Tactics on Inventory Projections (2,242 words)
Edited By Donna Loyle
You discover a terrific product that you know your customers will love. The vendor's pen hovers over the quantity line on the order form. How much should you buy? Three catalog executives shared with Editor Donna Loyle their insights and methodologies for projecting how much merchandise to stock for each catalog campaign.
Ron Zientarski, vice president of purchasing and inventory management, Corporate Express, Grand Rapids, MI
Product: business-to-business office supplies and furniture
Size of warehouse facilities: The company has 257 office products locations, including 40 distribution centers spanning more than 6 million square feet.
SKUs: 70,000, but 7,000 to 25,000 are stocked in its warehouses at any one time.
Catalog Success: What criteria do you use when deciding how much of any one product to stock?
Zientarski: We calculate things such as demand and demand variations, lead cycles and service-level goals. Our calculations are warehouse-specific, and every item must live on its own. It has its own demand variation for that particular marketplace served by that warehouse. So our calculations also depend on the size of the warehouse to which it will be shipped.
CS: What systems do you use to help make these inventory projections?
Zientarski: E3TRIM, software from JDA Associates, and our own data warehouse that runs on an Oracle database system.
CS: Do these systems notify you when there are problems, such as projected overstocks or shortages?
Zientarski: Yes, we capture hits and history, different costs, and all of that information is accessible by our central purchasing department. We have 24 buyers on staff. On a daily basis, they can see the projected product shortages and overstocks, all reported online. Our buyers review these reports daily.
We have a variable order scheduling system that looks at orders every night and knows when to recommend we place an order with the vendor. We can see when an item is crossing over into the safety-stock level.