Optimizing Inventory
The Dynamic Way is a brand founded to offer unique, beautiful, and affordable products that fit into every bathroom. The company provides a complete range to furnish the entire bathroom. With a team of designers, buyers, and installers, they work daily on the latest progressive products. It started small with people from the industry, and since then, it has grown rapidly, adding new wholesalers, installers, and customers. As the company is growing, it needs to allocate its resources wisely. TDW has requested Scale-Up Supply to enhance its supply & operations planning to achieve this.
The products are sourced from different factories worldwide, some located in the same area. The customers are located mainly in the Netherlands, where the company has its warehouse. The demand is growing steadily while the assortment and its business is being expanded. At the start of the project, the company faced two issues;
Unclear purchase and sales order management
No outlook for future inventory positions
Unclear purchase and sales order management
TDW uses Exact Online as its ERP system to manage its inventory and process sales and purchase orders. Exact is initially accounting firm software, which limits its functionality for supply chain management.
The first thing Scale-up Supply started with was making an API export to Google Sheets with the most critical datasets; inventory, purchase order lines and sales order lines. With the data, we start the creation of basic overviews, showing:
Item inventory
Showing the physical inventory quantity, average historical sales, open purchase & sales quantity, available quantity and inventory turnover
Purchase order line
Showing the open purchase order lines with customer, item, quantity, creation date & confirmed delivery date
Sales order line
Showing the open purchase order lines with vendor, item, quantity, creation date & confirmed delivery date
With the API connection, the S&OP sheet is being updated continuously and serves as a tool to further understand the process and technology requirements before investing in expensive software.
Secondly, with the purchase and sales order line overview, we start cleaning the open date, closing sales and purchase order lines that have already been delivered/received, requesting the expected lead time of purchase order lines with a confirmed delivery date in the past, and updating the expected delivery dates of the sales order lines.
Additionally, with the item inventory data we grouped the items and categorised them based on the needs (rupture, expected rupture or excess). The team could focus on solving and preventing the ruptures while making a start by decreasing the non-moving inventory.
Finally, we finished the issue by finalising the overview according to the requirements that came up during the previous point. We created process descriptions to safeguard the management of open and sales order lines. To finalize, we set up a dashboard to show the open purchase and sales order lines, highlight the delayed sales order lines, and track the ruptured items.
No outlook for future inventory positions
Now that we have the inventory, sales, and purchase data, we want to create an outlook of the expected inventory, purchase, and sales value for the next 12 months. Therefore, we set out to create the first version of a Supply & Operations Planning sheet.
We created a simple ordering algorithm to calculate future inventory expectations using an average forecast, safety stock, and lead time. We use a periodic ordering model to calculate the required inventory and pipeline quantities. The model uses the existing data (open purchase and sales order lines) and the sales and purchase quantities it is expected to be placed.
The outcome shows us the expected inventory, sales, and purchase quantities for the next 12 months. The expected inventory for the coming 12 months is shown by multiplying the (future) inventory quantity with the item price. As we like visualisation, we created multiple graphs (like below) to show future expectations.
