How to handle an inventory hog?

Don't let one customer ruin your service levels  

Ok so this post has nothing to do with livestock but the idea is fairly simple, as a distributor your customers expect a level of service from you. For example they expect that when they call for those standard items they need every week,  you will never be out of stock. So you use your inventory management modules and configure usage patterns and do your ABC analysis, but then you have a customer who completely wipes you out of an everyday item. 

This just causes headaches on your purchasing side and while sales might be happy initially in the long term it may just cause you to over order on your next purchasing cycle , mostly because it's a one time buy and not a new trend.



So how do you handle these inventory hogs?

The MDS System allows for a no wipe out flag. This will limit the amount of inventory any one sales order or customer is able to order. At the point of entry the operator is warned and advised of the percentage the company has made as business rulle. In our example below, no one order or customer can wipe out more then 75% of the total inventory we have on hand for an item. By advising your customers you can get the extra goods but not all of if right now you are able to maintain the optimum inventory levels and can ship a partial amount to the customer while back ordering the rest allowing your purchasing department to source the additional quantity without effecting fill rates and service levels.

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

3 Ways to Increase your virtual inventory footprint...

What is a virtual inventory footprint? 

It's really just a more complicated way of explaining that the traditional models of purchasing goods, holding them in the warehouse and then shipping them are changing and hence creating a "virtual" inventory footprint in your warehouse. Handling the logistics of the new virtual inventory mode can be complicated so today we are discussing three software tools the MDS-Nx System offers to streamline and simplify the process. 

Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination.

The MDS System allows for cross docking in multiple ways but a simple example is our Special Sales Order System.  This Systems allow you to order items for a specific customer or customers and is different then a drop ship in that the items are shipped from your warehouse.  Because of this you can aggregate multiple sales orders into one purchase order but still maintain specific allocation for which orders when the purchase order is received.  This saves time in warehouse if the item is a special order for multiple customers, by  allowing your company to receive it and getting alerted during the process to cross dock. This would move the good from the receiving location to the outbound shipping queue, rather then putting the goods away on the shelf and generating an additional picking document. 

Drop Ship Orders - Zero Inventory virtual systems, the MDS_nx System allows you to flag individual sales order line or entire sales orders as drop shipped from a specific vendor, once this option is chosen the system will automatically create a purchase order to your vendor and optionally send it electronically via email/fax/edi 850 Purchase Order.  Once your vendor invoices you , either manually or via EDI 810 invoicing the system with then automatically Invoice your customer, no addl steps required. 


Next Day Vendor - Ship with other goods (SWOG) , Often you may have a mix of goods on a single sales order and want to ship them together, this is often a requirement of some government or state contracts. to facilitate this the MDS-Nx system offers the Next Day/Ship with other Goods option. This will hold the inventory for the order and wait for all additional lines to come into the warehouse. Options exist to create the paperwork upfront saving time and effort by allowing the warehouse to manage the shipping, or it can create the paperwork and or electronically send to shipping when all goods are in warehouse. 
This allows you to combine both your virtual and physical inventory into a single shipping step. 

All three options let you extend the functionality of your supply chain and expand the product offerings to your clients, translating into increase sales and customer satisfaction. 

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Inbound Shipments: One Added benefit of the DQSA...

As the DQSA (Drug Quality and Security Act) or Drug Pedigree law's update yet again , what is clear is that most supply chain partners seem to be exchanging this information us the HDMA Standard EDI 856 Advanced shipping notice. 

Our healthcare specific versions of the MDS-Nx Software platform offer the ability to both import and export your data in this standard format. However even if you are not using the inbound 856 documents for drug pedigree or T3 Information , they have an additional added benefit. 

 Integrate your vendors shipping schedule into your warehouse 

 Save Time Money and Warehouse Space!!

The MDS-Nx system will import this information and update the in transit table to give your purchase orders a new level of detail. Instead of wondering when items will arrive you will have details by line of each shipment that will be coming to your dock.  Prior to the truck rolling up to your dock you can plan where the product will be put away or use our Put-away function to manage the receiving process. During  receiving  any operator can call up the In transit document and verify the products are received.  This saves time and reduces data entry errors. while at the same time offering the option to schedule your labor and warehouse space.  If using our Pharma Modules this information also updates and creates your T3 , Transaction information and creates your pedigree documentation as well as the ability to send EDI 856's yourself.

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Simplify and Communicate using SOP's

Business Software and Supply Chain Management go hand in hand with an SOP. Keeping countless spreadsheets and having one person be the one who can run your business processes limits not only your growth, but also your daily operations. Integrating an SOP is a standard part of the MDS System and during implementation we work with your and your team to define and document these steps. 

For Many of our clients getting VAWD Certified means you have to put these SOP's into practice, but for any business large or small it's part of making sure everyone is on the same page. Used properly the SOP is the building block for success

Simplify Your Business with an SOP

One of the best ways to ensure your business runs smoothly is by creating a Standard Operation Procedure (SOP) manual that documents all of your business’s procedures, tasks and activities. An SOP manual can alleviate stress, disorder and chaos from your place of business by streamlining all of your regular business tasks.

Want to take a day off or go on vacation? With an SOP in place, you can leave your business in good hands, knowing that all daily tasks and activities have already been documented and will be implemented according to what has already been put in place. An SOP can also legitimize your business for your employees. For your customers, it will create a seamless, professional look and feel, encouraging confidence in your business.

1. Begin with a purpose. 
   Make sure you determine exactly what the purpose of your SOP will be — usually, to document your daily activities and serve as a guide for the running of your company — and the scope of work that you will be describing. Many times, an SOP includes descriptions for each procedure (opening/closing rituals, cash-register management, etc.), job descriptions and responsibilities, rules and consequences for breaking the rules (attendance policies and more), and proper equipment-management procedures.
2. Use a template.
   Free SOP templates are available online and greatly reduce the confusion of creating an SOP from scratch. Using an SOP template, or building one from an existing SOP, can also save you precious time — which gives you more time to manage your business.
3. Go into detail. 
   The best SOPs leave nothing to chance. Be specific in your SOP — make sure to describe equipment and products by name, and be specific about the various locations around your place of business. When necessary, include organizational charts and maps plotting out your business, and designate certain areas of your building for specific things — i.e. the mail room — to alleviate staff confusion.
4. Put it into place. 
   Make the SOP a focus of your business practices. Let your employees know where it is and ensure they learn it.

Finally, emphasize the importance of following the SOP. If your employees know their job descriptions and the company’s rules, all aspects of your business should run more smoothly — taking the pressure off of you as a business owner. Additionally, as your company grows, having an SOP in place will make the growth easier to handle. Update the SOP manual periodically to reflect job description changes and other modifications.

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Same Day Delivery with a Warehouse on Wheels

Move your customers to same day delivery using technology from another industry.

As you may have noticed I am a big fan of Amazon's services in general and one of the latest offerings, Amazon Prime Now, led me to discussions with a number of clients who wanted to emulate or explore how they could also achieve same day delivery.  Companies like  McMaster-Carr have made a billion dollar business on the same day delivery model.

If you are not familiar  with it , Amazon Prime now offers thousands of products on a two hour delivery time frame and having used the product extensively I must say  I would pay for the convenience however it's currently free to prime members.

Having said that to differentiate themselves in the Retail Pharmacy space a client recently said , what other value can we bring to these clients?

During the meeting it was suggested that same day delivery was a good value as it would allow them to tell patients/customers, "No problem I can have the prescription filled by 3pm today."

This would also steer them away from the traditional pricing arguments and haggling over price
as other competitors could not deliver this service and eventually customers would either come to their pharmacy more often or possibly even pay a rush fee.

The problem was that they while they did have the inventory to handle the demand they did not have the distribution network and wanted to expand it outside the normal 2-3 hour zone from thier main warehouse.
In a previous blog post we covered using existing clients to expand the supply chain and using those not as supply chain endpoints , but rather as mini warehouses. However there are complications at those locations and your don't always have controlled access, certainly an issue in the the Pharma supply chain.

So what was the solution? 

Borrowing from our successful MDS-EMS  Supply Chain Management for Emergency Medical Services  Software solution , we took the concept of a warehouse on wheels and created the mobile inventory warehouse that solved the issue.

Customer orders can be routed directly to the driver and mapped out so if there is not enough time and he or she can move along a predetermined route delivering products through out the day.
As demand increases multiple vans/trucks can be added and the standard MDS-EMS replenishment system means they are in and out of the distribution center in minutes instead of hours when restocking the mobile warehouse.

The Mobile Inventory System works by allowing Each mobile warehouse to  replenish packs and loose items from the DC/supply depot. On a scheduled basis or on demand customer sales orders are sent to your supply truck. The orders are updated via wireless web connection from your supply warehouse and the MDS-Nx System. The truck Prints labels and delivers the goods on the truck, then returns to the main warehouse, after supplying and restocks or delivers additional orders until inventory is depleted. Packs are replenished and any lose items are restocked using each pack’s bar coded label. An invoice is generated for the items consumed and the customers account is charged. All items are displayed on the website as available for same day delivery and if an order is mixed items - they can choose to ship later with entire shipment from the DC or have it routed to the same day truck driver.

By building prebuilt "packs" of the most frequently used items and or creating a usage pattern for the clients in that area  you can increase the likelihood of customers using the program and you can either charge higher product prices for same day items or a surcharge for delivery.

Alternately you can just this as the tool the separates your company from the competition.

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Smaller Faster Warehouses?

Turns out bigger is not always better when it comes to distribution.

Most of our blog posts look at what the larger distributors are doing and try to adapt the concepts to small and medium sized business. But for this week a surprising trend is emerging..
The E-Commerce Supply chain is driving demand for smaller, Urban Distribution Centers.

In today's world of e-commerce distribution, speed and mobility are key. Just like how any customer who orders a widget from Amazon.com expects it to be on their doorstep two days later or less, businesses ordering commercial products now expect the same speedy service from distributors.

As the pace of B2B continues to transform distribution trends, it appears one of them is in the distribution centers themselves. New data from real estate firm CBRE Inc. shows that demand for industrial facilities under 100,000 square feet in urban areas is on the rise.

Traditionally, large distribution centers have been located in suburbs and small towns, where property and labor are cheaper than large cities. But with end users growing more reliant on 1-2 day, or even same-day delivery, distributors and retailers have had to find ways of moving products to them faster.

David Egan, CBRE’s head of U.S. industrial research, told the Wall Street Journal, “You need to expand and make your supply chain much more complex if you want to be able to promise and deliver on that same-hour, same-day or overnight delivery everyone is coming to expect.”

One of those growing ways retailers/distributors are moving products, CBRE has found, is by snatching up smaller distribution facilities in urban "light industrial space," keeping their logistics network mobile, and perhaps cheaper.

These facilities are often in older industrial buildings where location is the big factor instead of a priority on the latest, greatest machinery found in large warehouses. CBRE's research found that such urban light industrial property has more availability than the increasingly tight market for large industrial facilities, and for relatively reasonable rents.

CBRE reported that industrial real estate demand has pushed rents to near pre-recession levels, growing by 1.3 percent in Q2 2015 and nearly 3 percent so far this year. The firm expects 3.2 percent of additional growth through the end of 2015, which would bring rents to within 4 percent of the previous cycle high.

CBRE analyzed 44 neighborhoods prone to probable online shoppers across 14 major metropolitan areas and, according to the report, found that Atlanta, Boston, Chicago and Philadelphia offer ample access to both e-commerce customers and light industrial space choices.

The practice of adding smaller, urban distribution centers certainly suits retailers of consumer products, but what about distributors of other industrial or healthcare products?

Population centers may be more for the retail crowd, but what CBRE's research shows is that distribution centers can have a place there too, even if it's in smaller pieces than massive warehouses. Using smaller, urban DCs could be effective for stocking your most popular B2B products instead of feeling a need to include absolutely everything in your product catalog at every location. The traditional single warehouse or JIT Model is changing. If you have the product closer to or at your customers IE a Stockroom at a customer and treat is as a mini warehouse.
You can take advantage of the same concepts.

Consumer retailers have begun using crowdsourced delivery services such as Deliv, or even Uber-like rideshare services , Amazon is testing a new delivery service called Amazon Flex that allow ordinary citizens to drive packages to destinations. Those services go hand-in-hand with brick-and-mortar retail stores in population centers. But most those packages are delivered to an individual person, whereas  B2B orders are going to other businesses. We have yet to see any many distributors jump on the bandwagon of those delivery services, but that's not to say it won't eventually happen. Especially for those who run their own delivery fleet now.


But here is an interesting concept, many distributors operate stockrooms and offsite customer owned inventory locations today.
Rather then viewing those as endpoints in your supply chain, change the view to a more 360 degree view and understand they can be satellite warehouses providing the right amount of inventory at the right location at the right time.

How many doctors offices would crowdsource and deliver for you?
If you have a medical center with thirty offices in a building, and half of them can hold some extra inventory, by using an effective inventory management and shipping solution ( Like MDS-Nx ) you can create those warehouses and get customers the products they need just like amazon.

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Why does that matter?

Often we talk about supply chain metrics or KPI ( Key performance indicators) without explaining the purpose or reason we measure them and watch them.

On a daily basis we often push a number or percentage and tell people to watch them, but the most common question we get is.... 

Why does that matter? 

So to help you along today here a few simple metrics/indicators and why they matter. 

In addition since many the of the metrics don't really explain what is good or what is bad we can look at some of the different types of graphs to help us see a trend and figure out how to correct or react. 

While some of this data may be readily available in your ERP/Business management system, if not you can always start with a spreadsheet or a piece of paper. 

As the saying goes, "If you can not measure it, you can not improve it." - Lord Kelvin 

Cash Conversion Cycle 

In it's simplest form , how long does it take for your money to make money. 

Take the Invoice Payment Date from your vendor and the Cash Receipt Date from your Customer. The Number of days between the two is your cash conversion cycle. 

In most distribution companies this is not always that simple as you may purchase and pay for a case of gloves but sell them by the box. So the most common way to normalize or make the number meaningful is to use an average of the days rather then a single transaction. 

What is is supposed to look like?  While it can vary universally every agrees a lower number is better. Anything under 30 days is excellent but most companies who hold inventory hover around 80-100 days

Why it matters? The shorter your cycle time to the more money you will have to buy more inventory and sell more etc. It basically going to decrease the amount of operating capital or money you need to expand you business. 

Instead of looking to more funding to expand the business look at ways to shorten the cycle time. Credit cards, ACH payments, Cash discount for quick payments. 

These are all tools to help the cash conversion cycle and can speed up payments on the consumer side as well as the purchase side. 

Inventory Days/Weeks of Supply

This is the  number of days it would take to run out of supply if it was not replenished.

It is calculated as inventory on hand / average daily usage.  Inventory Management seeks to minimize inventory days of supply in order to reduce the risks of excess and obsolete inventory. 

What is is supposed to look like?  

In most distribution operations a 1-2 month spread is typical or 30-60 days on hand. 

Why it matters? 

Excess inventory tends to tie up  cash flow. Why let the money sit in inventory in the warehouse , typically inventory like a car will lose value while sitting in the warehouse and the more you reduce the inventory you are keeping the less cash you will have sitting in the warehouse. and the more you will have to operate and grow your business. 

Using an effective inventory management solution can yield more cash to help your run the business. 

Fill Rate

While their are many arguments over what goes into the fill rate  starting with a simple calculation that can be tweaked is suggested when starting the process. 

For now lets assume the fill rate is the percentage of a customer's order that is filled on the first shipment. 

This can be represented as the percentage of items, SKUs or order value that is included with the first shipment. 

(1 - ((total items - shipped items) / total items)) * 100 

What is is supposed to look like?  

While again i can vary form company to company the floor or bottom value we see if usually around 93% or 94%   if you are not there then you either need to increase inventory 

or review customer order patterns to match them up better with your purchasing and delivery schedule. 

Why it matters? 

Fill rate is typically the most quoted metric to match with customer satisfaction and is a good measurement of efficiency for your company as it involves a number of areas. 

Tools to improve your fill rate can be inventory management, customer usage analysis and possibly customer commitments. Often a client/customer will commit to purchasing a specific quantity for you or allow you to do strategic planning with them so that the fill rate matches to their expectations. 

These measurements or metrics allow you to simplify your review processes and by understanding the reasons behind why each one matters you can help others in the company understand the concept of a KPI or Metric and turn those into measurable results to help drive your business. 

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.