You use this program to configure policies for individual stock items for use in Inventory Optimization to model and calculate minimum and maximum stock levels over time. These minimum and maximum levels are used in the Requirements Calculation when calculating the required level of stock holding to meet demand.
- Toolbar and menu
- Policies
- Policy Maintenance
- Stock Information
- Notes and warnings
- Hint and tips
- Application Help Pane
| Field | Description |
|---|---|
| Edit | |
| Add | Select this to add a new policy. |
| Change | Select this to maintain the policy currently highlighted in the Policies listview. |
| Delete | Select this to delete the entry currently highlighted in the Policies listview. |
| Copy | Select this to use the IO Copy Policies program to copy the policy currently highlighted in the Policies listview. |
| Include | |
| Non-current | Select this to include policies which have lapsed, or which belong to time-frames in the past. |
| Warehouse | Enter the warehouse of the stock item against which you want to add or change a policy. |
| Stock code | Enter the stock item against which you want to add or change a policy. The stock code must be stocked in the warehouse you entered. |
| Change Rev/Rel | Select this to change the revision/release of the item for which you want to add or change a policy. This only applies to ECC controlled items. |
A list of all currently defined policies for the selected stock code/warehouse combination are displayed in this pane.
This information is stored in the IO Policies table (IopPolicies) for use in the min/max calculation and in modelling.
IO policies can extend to any period of time into the future. A different policy can be defined for each period, or season, or for changes in sales according to the product life cycle of the item. Each period should be supported by the appropriate policy relevant to the season the item is in.
Policies therefore contain important features of the stock holding strategy for an item, including Target Service Levels and Planned Order Frequency. They are crucial to the generation and optimization of min/max levels in modeling.
The equivalent program for maintaining policies for a selection set (batch) of items is the IO Batch Policy Maintenance program.
| Field | Description |
|---|---|
| New | Select this to add a new policy for the stock code. |
| Delete | Select this to delete the policy currently highlighted in the Policies listview. |
| Save | Select this to save the policy details you entered. |
| Field | Description | ||||
|---|---|---|---|---|---|
| General | |||||
| Effective date | This is the 'go-live' date of the policy, but can be
changed by selecting the Set date to start of
period option. If there is more than one policy active within a period for the calendar selected, the first policy within the period is applied. For example: Assume a period starts on 10/10/2012 and ends on 31/10/2012. Two policies exist for this period. The effective date for one policy is 10/10/2012 and for the other it is 20/10/2012. Modelling will apply the policy effective 1010/2012 (i.e. the first policy) and apply that policy's information for the period. |
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| Delete other policies in period | Select this to allow other policies for the stock item within the selected period to be deleted. | ||||
| Set date to start of period | Select this to override the Effective
date with the start date of the period according to the
forecast calendar. For example: The policy's Effective date is set to 03/08/2012. The period dates on the forecast calendar are from 01/08/2102 to 31/08/2012. If you select this option, then the policy will come into effect on 01/08/2012. |
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| Reference | Optionally enter a reference. | ||||
| Target service level |
Indicate the target service level you want to achieve with this policy. This is the percentage of demand you want to satisfy over time, period by period. If the policy is Risk based, then this percentage is used to calculate the number of days stock cover you require to achieve the target service level. If the policy is Fixed, then the target service level is used for historical comparison only.
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| Service level measure | This is the measure used to calculate whether the target
service level was met. It is based on the Sales Order
Performance table. You can indicate which measure to use. |
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| Line fill rate | This is the default selection and compares your target
service level to your actual achieved service level. This is the Quantity Invoiced as a percentage of the Quantity Ordered and is calculated as: Line fill rate = Quantity Invoiced / Quantity Ordered * 100 for the order line. |
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| Line on time in full |
Order line delivered in full on or before the Line Due Date (customer request date). This is calculated as: Line on time in full = Lines in full / (Order lines + Number of lost sales) * 100. An order line in full is when the quantity shipped is not less than the quantity ordered and the last line ship date is not later than the customer request date. |
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| Line on time |
Order line delivered on or before the Line Due Date (customer request date). This may or may not be a full delivery. This is calculated as: Line on time = Lines on time / (Order lines + No lost sales) * 100. An order line on time is when a quantity has been shipped on or before the customer request date. It is not necessarily complete by the request date. |
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| Order fill rate | This is the total Quantity Delivered (or Invoiced) as a percentage of the total Quantity Ordered for all of the stocked merchandise lines within a single Sales Order. This is calculated as: Order fill rate = Value shipped / (Value ordered + Value of lost sales) * 100.The Order fill rate is always calculated using the sales value. |
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| Order on time in full | All lines on the order are delivered on or before the line Due Date (Customer Request Date) and each line is delivered in full. This is calculated as: Orders on time in full = Orders in full / (No Orders + No lost sales) * 100. An order is seen as on time in full when all the order lines included in the review have been shipped in full on or before the customer request date. |
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| Order on time |
All lines on the order are delivered on or before the line Due Date (Customer Request Date). This is calculated as: Orders on time = Order on time / (Number of orders + Number of lost sales) * 100. An order on time is an order where all the order lines included in the review have at least partial shipments made on or before each customer request date. Order based measures only take into account the order lines which are included in the review based on the selections made. For example, if you have an order with 3 stocked merchandise lines: A100, B100 and X999. If your selection is only for A100 and B100, then the third line for X999 is not included in any of the measures. |
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| Maximum quantity cap | Enter the maximum quantity to be determined within the
policy. This is the maximum quantity that can be held in stock whilst the policy is effective. This is used in all policy types. This is the ceiling placed on the Maximum Quantity when the suggested Maximum Quantity exceeds the ceiling. If this is zero, then the maximum quantity defined against the warehouse for the stock code is used (Warehouse Maintenance for Stock Code). The maximum can be a function of warehouse space. For example, if the warehouse can only accommodate 300 items and 500 items are ordered, where would you store the extra 200? |
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| Planned order frequency | Enter how often you plan to order an item. This is the number of days between each purchase order raised to satisfy demand. |
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| Policy type | A policy can be either Fixed (in quantity or the number of days of cover of future demand) or Risk based, where the amount of stock is a function of the service level desired to meet future demand. | ||||
| Fixed | Select this if you want a fixed quantity or fixed number of
days cover for the stock item. This is useful when you are not sure of the demand, but you need to keep a certain number of the item in stock. Fixed policies can be used for new products, since these items do not have any demand history. |
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| Risk | This type of policy determines the characteristics of the item according to the required service level, together with either the capability to forecast it or what its historic patterns of demand have been. | ||||
| Fixed policy settings |
This section enables you to indicate the Fixed Safety Stock, in Quantity or in Days, for Fixed policy types. For risk based policies, the days cover is calculated based on the target service level and the algorithm used. |
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| Policy base | The fixed minimum stock can be indicated in terms of quantity or days. | ||||
| Days | Select this to indicate the days of minimum stock cover required for this item. | ||||
| Quantity | Select this to indicate a specific number of items to keep in stock as minimum stock. | ||||
| Minimum quantity | If the Quantity policy base is
selected, then enter the minimum number of items to be kept in
stock. This minimum quantity is absolute and is used as the minimum level for the duration of the policy. |
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| Minimum days cover | For a Fixed policy, if the
Days policy base is selected, then enter the
minimum number of days of cover required. This is converted to a
quantity based on the forecast demand for the effective
period. The system uses the forecast for the item in the future and works out how many days of cover this represents in quantities into every forecast period within the policy horizon. |
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| Risk policy settings | These options are only enabled for Risk based policies. | ||||
| Distribution algorithm | For a risk based policy you can choose either Poisson or
Normal distribution as the algorithm to calculate the days cover
required to meet the target service level. The days cover is calculated based on the target service level and the algorithm selected. |
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| Normal distribution | Select this if the product has a fairly regular demand and is forecast regularly. | ||||
| Poisson quantity | Select this to use a Poisson probability distribution to calculate service level based on the quantity of demand into the future, or the historic quantity in the past. | ||||
| Poisson hits | Select this to use the Poisson distribution, but change the
demand into demand occurrences (hits). This a more reliable method for lower or intermittent demand items of providing stock cover. |
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| Minimum cap in days | Enter the amount you want to cap the minimum stock level
at. The entry made here is set and saved against each stock code supplied by the selection set. When using a risk based policy the minimum number of days cover may require a ceiling to prevent overstocking. This is especially true if your data contains a lot of noise. In this case, the calculation may indicate that you need a minimum of 90 days cover, but you may actually only have warehouse space for 30 days minimum cover. If the calculated minimum days cover exceeds the days entered here, then the minimum cap in days entered here is used instead. |
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| Lead time variance | Enter the amount you expect the lead time to vary from that
promised by the supplier. This amount is used to buffer the item's lead time, providing the lead time against the stock master is greater than zero. (i.e. the system will provide additional stock holding to cover the variance within the lead time). It is applied as a percentage of the SKU's lead time as part of the days cover calculated by the algorithm. For example: The lead time against the stock item in the item master record is 50 days. The Lead time variance is 25 days. The cover is increased by 50% (i.e. 25/50 *100). If the Lead time variance is zero then there is no buffering. Also, if the lead time against the item's master record is zero, then the lead time variance entered here is meaningless. |
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![[Warning]](images/warning.png)
This pane displays the static settings against the Inventory Master table for the entered stock code.
Electronic Signatures provide security access, transaction logging and event triggering. This enables you to increase control over your system changes.
Access to the following eSignature transactions within this program can be restricted at Operator, Group, Role or Company level. You configure this using the Electronic Signatures program.
| eSignature Transaction | Description |
|---|---|
| IO Policy added |
Controls access to the New Item function in the Policy Maintenance pane of the IO Policies program. |
| IO Policy changed |
Controls access to the maintenance of policies in the IO Policies program. |
| IO Policy deleted |
Controls access to the Delete function in the Policy Maintenance pane of the IO Policies program. |
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The Target Service Level – defined against the policy (IO Policies) – is crucial in determining the resultant min/max levels.
The higher the Target Service Level, the higher the suggested Minimum, and by implication, the higher the suggested Maximum. These min/max levels are used by the MRP calculation to address demand, in conjunction with Batching Rules set against the Inventory Master.
It follows therefore that, the higher the Target Service Level, the higher the potential inventory on-hand, and the greater the risk you bear when customers do not purchase your product in the volumes recommended by the Target Service Level.
Suggested min/max levels must be critically reviewed for feasibility in relation to the target service level set, before they are copied to current for use in MRP. It is recommended that only senior staff are involved in the determination of min/max levels, since this is the level at which decisions affecting profitability are made.
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Amendment journals are created for changes to selection sets if you selected the option: Amendment journals required - Policy settings (Inventory Optimization Setup - General tab). These can be printed using the IO Policy Amendment Journal program.
Application Help Panes provide step-by-step instructions for various functions within the program, including a brief overview of what the program does, what setup options are required and how to personalize the program. The intention is that the pane provides information that is uncluttered and easy to navigate.
You can embed an Application Help Pane:
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in the main SYSPRO menu
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in any program with panes, if not using roles
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when adding a role layout in Design Mode.
Inserting Application Help
You would typically follow this procedure to display help for the current program in a customized pane that can be pinned to the program window.
Information includes step-by-step instructions for the various functions available within the program, including a brief overview of what the program does, what setup options are required and how to personalize the program.
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Open the program for which you want to insert application help into a customized pane.
This functionality is only available for a program that has panes.
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Right-click any form field.
You can also click the triangle menu icon that appears in the title area of a pane.
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Select Insert Application Help from the context-sensitive menu.
The application help appears in a pane within your program. You can reposition the pane using the docking stickers or pin it to the program window.
Removing the Application Help pane
If you no longer want to display application help in a pane for your current program, you can simply remove it.
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Select the Close icon in the right-hand corner of the application help pane.
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Confirm that you want to delete the pane.