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ANALYZE

Most organiza,ons commit signicant resources in order to make sure customer commitments are met. Carrying the right amount of inventory is an important component in mee,ng customer demand. But, incorrectly determining inventory levels leads to wasted working capital and lost prots. Unfortunately, inventory determina,on methods are o@en only understood by a few people in the organiza,on. What decision makers need is the ability to visually see the business impact of inventory planning and the trade-os between inventory, demand, and the ,me to re-supply. The ANALYZE capability of the converts discreet customer demand into ,me based demand paLerns, providing an all in one picture of ,me, demand, risk and investment. Time-based demand paLerns provide visibility into where and when demand variability in conjunc,on with supplier lead ,mes run the risk of out-of- stocks. The result is an easy to understand visual assessment of the tradeos.

Summary

The leverages your investment in ERP and MRP solu,ons by turning exis,ng data into easily and ac,onable informa,on to provide greater control over opera,onal processes (e.g., produc,on, repair, logis,cs, vendor management, etc.). The results: beLer on ,me delivery, shorter more reliable lead ,mes, lower costs (e.g., over,me, premium freight, cross shipments, outside buys, etc.). ANALYZE is a decision support so@ware tool used to size inventory buers by using ,me-based demand paLerns derived from historical or forecasted demand in windows of Time to Reliably Replenish (TRR) with varying degrees of risk associated with stock-out condi,ons. The boLom line:
WORKING CAPITAL PRESERVED AND INVENTORY REDUCED. DECREASED RISK OF STOCK-OUTS

Business Issues

Variability in demand and resource availability makes it dicult to know when or where devasta,ng stock-outs will occur. Incorrectly sized buers lead to increased stock outs and missed sales, or reduced working capital and cash constraints. Inventory shorSalls lead to shi@ing workload and priori,es, over,me, premium freight, cross shipments, outside buys, etc. Inventory turns are too low. Too much inventory of some items and not enough of others.

Key FuncAonality of ANALYZE

All-in-one picture of ,me, demand, risk, and investment in a paLern-recogni,on based decision support system that provides what-if capability for analyzing tradeos and assessing boLom line impact. Time based demand paLerns provide for visual and numerical analyses of ,me, demand, risk, and investment reducing the need to rely on complex and theore,cally abstract formulae.

Business Benets

Higher ll rates. Higher inventory turns. Increased working capital. Improved customer-vendor rela,onships.

Learn more about how ANALYZE improves your bo8om-line

WHY ANALYZE WORKS

ANALYZE

Types of Buers

In todays world, a great deal of aLen,on is given to sizing and loca,ng physical inventory buers. Inventory buers serve two purposes. First, they absorb the variability in customer demand. Second, they account for the variability in the ,me that it takes to replenish those inventory buers. Demand is sa,sed from physical inventory buers, which eec,vely decouples variability in demand from variability in supply. Iden,fying the maximum expected demand during the Time to Reliably Replenish (TRR) provides context in which to relate changes in inventory levels to stock outs. The solu,on is to ANALYZE inventory levels using ,me based demand paLerns to see the risk of stock outs in rela,on to variability in demand and supply.

There are three categories of buers in the Theory Of Constraints (TOC): (a) Time buers, (b) space buers, and (c) physical inventory buers. Time buers protect the ,meliness of delivery in support of execu,on management (for more informa,on on how the ONE number priority system can enhance your execu,on management see the MANAGE capability of the ). Space buers ensure that space is not the limi,ng factor to ow. Physical inventory buers ensure variability in customer demand can be eec,vely sa,sed while taking into account variability in the ,me to re-supply.

Determine the level of Inventory required to meet Demand during the Time to Reliably Replenish (TRR).

Physical Buer Size = The Maximum expected demand during the TRR yields the Lowest level of stock outs. ANALYZE processes historical or forecasted demand through consecu,ve windows of Time to Reliably Replenish (TRR) in order to produce what are called ,me based demand paLerns. Time based demand paLerns are what enable paLern recogni,on to play a key role in assessing inventory levels in rela,on to the level of risk associated with stock outs. The result is a simple, easy to learn, easy to use process for assimila,ng the tradeos between ,me, demand, risk, and investment when establishing inventory levels and customer ll rates.

ANALYZE

a new powerful pattern recognition method for managing inventory by properly sizing physical buffers.

ANALYZE allows you to use pa8ern recogniAon to determine the best buer size that produces the highest sales and highest inventory turnover by saAsfying demand without variability geTng in the way. By analyzing actual demand variability in conjuncAon with a Time to Reliably Replenish (TRR) ANALYZE provides a clear picture of inventory consumpAon through Ame.
ANALYZE uses a patented process that gives you the ability to perform what-if scenarios to iden,fy buer sizes based on demand, varying degrees of risk, and replenishment ,ming. Establishing an actual and NOT average demand paLern provides a more realis,c assessment of inventory levels in rela,on to stock outs. ANALYZE synthesizes complex data and computa,onal algorithms providing a smooth interac,ve solu,on pucng you in charge, by providing a beLer understanding of how the inventory strategy aects working capital and protability.

What it Takes to Run ANALYZE


What You Already Have in Place
Provide, for each item to be buered, historical or forecasted demand data (i.e., actual order start date, actual order nish date, order quan,ty, actual issue/ship date, ship quan,ty) for all orders processed in the user dened Demand Date Range

What You will Need to Do


q Establish Reliable (Not Average) Lead Times (LT) and/or Times-to-Reliably Replenish (TRR); i.e., a planned period of ,me between the placement and receipt of an order that is o@en greater than, and seldom less than the actual ,me required for each order placed to be completed q Minimize the batching of orders by placing replenishment orders in accordance with the ,ming (e.g., daily) and quan,ty (e.g., daily total) of the item issued (or sold) from inventory q Maintain a predetermined maximum quan,ty, whether it be in inventory or on its way back to being in inventory

THE BIG INVENTORY MANAGEMENT PROBLEMS OUT-OF-STOCK & WORKING CAPITAL


Out of stock situa,ons whether vendor, manufacturer, wholesaler, or retailer
can devastate an organiza,ons reputa,on with customers. Aside from the serious impact on working capital, poor inventory planning and execu,on leads to poor boLom line performance. Inventory management methods should provide the ability to iden,fy demand paLern variability and its rela,onship to stock-outs when determining op,mal levels of stock. ANALYZE provides the ability to account for both demand variability and supplier performance when determining inventory levels in rela,on to stock-outs and working capital.

To learn more about the capabili,es of:

FIND OUT MORE

MANAGE IMPROVE PLAN SCHEDULE and how ANALYZE can put you in control of improving your inventory management; contact your AGI representa,ve today or visit www.goldraL.com. USA: (203) 624-9026

ANALYZE

Working capital is a precious resource for companies. Unwise use of working

capital limits an organiza,ons ability to meet short-term nancial commitments and accomplish long-term plans. It is important to understand the impact of inventory on working capital: too much slow moving inventory reduces the eec,veness of working capital, while not enough fast moving inventory means lost sales, reducing the inux of new money. The ques,ons of how much inventory to hold, and where to hold it, play a vital role in the short and long term nancial health of organiza,ons, and in the ability of organiza,ons to meet customer commitments.

Copyright 2007-2013, Avraham Y. GoldraL Ins,tute, LP All Rights Reserved.

and are service marks or trademarks of the Avraham Y. GoldraL Ins,tute, LP in the United States and other countries.

U.S. Patent No. 8,433,592 and Japanese Patent No. 5039025 for ANALYZE. U.S. Patent No. 8,401,905 and Foreign Patents Pending for MANAGE and IMPROVE. U.S. and Foreign Patents Pending for PLAN and SCHEDULE modules.

Data contained in this document serves informa,onal purposes only. Na,onal product specica,ons may vary.

The best way to improve inventory management is to improve


inventory eec,veness while reducing out-of-stocks. ANALYZEs patented inventory management system converts discreet customer demand into ,me-based demand paLerns. Time-based demand paLerns provide visibility into where and when demand variability in conjunc,on with supplier performance run the risk of out-of-stocks. The result is higher ll rates, increased inventory eec,veness, and improved cash ow.

These materials are subject to change without no,ce. These materials are provided by The Avraham Y. GoldraL Ins,tute, LP and its aliated companies for informa,onal purposes only, without representa,on of warranty of any kind, and The Avraham Y. GoldraL Ins,tute, LP shall not be liable for errors or omissions with respect to the materials. The only warran,es for the Avraham Y. GoldraL Ins,tute, LP group of products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as cons,tu,ng an addi,onal warranty.

ANALYZE Buer sizing using Ame-based demand pa8erns.