Module: Branch Exchange (Internal Transfer)

Executive summary

The Branch Exchange is a module that facilitates the solution of ordering and redistribution using overstock within the company. It therefore makes it possible to eliminate unnecessary orders to the supplier, which are solvable internally by moving the overstock from one warehouse to another, where it would otherwise have to be ordered.

Functional description

The module displays a list of overstocks by items that are also usable at other branches where it is necessary to order. The determination of the overstock is based on a comparison of the expected endurance of the stock with the set limit of the determination of the overstock (see 5.5.1 Module: Identification of overstocks). A stock that exceeds it is designated as a usable overstock. The effort is to connect: overstock is compared with the need to order the same items in other warehouses and optimal transfers of items between warehouses are proposed.

Overstock identification for items with predecessor-successor binding If an item has predecessors and inventory addition is turned on, then the overstock determination is calculated for both items together, but the overstock is added only to the currently ordered item.

Graphical interface

The module has a graphical interface accessible (by default) in the section reports.

image0

The interface has two parts, a filter and a table with results. The filter contains the following items:

  • Source warehouse - warehouse(s) with overstock
  • Target warehouse - warehouse(s) where it is necessary to order
  • Do not take into account consumption for the next X days - includes in the calculation only orders from the date (today + set number of days) further
  • Maximum limit of the delivery plan for the future for the target branch - the date (today + number of days) after which we want to calculate the need for the destination branch (limit on the time for which we want to replace orders to suppliers with transport)

Algorithm

STOCK first identifies the overstock of individual items (can be seen in the Overstock Report), then proposes orders for each item (can be seen in Orders). The Branch Exchange module then proposes to move the calculated overstock to where STOCK would order the largest quantity from the supplier in the set period (Maximum limit of the delivery plan for the future for the target branch), or where it would order first if the quantity matches. When evaluating the total ordered volume, STOCK does not take into account orders for the next x days (Setting “Do not take into account consumption for the next X days in the report) so as not to try to replace those orders to suppliers that could not be covered during the “delivery time” of redistribution from branch to branch.

Overstock calculation

  • Ordered items
    • Sporadic: Overstock refers to in-store stock that has a higher stock than a set multiple of the minimum inventory
    • Non-sporadic: Overstock means stock in the store that exceeds the forecast for a certain set number of days
  • Not-ordered items: overstock cannot be determined as neither stock levels nor orders are counted for them to determine inventory durability

Quantification of the need to order

  • Ordered non-sporadic items
    • we take data from proposed orders/redistributions
    • we treat them the same as in orders
  • Ordered sporadic items
    • we take data from proposed orders/redistributions, but because sporadic items always have proposed orders only “for today”, if their stock is below the minimum stock level, the proposals of the branch exchange will probably not be relevant and with the setting “Do not take into account consumption for the next X days” > 0 they will never be proposed for transport.
  • Items not ordered
    • do not have calculated orders and sales forecast -> there is nothing to calculate

Settings

Proposing transport of not ordered and sporadic items

By default, the branch exchange works only for items that are allowed to order and are non-sporadic. The functionality can also be extended to not-ordered and sporadic items. For the following items (marked as dont_order = 1 or sporadic), the “sales forecast” is calculated based on the average sales in the last x months since the last sale:

  • sales / number of days in the selected period since the last sale (evaluated in total for the whole group of predecessors and successor)

The expected number of days of supply of the stock (according to the calculated average sales) is compared with the set limit of determining the overstock (specifically for the following items):

  • a stock that exceeds it is identified as a usable overstock
  • the need to order is a stock that, in addition to the current available stock, would be sold out in the specified number of days (as set in Overstock Identification Settings)

Minimum transport value limitation

The minimum transport value can be set. In this case, no combinations of transfers will be proposed for which the sum of the potential margin (i.e. Σ(sale price - stock price) * the proposed quantity for redistribution) does not meet the set minimum limit from the “Branch Exchange Administration” setting.

Order multiple

For transfers between branches, the order multiple and MOQ, which is set on the supplier, are ignored. Unpacked packaging can also be transported between branches.