Stock Reserves, Back Orders and Forward Orders

….or how not to run out of stock

Gidday, This is the latest in a series of blogs I am writing on Abel’s features and what they can do for you. This month’s topic is Abel’s stock and inventory demand and on order processing. This includes Abel’s basic demand, reserve, back order and forward order features.

These features have been designed to make sure you can meet deadlines, have stock on hand and accurately plan for requirements across multiple warehouses and production lines.

Abel can be configured to capture stock and inventory item demand from: Customer Orders, Manufacture Orders, Shop Orders, Jobbing Orders and Production Orders.

This basic demand can further be extended to track: reserved stock, back ordered stock and forward orders. This demand is used to calculate available stock (stock on hand less reserved and back ordered) and is used for reorder and replenishment (stock on hand less basic demand).

We are often asked: What does reserving stock mean?

Reserve is Abel’s term for current stock that is needed for a customer order or a plant order. (APICS defines this concept as allocated stock created by a reservation process – effectively an “uncashed” stockroom requisition). Reserving stock is a way of allocating available stock to customer orders or manufacturing activities (plant orders).

Back order is a technique for recording demand for a normally stocked item that is out of stock. Abel can be configured to calculate and store the back order quantity when there is insufficient stock to complete an order, so you can easily see the back order requirements on each document and inventory item. It does not reserve the stock but the orders will be in the stock allocation queue for available stock.

Forward order is a technique that initiates the manufacture or purchase of an item you don’t have in stock, or nominates a supplier order to fulfill demand. It can be used when there is no current stock to satisfy the demand (either because the item is never kept in stock or because stock has run out). For items that you never keep in stock, you can configure specific customer order line types to automatically create a supplier purchase order or a plant order when the customer order line is posted.  For items that are temporarily out of stock, you can manually create a forward order link  to a supplier purchase order, giving certainty over when that order will be fulfilled. When stock arrives for a supplier purchase order, it is not received and stored away, rather it is immediately dispatched. This is called cross docking.

Here are some more questions we often get asked:

How do I know if I will have enough stock to make an item when the manufacture starts?
Use the Available Position screen – this forecasts the available stock as at the start date of the manufacture. This example shows the available position as at the manufacture start date for a particular plant document. There is a shortage on one of the raw materials.

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What if I have an important job that I want to move up the queue?
You can move an item up the queue by changing its reserve date, you must also manage those jobs that will be short of stock as a result. This example shows an important order waiting behind three others. You can use Abel’s manual reserve feature to change the reserve date to move it up the queue.

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What does  over reserved [Rov] mean?
If you are running a reserve configuration and you see [Rov] it means the stock item is over reserved i.e. you have not got enough available stock to fulfil the order or complete the manufacture.

This example shows a customer order that has been reserved. The top line has enough stock and the stock has been reserved [Res], the second line does not have enough stock [Rov].

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So that was a very quick summary of three techniques for managing inventory demand. It is pretty much horses for courses. You can select different techniques for different inventory items according to your requirements.

If you want to know more about Abel’s inventory demand and on order processing features and how they can help your business, please contact your Abel Consultant or an Abel Distributor.

Until next time.

Rik

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