ABC Softwork Blog

In this blog post I wish to address the importance of making sure that people who are held responsible have the authority to decide!

In most companies, you have a purchase  or logistics manager who is responsible for the inventory performance. These managers are measured on how efficient they run the entire inventory, which makes a lot of sense… most of the time!

When dealing with inventory management, we often see a conflict between sales and purchasing. The conflict occurs when empirical data indicates that it would be wrong to keep specific SKU’s in stock. In many cases, sales are pushing to keep certain items because they are afraid of missing out on potential business if the product portfolio gets too narrow. (more…)

Statements like these are excellent for marketing but do they help operations?

In my experience, they have become part of most retailers’ and wholesalers’ identity. They help to create environments with extreme focus on doing everything possible to satisfy the customers, a behaviour that is causing some problems in operations.

At ABC Softwork, I work with companies who typically manage thousands of SKU’s and customers. I often interact with (more…)

Best practice: Bevola A/S has reduced inventory levels dramatically through special agreements with key subcontractors. What is most surprising is that the new agreements are for mutual benefits.

Bevola, a Europe-based manufacturing company offering products and solutions for the transport sector, has reduced inventory levels on their most important products (AA products) as subcontractors have agreed to lower the delivery time. In return subcontractors have gained insights in Bevolas’ needs and future production plans making their own production flow easier to forecast and plan. – A true win-win situation for both parts. (more…)

One of the more common questions we at ABC Softwork get is; what is the correct way to categorize products? We would love nothing more than to give a simple answer to this question, but the fact is that there isn’t just one – there are many.

Before we can even begin to discuss how to categorize, five questions need to be answered:

• What is the challenge you wish to address?
• Which products (or customers) are affected by this challenge?
• Which information will help you to understand the challenge better?
• Which data do you need in order to understand the challenge?
• How should you categorize in order to create the information you need?

With ABC Analyzer you have a tool that can carry out the task of categorization, but YOU still need to do the thinking! (more…)

Once you have categorized your products and defined your most (and least) profitable items it is time to apply differentiated mangement policies. But how? Step one is to acknowlegde that each ABC category must be handled differently.

Once you have classified all your products using “frequency” (how often an item is picked from your stock) and “cost of sales”, you gain an overview of how your items contribute differently by impact on service levels and econimically. – Still haven’t classified your products? Read this post

As a rule of thumb, focus your energy on the four corner categories: AA, AC & CA as these products are the most important when it comes to service level and economic impact. Keep an eye on CC items as they are slow moving and items that often have excessive inventory levels.

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