Differentiated strategies

In the Classification app every assortment contains a matrix of segments. Each of these segments contain groups of parts, defined by the 2 dimensions of the matrix. For example: cheap fast movers (A1 in default configuration) or expensive slow movers (C3 in default configuration).

For each segment you can assign settings. The default settings are based on the planning concepts that are associated to the different segments.

Settings

There are different setting groups that can be set, see below. All settings that are set for a segment are applied on part-level after pressing Save and calculate.

The setting groups are:

  • Stock availability
  • Forecast
  • Order quantity
  • Lead time
  • Export

In addition, you can change the planning concept that is associated to that segment by clicking on that segment and then change the planning concept.

Note that only admin users can configure a planning concept. You can contact Lanza support.

Stock availability

The stock availability target defines the risk of a stock-out and has a direct impact on the safety stock calculation. The higher this number the higher the safety stock. Typically you set higher targets for cheap fast movers than for expensive slow movers. Contact Lanza support for more in-depth coaching on availability settings.

Forecast

Demand forecast settings contain a hierarchy of settings.

  • Select the ‘Forecast’ setting group in the dropdown in the Classification app.
  • Click on the segment where you want to change the demand forecast settings.

 

Now the complete list of forecast settings appears. The most important setting is the planning method. There are 4 options:

  • Reactive: forecasting based on historical demand 
  • Proactive: forecasting based on future demand information, e.g. soft reservations
  • Mixed: combined reactive and proactive forecasting
  • Manual: allows for a manual forecast and forecast error

Order quantity

The order quantity method determines in which way the order quantity is determined. An order quantity method can be set as long as the active inventory model for a segment is not Slow‘. Typically this inventory model is associated to segments C2 and C3. For this inventory model the order quantity defaults to 1, as we are using a base stock policy.

The following order quantity methods can be applied:

  • Economic Order Quantity (EOQ): minimizing order costs and inventory holding costs
  • Interval: based on the expected demand in a certain period
  • Manual: a manually set order quantity
Moreover, for each segment the MOQ (minimum order quantity) and MOD (rounding order quantity) can be enabled or disabled. When these are enabled the calculated order quantity may be overruled.

Lead time

The lead time method dictates how the lead time is determined. For each segment, a lead time method is chosen for both purchase lead time, and if applicable, repair lead time. The following methods are available:

  • Actual (repair) lead time: lead time based on historical supply lines (purchase or repair). This involves an average lead time and a lead time deviation.
  • Default (repair) lead time: lead time based on the lead time field in the ERP system. There is no deviation taken into account.
  • Manual (repair) lead time: a manually set average lead time and lead time deviation.

Export

The export settings determine which segments are in scope for the parameter update. When this setting is set to ‘No’ the inventory parameters of that segment will be not be included in the export list towards the ERP system. Contact Lanza support for more information on the configuration of your inventory parameter export.