Inventory Optimization: Is it wishful thinking or a reality in a challenging economy?

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As a distributor or a component manufacturer, your largest and most costly asset is most likely inventory. Reducing inventory carrying cost and increasing margins can cause a greater effect on the bottom line than increased sales. By doing both you will significantly increase profitability.

Built Inside Microsoft Dynamics® NAV

Advanced Forecasting & Procurement “AFP” is built inside Dynamics NAV and takes a unique approach of incorporating vital forecasting functions inside a single system, providing “Total Access to Data.”

Forecast Input

Any forecasting tool is only as good as the accuracy of the historical data that it bases its forecast on. AFP provides several ways to improve the accuracy of historical data:

• Filtered Usage – Only sales that are expected to reoccur should be considered as demand input for the forecast.

o One-time sales can be flagged by the customer service person and excluded from usage.

o Unusual usage is flagged by the system to provide a means of adjusting abnormalities.

o Usage for lost customers is not included.

• Smoothed Usage – Irregular usage can be automatically smoothed to improve usage patterns.

• Re-directed Usage – Usage history from discontinued items can be reassigned to new items.

• Collaborative Input – Input from large customers who will share their expected buying patterns can be imported.

Forecast Method

AFP is delivered with 18 formulas. New formulas can also be added or existing ones can be modified. During forecast calculation, all items are reforecast, using each formula, in order to choose the formula that most closely matches the historical usage pattern of the item. This allows different formulas to be used for an item as its usage pattern changes.

Forecast View

The twelve-month forecast is presented with drill down capabilities to allow the user to view the details of the forecast input, as well as the calculations used. In addition, the

Forecast is compared to the time phased expected inventory and then utilized to predict the expected inventory level for each period.

Procurement

In addition to forecasting future sales, AFP considers usage patterns, vendor lead-time, vendor targets, and time phased expected inventory to create a suggested purchase order. Like the Forecast view, the user is presented with ample opportunity to evaluate the suggested order calculations, as well as the detail of the forecast and expected inventory.

Getting hold of your inventory turnover and replenishment is even more crucial in a challenging economy. In some cases, it could mean the difference between surviving an economical downturn and completely losing out to your competition. A combination of Microsoft Dynamics NAV and AFP can be the automated and intelligent tool required for you to take fully control of your business and to be ready when the economy turns around.

Finatech, a Microsoft Gold Certified Partner, is a global IT services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. We deliver end-to-end Systems & IT-enabled business solutions and we partner with industry leaders such as Microsoft and Sage.

By Omar Sary with Finatech, a California Microsoft Dynamics NAV Partner

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