Mid-market ERP provider SYSPRO this week released an inventory optimization module that parses inventory stock codes into the category groups that manufacturers often use to anticipate inventory requirements. SYSPRO Families and Groupings is the second module in a series of three aimed at helping manufacturing companies improve inventory forecasts and support lean efforts.
Part of the SYSPRO Inventory Optimization suite, the Families and Groupings module follows the release of a SKU-level forecasting product in 2006. The third product in the suite, due out toward the end of 2008, will complete the suite with functionality that helps users set policies by suggesting optimal inventory levels. The suite is designed to help companies better predict and forecast inventory demand in both outbound (sales) and inbound (supply) processes, major factors in lean manufacturing projects.
Using the Families and Groups module, manufacturers first define which inventoried items will belong to larger categories, such as "groups" (usually collections of individual SKUs), or "families" (hierarchies of SKU groups). The system then generates forecasts at the various levels according to the user's requests, said SYSPRO USA Product Manager Rene Inzana, in an interview today.
The information and forecasts generated by the Families and Groupings module can also be presented according to an individual user's needs — for example, marketing staff can call up groups by brand; sales can see regional information or top-selling items; and logistics managers can view a Pareto analysis at various levels in the hierarchy or single groups, Inzana said.
According to consulting firm R. Michael Donovan and Co., inventory directly affects a company's bottom line because it is often the largest asset on the balance sheet. It stands to reason, then, that lower inventory levels would mean less of a drain on cash; however, a swing too far in that direction could lead to a halt in the production line or a compromise in customer service if orders are missed or late.
"The whole idea of lean is to not hold too much inventory and improve efficiency by having inventory there when you need it to supply production and fill orders while providing the best customer service possible," Inzana said.
Inventory held too long has a direct effect on a company's income, she continued, because the longer excess inventory sits, the greater the risk of damage or outdated items that end up being sold at lower prices or scrapped altogether.
"Most manufacturers have many items, so forecasting can quickly become a daunting task," Inzana said. "The whole idea is to get as close to accurate as you possibly can."
"One of the tenets of lean is minimizing waste, such as excess inventory," Julie Fraser, principal and industry analyst at research firm Industry Directions, told Managing Automation. "Our research shows that companies that forecast and plan inventory at a more granular level can gain an understanding of exactly when various products are likely to be needed where, thus enabling the same or even higher service levels to each customer or location with smaller buffer inventories."
SYSPRO, which serves 12,000 customers worldwide, was founded nearly 30 years ago and has remained focused on the mid-market. Although the SYSPRO product platform can be used in any discrete manufacturing environment, officials said, the company recently embarked on a micro-vertical marketing strategy focused on food, medical device, electronics, and machinery makers, which account for the bulk of existing customers.
Major customers include Chocolate Potpourri, a confectioner based in Glenview, IL; auto parts manufacturer Moriden America; medical device maker Sound Surgical; and Airflow Research, recognized by Managing Automation earlier this year as a 2007 Progressive Manufacturing Award recipient.