How to calculation Weeks of Supply
A metric an essential to regulating the sleeve supply chain is mainly of supply (WOS). Weeks of supply tells the inventory manager how long the present on hand will last based upon current sales demand. By maintaining your eye on main of supply, you can avoid inventory share outs and lost sales. The an easy calculation for weeks of supply is nice simple: on hand list / median weekly systems sold. However, our occupational with vendors demonstrates calculating precise and useful weeks of supply have the right to be anything but simple. Permit me explain. One EDI 852 file will carry out units sold and also on hand. Very couple of EDI 852 documents provide data for inventory ~ above order, list in transit, or perform in the warehouse. Much more sophisticated systems, prefer Wal-Mart’s retail Link, will provide the extr inventory data. So, the first issue one analyst working just with EDI 852 must overcome is to acquire a complete snapshot of the perform in the supply chain – all the inventory. If you space working with a home Depot 852 or a Lowe’s 852 girlfriend must additionally gather your purchase order and also shipping data so that you have the capability to recognize on order and also in transit inventory. Girlfriend must additionally decide how to apply inventory in the it is provided chain. The is, will certainly you amount on hand + on stimulate + in transit to use as the molecule in your calculation? Or perhaps you would choose to disregard the on order because of long shipping lead times and use top top hand + in transit.
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The next factor to consider is how to calculation the mean weekly units marketed which is the denominator in the main of supply calculation. This calls for some mindful consideration. If the number of weeks provided to calculation the average is no selected correctly you will arrive at a misleading result.
One merchant has assets which are non seasonal and tend come have an extremely steady and also consistent sales. The other merchant has products which space seasonal and also sell much higher in the heat spring and summer months. When choosing the number of weeks for calculating the main of supply, you desire to consider the rate at i m sorry your need changes. If your demand is relatively steady, like the no seasonal vendor, a larger number of weeks can be used. If, however, your demand tends to adjust rapidly because of seasonality or based upon some event like selling licensed apparel throughout football season, then you should select a smaller variety of weeks. Ours experience shows that a seasonal merchant should think about a 4 week home window of sales demand and a non seasonal vendor should pick 8 come 10 weeks.
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The final allude to make about calculating main of supply is come consult through your sleeve buyer on the duration of demand they space using. If you space using four weeks and also they are using 6 weeks, you will arrive at various order quantities. By mentioning the calculation, you may uncover your technique is more accurate or you may find the retailer has good reasons for your method. If girlfriend still feeling your an approach is an ext accurate, then calculate weeks that supply using both methods and also track the accuracy end time. This will provide you through the factual data to either readjust your calculation technique to align through the buyer’s, or show to lock why your calculation is an ext accurate.