Browse Prior Art Database

Web based Automatic replacement of inventory to ensure optimum supply

IP.com Disclosure Number: IPCOM000013549D
Original Publication Date: 2001-Apr-16
Included in the Prior Art Database: 2003-Jun-18
Document File: 2 page(s) / 41K

Publishing Venue

IBM

Abstract

Volume manufactures typically drive their business against a build plan. The build plan represents that they will build in the next 30/60/90 days. This build plans is used to drive parts orders and inform the channel which products will be sent.

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Web based Automatic replacement of inventory to ensure optimum supply

    Volume manufactures typically drive their business against a build plan. The build plan represents that they will build in the next 30/60/90 days. This build plans is used to drive parts orders and inform the channel which products will be sent.

A web based business builds to order vs build to plan. The traditional method to support this is to attempt to execute forecast against the direct build i.e. to anticipate customer order rate and plan against it. This method works for basic commodities (frames, covers, power supplies) but is not effective for high cost lower attach rate commodities.

For low attach rate commodities, a direct business must balance the following two goals:

1) Ensure item is always in stock
2) Keep inventory as low as possible to minimize inventory carrying costs

The two goals are fundamental opposite. If you do not have supply when a customer attempts to order the item, you have lost the sale and maybe the customer. If you have to much supply of an item then your exposed in several areas: high cost to carry the extra inventory, potential stale supply if technology changes, and loss of price action by supplier.

The optimum solution is to just carry enough inventory to ensure supply without extra inventory. This invention creates an automatic process to determine when to reorder items based on the outgoing sales rate and the time duration it takes to restock the inventory.

This business practice determines the "replenishment factor" that is used to determine the required inventory level. The replenishment factor is based 5 key items given weights to allow fine tuning of the inventory level.

Key Factors:

1) Industry standard or customized part

2) Transit time: Time required for ground freight

3) Actual sell rate: Running x-day average of sell rate.

4) Projected sell rate: The sell rate of the it...