to collaborate with your trading partner on your requirements and shipping decisions.
As you have already learned, open the Min/Max screen from the dropdown menu under "Inventory" as shown below:
As you have already learned, the customers (usually the material planners) determine a minimum and maximum amount of inventory for each item and the goal is to keep stock levels in-between them; the quantity on hand should never go below the min or over the max. By displaying and continually updating this information, SV makes vendor managed inventory a collaborative process between the trading partners. If it seems that the min/max settings need to be adjusted, that can always be done too. SV is meant to enhance the customer/supplier communication to make the whole inventory management system more effective for both.
Definition of Min/Max
Safety Stock: The quantity that is planned to be in stock at all times to provide a buffer against fluctuations in demand and/or supply.
Minimum: The minimum in SV could be considered the same as "safety stock" in that it reflects the amount of inventory to be maintained in stock at all times. The customer displays the min in SV in order to collaborate with the supplier to keep inventory above it. While there are different ways of determining it and the customer can manually input any quantity into this field, the minimum in SV typically reflects the "average usage" multiplied by a "number of safety days." The customer can optionally have SV make this calculation automatically.
Maximum: The maximum amount of inventory to be in stock (not including material in transit or on order); quantity on hand should never go above the max. The max must be set higher than the minimum, leaving at least enough room to allow for a regular size shipment that arrives in the usual amount of time and covers the average usage.
Note that the min and max are not pulled in from the customer's ERP system; they are either manually input into SV or they are calculated automatically within SV.
Customer Admin Users: The topic of how to enter min/max data into SV is covered in separate modules under Advanced Training.
Factors when Determining Min/Max
There are several factors that are typically considered when determining a min and a max. Some of these factors are described below:
Average Usage: There are various ways to calculate and input average demand. The customer might use his own internal system; or in SV, the customer can do it manually or let SV do it automatically. Average demand can be based on historical usage, future forecasts or a combination of the two.
Order Lead Time: The time is takes for the supplier to receive an order (or a signal that material needs to be shipped) and make it available for shipment. This includes the time to process, pick and pack the order - but excludes the transportation or delivery time. Often, when determining Order Lead Time, the customer has to consider aspects like the supplier's agility (ability to ship on short notice) and the supplier's general performance.
Transit Time: The amount of time it takes to transport the material to the customer's receiving site.
Replenishment Time: The amount of time it takes the customer to receive the material, inspect it and put it into place on site.
Order Multiple Quantity: A multiplier used to calculate a shipment amount. Typically it equates to a pack size. The system will use this multiplier when calculating a ship quantity and round up (or down). For example, if the Order Multiple Quantity is set to 100, the ship quantity will always be a multiple of this quantity, i.e. 100, 200, 300, etc. - even if the actual required quantity is different.
Using min/max, the supplier can be much more proactive, making shipping decisions based on the information that is being shared through SV, rather than waiting to receive an order or a release from the customer that tells him exactly what and when to ship. The customer can observe and communicate about the activity at any time. This collaboration usually means that customers stop sending releases entirely once SV is in place. For the supplier's planning purposes, they can display their forecasted requirements i(supplier schedules) in the Schedules screen of SV. The Schedules screen is used for planning and the Min/Max screen is used for making shipping decisions.
In addition to the min and max levels, the customer can set an order point. Order point is the amount of inventory that, once reached, advises the supplier to ship more material (or the stock could hit the minimum). This leaves enough time for the order to arrive at the customer's site within the standard order lead time, transit time and replenishment time. The customer can determine the order point and input it manually into SV or he can have SV do it automatically. Then, this column, Order Point, can be displayed in the min/max view.
Some typical scenarios using min/max are:
Simple Min/Max: Typically used for standard, fast-moving items. The product is in regular use, following standard shipping schedules. The min is set at "Average Daily Usage (ADU) multiplied by the "number of safety days" and the max is set to allow for a normal shipment to arrive in an economical order quantity.
Min/Max with Order Point: Requirements are less consistent. The supplier wants to be notified when a shipment is necessary. An order point is set to allow time for the supplier to prepare the shipment and get it to the customer before hitting the minimum level.
For schedule-controlled items, you would use the Schedules screen in SV to determine exactly what and when to ship; or for other items that have a less predictable demand rate for which the customer wants to place discrete purchase orders, you would primarily use the Orders screen in SV to determine your shipments. In both cases however, you would still probably want to consult the min/max screen for other types of important, relevant inventory data that helps you optimize performance and communication.
Using Min/Max and Order Point to Make a Shipping Decision
Let's look at two examples of typical scenarios:
In this case, the supplier may decide to ship 200 pieces right now, getting him back to the max amount. If the transit time has been adequately considered in the min/max equation, the customer will have the shipment in plenty of time before hitting the min. Or he might wait until inventory is closer to min to make the shipment.
But, let's say the supplier can't ship right away; he has to determine the criticality of the situation - will expediting or overtime be necessary? Or perhaps the supplier has another customer that needs the same item urgently, and he has to decide how much and who to ship to first. In these cases, he would consult the average daily usage amount (in the min/max screen), as well as other important and relevant data, to determine if he could wait another day and accomodate both.
Let's even say that the supplier missed some of the signals that SV was displaying and the inventory were to reach the min; if he has set-up alert messaging for this scenario, he would be advised immediately so that he could react to the situation.
Min/Max with Order Point:
Order Point: 650
In this case, the supplier might not ship at all; in fact, if he is relying on an order point alert to notify him when to get ready, he may not be monitoring this part in SV very much (until he receives a message). However, when the part reaches the order point, he knows that it is definitely time to make the shipment - using the standard transportation mode, without expediting.
Columns in the Min/Max Screen
In addition to the basic information about min, max, order point and QOH, the Min/Max view offers many more columns, links (that open more detail) and color-coding to make everything easy to recognize and prioritize. Remember that each user can customize the display by determining which columns appear and in what order.
Below is a link to open a table that shows all of the available columns and their descriptions, links and color-coding:
When you are in the min/max screen and you open "Help for this Page," you will also get a list of the columns with information about them.
Deciding on Columns to Display
With so many columns to display, how does the user decide which ones are the most useful and in which order to display them? Primarily, it depends on your particular business processes and often, the customer has recommendations on how they would like the supplier to set it up. Later, in the Intermediate Training, you will learn about "work spaces" in SV that allow you create different templates of your set-up, allowing you to define the display and filters and then name and save that setting to be used later. So the supplier user might have one work space that is set-up with their own preferences for viewing the information and another work space of the customer's preferred view; or a work space that is filtered to show only one set of part numbers or a particular date range.
For now, we'll offer some general suggestions to get you started; modify your display to show what's most beneficial to you. Remember that you have a setting (in Admin / User Maintenance / Preferences) for either a standard or a scrolling screen. A scrolling screen keeps the first couple columns locked into position and these first columns in Min/Max are always "Item" and "Site." (If you are the customer, the Supplier column also stays locked in place.) Remember also that you can't sort or use hyperlinks on the data in a locked column, so if you want to be able to do that for the item and site columns, you would still want to choose to display them a second time (in the Display tab). A standard screen does not predetermine or lock any columns.
If you're using min/max as your primary replenishment strategy, some of the important columns to display are:
- Order Point (if you're using it)
- QOH + ASN's
- Replenishment Qty.
Others that you might want to add if you're primarily using a min/max strategy are:
- Consignment Qty. (if you have inventory on consignment)
- Next Delivery Date
- Next Delivery Quantity
- Average Daily Usage (AADU)
And of course, any other columns that help you understand and manage your inventory system. Remember, you can adjust the column widths by simply placing your mouse on the dividing line of the headings and moving them left or right (if you're using a scrolling view; this feature does not apply to a standard view).
TIP: To see the most critical items first on your screen, sort by Inventory Flags.
SV Min/Max Screen & QAD Enterprise Applications
If you are a customer using QAD Enterprise Applications as your ERP system, you may be interested to know where the data is coming from that you see displayed in the min/max columns of SV. The attachment (located under the Summary at the end of this module) is a table of the SV min/max columns and the corresponding tables, fields and menu numbers of QAD Enterprise Applications. This will show you how the data that you enter in QAD Enterprise Applications gets reflected in SV. Keep in mind that not all of the information in SV is extracted and updated from QAD Enterprise Applications; some of it is input or calculated directly into SV. The attached table lists only the columns that correspond to QAD Enterprise Applications.
In this training module, we learned about the min/max screen in more detail. Now you understand:
- Terminology used in an SV min/max strategy
- Factors that are considered when determining min/max
- How order point is used
- How to make a shipping decision
- The columns that are available to you and how to move them
If you have any questions about how to use the min/max strategy in your own business processes, please consult your trading partner to initiate a discussion.
Attachment Data: download (application/vnd.ms-excel, 24.1 kB)