An introduction to NETSTOCK

 

There is a good chance that your company has subscribed to the App to achieve one or more of the following:

  • Reduce excess inventory; NETSTOCK can help you release cash that is tied up in excess inventory
  • Minimise stock-outs; use NETSTOCK to minimise your stock-outs and make more sales
  • Place orders quicker; let NETSTOCK help you place optimal orders in no time at all

The big picture

A high level overview of what happens in NETSTOCK, covering:

  • Your objectives and the configuration of the App
  • Data extracted from your ERP and synced to our cloud servers
  • Processing that computes ideal inventory levels
  • Reviewing dashboard KPI and exceptions
  • Reviewing, amending and placing orders
  • Training for your users

The big picture - what happens during processing

This video dives deeper into the processing section of the big picture video, describing:

  • Critical data such as the stocking indicator and lead time
  • Obsolete, non-stocked and stocked items
  • Classification of your stocked items, by value and velocity
  • Using the matrix to set macro inventory policy
  • Generation of demand forecasts
  • Manual forecast overrides
  • Computing ideal inventory levels
  • Testing your current stock levels against these ideal levels, to:
    • Highlight key inventory exceptions
    • Recommend ideal orders

Basic navigation in NETSTOCK

Welcome to the Fast-track for Navigation. After logging in to the App, you will be greeted by the dashboard.

In this video we’ll:

  • Use the dashboard to explain the page layout

  • Give you some navigation tips and tricks

  • And show you how to find help

Menu options

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Use Menu options to:

  • View the dashboard for a specific location or regional consolidation

  • View a summary of all locations in the App or view information for a specific location

  • View a summary of the sales and forecasts for a location, and adjust forecasts at a macro level

  • Create orders, internal transfers and order ahead for supplier shutdowns

  • View key supplier information and supplier performance

  • View a forward projection of what is likely to happen to your inventory based on the current policy that has been set

  • View all information about a product in a location - comprehensive information to enable you make decisions

 

Setting the stocking indicator correctly is critical

Accurately defining your product range is critical for inventory planning, so that the App knows:

  • which items you plan to keep in stock

  • which items you will only buy when a customer orders them

  • which items you will not buy under any circumstances

How (and why) we classify your inventory

Click to download the infographic

Click to download the infographic

It is difficult to view hundreds, or even thousands, of inventory items every day and make an informed decision on what to buy, what’s running short and what you have too much of. The best way to get to the most important items is by classifying your items.

Why is classification so important? Because classifying your items allows you to focus on the 20% of the items that will give you 80% of your sales.

The tools to create the best possible forecast

Click to download the infographic

Click to download the infographic

If you don’t know what you are going to sell tomorrow, how can you decide what to buy today.

Having the tools to help you create the best possible forecast, results in optimal purchasing and planning.

How reorder levels are calculated

Understanding how reorder levels are calculated is fundamental to understanding order recommendations.

In this tutorial we explain how dynamic optimal reorder levels are computed.

How reorder levels result in order recommendations

Understanding how reorder levels result in order recommendations helps you during order review.

Now you can place the best possible order, to minimise stock-outs, reduce excess inventory and help to grow your business.

How the status of an item is determined

It is important to understand how the status gets assigned to each item, and the order in which you should address each status.

This tutorial explains how an item gets identified as a new, stock-out, potential stock-out, surplus order, or excess item.

How to ..

Before watching the tutorials below, it will be useful to do the “in product” tour on the dashboard and item enquiry, as these screens are shown in these tutorials.

Action your new items

Items show as new when there is no way to accurately determine the status to be assigned. Your goal is to action them to get them off the new items “to do” list.

In this tutorial we share some tips on how to action your new items, including:

  • How are “new” items identified
  • Your goal: get “new” items off the list
  • Incorrect stocking indicator
  • Check for supersessions
  • Add a manual forecast for stocked items
  • Add components to the bill of materials (bom)
  • Configure central warehouse supply
 

Action your stock-out items

Stock outs are bad for business. Losing a sale is bad enough, but if your customer has a good experience buying from your competitor, losing them for good is a disaster.

In this tutorial we share some tips on how to action your stock-out items, including:

  • Prevent the stock out by actioning your potential stock outs
  • How stock out items are identified
  • The situation and the available alternatives
  • The factors that influence the accuracy/validity of the prediction
 

Action your potential stock-out items

When you stock out of an item you will probably lose the sale, you may lose the customer’s entire shopping list and you risk losing the customer for good.

In this tutorial we share some tips on how to action your potential stock-out items, including:

  • How potential stock out items are identified
  • The situation and the available alternatives
  • The factors that influence the accuracy/validity of the prediction
 

Action your surplus order items

Once placed, an order is rarely reviewed before it arrives into stock. If demand has dropped off we may end up with significant excess that could have been avoided.

In this tutorial we share some tips on how to action your surplus orders, including:

  • How surplus order items are identified
  • Scenario’s and possible actions to take
  • Reasons for inaccurate identification of surplus orders
  • To gain maximum benefit from this tutorial
 

Action your excess items

Whether you purchased excess inventory at a reduced cost from your supplier in anticipation of increased margin or market demand has fallen after the inventory was purchased, the costs incurred while the excess sells down start to add up.

In this tutorial we share some tips on how to action your excess stock items, including: 

  • Prevent excess stock by actioning your surplus order items
  • How excess stock items are identified
  • Prioritise items for excess stock disposal
  • Excess stock disposal options
  • Excess stock disposal priority summary
  • Verify the excess is real by examining the key inputs
  • Be wary of unintended consequences
  • Actioning your excess stock items

 Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

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Allocated Stock - Stock-on-hand that has been set aside and is not available for sale or issue.


Average Cost - The cost price of the item used to valuate the inventory.

 

B

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Backorder - The quantity associated with a firm sales/customer order where the expected delivery date has passed today's date.


Bill of Material - The list of all raw material items along with their quantity needed to make a finished good item.

 

C

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Central Warehouse - The structure where branches or locations are supplied by a centralised location instead of external vendors. The centralised location is however supplied by external vendors.


Classification - The categorization of item codes into volume and value based groupings (HML & ABC) depending on their contribution to total sales/forecasts.


Classification Matrix - The 3x3 square of blocks where the rows represent value based sales/forecast movement, and the columns represent volume based sales/forecast movement. Each block represents a number of stocked product codes that indicate their importance to the business based on their sales/forecast movement.


C.O.S. (Cost of Sales) - The average monthly value of sales, at cost price, over the last 12 months.


Cover Forward - The period of time defined as Lead Time + Safety Stock + Replenishment Cycle. Also defined as the Order-up-to quantity.

 

D

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Days Cover - The number of days that the current level of inventory will last based on forecasted demand assuming no further purchase orders arrive.


Day(s) Offset - The number of days by which the safety stock has been adjusted to its current level.

 

E

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Excess Stock - An item whose net stock position exceeds the calculated Order-up-to or maximum level. The value of excess is defined as the amount of stock only exceeding the Order-up-to level.

 

F

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Fill Rate - Actual - The percentage stock availability measured over a historic rolling 30 day period.


Fill Rate - Target - The targeted stock availability percentage.


Forecasting Performance - The level of historic over- and under-forecasting when compared with actual sales.


Forecast Risk - The percentage risk calculated due to historic forecasted demand exceeding or lagging actual sales.


Forecast Shots - The historic 12 month horizon forecasting attempts, by month, for the past 12 months.

 

G

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H

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I

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J

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K

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L

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Last Import Date - The date on which the last set of data was extracted from the host database and processed.


Lead time - The period of time from deciding to place a purchase order with a supplier, to when it is available for sale to the customer. In the case of production lead time, it is the time from when the raw stock is requested to when it is available to production.


Lead Time Performance - The measurement of supplier lead time based on early or late deliveries.


Lost Sales - The value of forecasted sales to be lost due to being out of stock.

 

M

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Margin - The difference between the selling price and the Average cost price.


Minimum Order Quantity - A purchasing constraint imposed by a vendor where a minimum initial amount of stock may be ordered per order.


Model Stock - The average level of stock over the current replenishment cycle period that is regarded as ideal for the currently associated risk factors for the item. The Model stock level is defined as Safety Stock + 1/2 Replenishment Cycle.

 

N

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Net Stock - The level of inventory defined as stock-on-hand minus backorders minus allocated stock plus open purchase orders.


Non-Stock item - An item not held in inventory but still on the price list for ordering should demand require it. An item that has not sold for a long time, typically a 12 month period.

 

O

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Obsolete item - An item that has not had any sales for an extended period of time, typically 24 months, and therefore no inventory is planned to be held at this time.


On Order - The quantity of open and outstanding purchase orders.


Order Multiple - A purchasing constraint imposed by a vendor where the order amount greater than the Minimum Order Quantity must be ordered in multiples rather than in single units.


Order-up-to Level - The maximum level of stock required for inventory optimization. Defined as the Lead Time + Safety Stock + Replenishment Cycle.


Overdue Purchase Order - The quantity associated with an open and outstanding supply order where the Expected Arrival Date has passed today's date.


Over-Forecasting - Where historical forecasts have exceeded actual sales. Over-forecasting leads to excess stock.

 

P

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Potential Stock-Out - An item whose net stock position is potentially going to drop to zero before the next purchase order arrives. Action over and above placing an order based on the normal lead time is required to prevent a stock-out from happening. The Potential stock-out value is defined as the value of sales that will be lost inside the lead time when the net stock position falls to zero or less until sufficient stock arrives to raise the net stock position above zero.


Products Supplied - The number of product codes currently associated with the vendor.


PTD - Period to Date. Defined as the period of time from the beginning of the current period to the Last Import date, typically being today.


Purchase Order - The quantity associated with an open and outstanding supply order where the Expected Arrival Date is either today or in the future.

 

Q

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R

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Recommended Order - The unit quantity to be purchased that will result in optimal inventory levels.


Re-Order Level - The minimum level of stock required for inventory optimization. Defined as Lead Time + Safety Stock.


Replenishment Cycle - The amount of stock, in time, to be purchased when a recommended order is triggered. The unit quantity is calculated by looking forward, at the end of the lead time period from today, the replenishment cycle period over future demand (Forecasts + BOM demand + Central Warehouse demand)

 

S

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Safety Stock - A quantity of planned stock that provides safety against stocking-out due to unforeseen demand or risk. Otherwise known as planned dead stock. There are 5 inputs to calculating the level of safety stock, 2 are referred to as the sources of risk and they are Supply risk and Forecast risk, and the remaining 3 are referred to as risk multipliers, and they are Target Fill Rate, Replenishment Cycle and Leadtime


Selling Price - The price to be used to determine the average value of sales at selling price and to determine the level of margin made on an item. Selling price and Margin can be used in the classification settings.


Stock Item - An item held in inventory for the purpose of meeting immediate sales demand.


Stock-Out - An item where its net stock position is currently zero or less. Action over and above ordering based on the lead time is required to prevent further lost sales. The Stock-out value is defined as the value of sales that will be lost from now until sufficient stock arrives to raise the net stock position above zero.


Surplus Orders - An item where the arrival of the open and outstanding purchase orders will result in the net stock position being greater than the order-up-to or maximum stock level. The value of Surplus orders will be the portion of the order resulting in the net stock position exceeding the order-up-to level.


Supply Performance - The measurement of supply based on whether the vendor over or under delivered in terms of quantity.


Supply Risk - The percentage risk calculated due to a supplier delivering early or late based on historic deliveries.

 

T

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Target - A manually set level/number to be reached.


Turns - The number of times in a 12 month period, that the current level of inventory is expected to be rotated.

 

U

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Under-Forecasting - Where sales have exceeded historical forecasts. Under-forecasting leads to stock-outs.

 

V

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Velocity - The rate of units sold.

 

W

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X

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Y

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Z

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