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The Finished Goods Series
from E/Step Software Inc.
  Distribution Planning
Distribution Module
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Replenishment Planning

Distribution Planning

Plan throughout your distribution supply chain

In replenishing field warehouse (satellite) stocks, one seeks a balance between sending so much in a single shipment that the source cannot serve other warehouses which may subsequently run short, and sending so many small shipments that the satellite is swamped with too many unproductive receipts and bin trips while also incurring higher freight charges.

DRP concept

FGS' Distribution module has two phases:

Besides computing the right distribution quantities, DRP is integrated with Replenishment Planning, providing the source a look at the net shipping requirements to all warehouses, as a better basis for production planning.

Fair Shares Allocation spreads the inventory and the effort

This method succeeds by knowing the stock status and requirements in the total system before recommending any shipments to any satellite.

By using the Fair Shares Allocation enhancement to traditional DRP logic, this approach:

The general concept is to compute net shipping requirements out to the planning horizon for each SKU. These are based on each SKU's stock status, forecast, and service objectives. The net shipping requirements are then offset by the shipping and administrative lead times (appropriate to each field warehouse) and summed to the total for that part at the source.

Looking out to the horizon, the system, knowing the availability at the source, computes the:

  1. Minimum quantity to be shipped which will bring each warehouse up to order point (safety stock plus lead-time usage), and the Latest Date by which the shipment must be sent.
  2. For total available stock below the sum of the order points, a variety of rules are used, depending on the level of the shortage.
  3. For stock available above the sum of the order points, the system computes a fair share allocation which brings all warehouses to the same number of days of supply above order point. This represents a maximum quantity to ship—any amount above the fair share shipped to one warehouse could potentially hurt service at another.
  4. Between the minimum and the fair share, the system computes a suggested quantity to ship based on time and/or space limitations and rounded to normal handling quantities (e.g., pallets). By knowing what must be shipped, as well as a prioritized list of what may be shipped, the planner can optimize vehicle weight and cube, resulting in lower total freight charges.

Integrates Forecasting, Inventory Planning, and Replenishment Planning

Since the safety stock incorporated in the order point is based on each SKU's service objective, this approach accommodates different service objectives in different markets for the same products.

The net shipping requirements are available to FGS' Replenishment Planning module as a better basis for planning replenishments than the usual national forecast. The result will be both fewer shortages and better inventory utilization.