With reverse planning, it’s possible to find what we call overstock inventory.
If I go into my reverse planning setup here on my page, we call it identify overstock inventory.
And the purpose of that is to find items where you have too high inventory value or inventory times multiple of safety stock or reorder point or safety stock plus reorder point.
And this way you can find items that you have too much in inventory and you want to reduce.
Maybe you want to sell out item, maybe you have too much that you bought for some wrong reason or maybe the market didn’t turn out like you expected, so you sold less than you expected and you want to find the items where you have too much in inventory value or bindings.
You can also include supply in this, so it’s also a way to find purchase orders or production orders that you’ve actually made but not yet placed or maybe you want to cancel them.
So if I enter my identify overstock inventory picture here, I can define different inventory templates in here.
For instance, if I look at my overstock item templates right now I only have one, but you can define as many as you want.
And I can set my criteria.
In this case, I’m looking for an item that falls for one of my criteria.
That’s why it says all.
I could also find items where it falls for many criteria.
But in this case, I say all, meaning I’m looking for items where the reorder quantity within the period, at whatever point in the period I’m looking at, is higher than twice the normal reorder quantity.
Or if my safety stock inventory or safety stock quantity in the end inventory of the period is higher than three times the safety stock or if my highest inventory value is 20 000.
Meaning if I have the setup and I want to calculate which items are falling for this calculations here I can find overstock items, I can set within what period, what to include, I have a template, so which orders to include, just like when I do all the others, reverse planning issues, where they only include released orders, open orders, etc.
When I’m calculating this, I can see that I have, in this case, maybe eight different items, some of them falling for my highest inventory value, so my city bike here has an inventory value of 80,000, I have to look at that, my mudguard bag has an inventory value only of 331.
It’s not very much, but the highest inventory is 85 and my reorder quantity out here is 40 on this line.
So then this way I can predict also in the future with all my supply orders and demand orders what my inventory is going to look like.
So this is a tool to figure out should I cancel some of my ingoing supply if it’s possible, or should I sell out some of this stuff? Maybe my chain up here is getting too old.
Nobody’s buying them.
So I need to lower the price, the price.
And I can find it in here with this tool to figure out to lower the price or do something to get into market.
I can even do this with the remaining shelf life if I have item that expires from expiration date.
So it’s possible to find all kinds of too high inventory value in here.
And of course, the CFO loves this tool because this is a way to lower your inventory that everybody likes.