Overview

This report provides detailed insights into your inventory, focusing on Just-in-Time (JIT) replenishment for each product variant. It helps in optimizing inventory levels, reducing carrying costs, and ensuring product availability.

Key Terms

• SKU: Stock Keeping Unit, a unique identifier for your product variants.
• Vendor Lead Time: Time taken by the supplier to deliver products after an order is placed.
• Safety Stock Days: The buffer stock to prevent stockouts.
• Units Sold in Historical Period: Total sales of a product variant in a specified period.
• Avg Units Sold per Day: Daily average sales for each product variant.
• Quantity On-hand: Current stock levels of each product.
• Incoming Inventory: Ordered stock that is yet to be received.
• Days of Inventory Remaining: Estimated time until the current stock runs out.
• Reorder Point: The stock level at which a new order should be placed.
• Reorder Quantity: Suggested quantity to order at the reorder point.
• Unit Cost: Cost per individual unit.
• Reorder Cost: Total cost for reordering the suggested quantity.

Formulas for Reorder Point and Reorder Quantity

• Reorder Point: Calculated as [Average Units Sold per day] x ([Vendor Lead Time] + [Safety Stock Days]). This is the inventory level at which you should trigger a new order.
• Reorder Quantity: When the 'Quantity On-hand' falls below the Reorder Point, the reorder quantity is equal to the Reorder Point. If the on-hand quantity is higher than the Reorder Point, no replenishment is suggested.

Using the Report

1. Monitor Stock Levels: Check the 'Quantity On-hand' and 'Days of Inventory Remaining' to understand current stock status.
2. Identify Replenishment Needs: Use the Reorder Point formula to determine when to reorder and the Reorder Quantity to know how much to order.
3. Plan Purchases: Use 'Reorder Quantity' and 'Reorder Cost' to plan your inventory purchases both in terms of quantity and budget.
4. Evaluate Sales Performance: 'Units Sold in Historical Period' and 'Avg Units Sold per Day' provide insights into the sales performance of each product variant.
5. Manage Supplier Relations: 'Vendor Lead Time' helps in planning orders considering the time it takes for products to be delivered.

Tips for Effective Management

• Regularly review the report to stay ahead of inventory needs.
• Coordinate with suppliers for products with high sales velocity or long lead times.
• Adjust safety stock levels based on sales trends and seasonality.
• Use the data to negotiate better terms with suppliers, like reduced lead times or bulk purchase discounts.

Conclusion

This report is a powerful tool for maintaining optimal inventory levels, avoiding overstocking or stockouts, and ensuring customer satisfaction through product availability.

Updated on: 12/12/2023