MANYENT PLC

ManyEnt Plc



ManyEnt plc

Answer1)

The purchase control system is used to manage the purchasing activity of a company. It provides a link between the inventory control system and the accounts payable system. This system provides a means of recording purchase orders placed with your vendors, and tracking the orders through the different phases of receiving the product, backordering, and invoicing. Inventory management is much more complicated than this, of course, because managing inventories from a multitude of different suppliers means dealing with all of those suppliers' individual lead times. For Kwikeeshop, this is quite a variance. Some vendors were pegged, generally, with lead times of 14-21 days, depending on the specific product. Some took 45-55 days. Some in between, longer, shorter, etc. Over the course of a year, however, it made sense that in a perfect purchasing system - with all inefficiencies removed - a smart company could average something approaching its monthly COGS. Kwikeeshop is mired at $265,000 and climbing.

When a firm makes a purchasing decision, certain variables have to be evaluated. Those are: current inventory level, vendor lead times, sales history and its relation to future demand, and other seasonal factors. This is simple for a company with one, two, or some other small total product offering acquired from just a handful of vendors. But for a company managing tens, hundreds, or thousands of different products from a multitude of suppliers, the analysis is infinitely more complicated. Most companies in this situation are going to ride the rollercoaster-like system of moving from actual stockouts to over-corrections. Moving from inventory deficits to bloated warehouses (Fisher, 2006).

Kwikeeshop's purchasing system used a home-brewed osC system that factored in too much information in many cases and not enough in other cases. Simply reviewing sales history without running it through statistical analyses ultimately leads to wrong information.

In Kwikeeshop's case, they ultimately discovered that the primary reason for the overstocks was because most of their individual customers simply purchased either a quantity of one or two of any given product. On occasion, though, a random customer, here or there, would purchase four, or five, or ten of a given product. These purchases, however, did not represent the “typical” purchaser and should have been excluded from the data set when determining how many products could actually be sold in the next 30 days. As a result, instead of making purchases of one or two, their buyers would place orders for the “average” sold for a given time period in quantities sometimes of three and four, or more, for many given items.

Independent Versus Dependent Demand Inventory

Selecting the right inventory control system requires distinguishing between the independent and dependent demand items. By definition, an item is considered to have independent demand if its sales rate is not influenced by the sales activity of another item. Consequently, inventory decisions for independent demand items can often be made separately for each item without worrying about interrelationships among items. Independent demand items are typically forecast where the demand is influenced ...