Purchase order system/process

[krammer]

All,

We have a warehouse for all second sales products from where we deliver to our branches .However we are running into a situation where we run short of products to deliver to our branches since they are not available in the warehouse due to lack of proper purchase.Sometimes the products are ordered(purchased) only when the requirement comes from one of the branches and they are not readily available to be dispatched to the stores causing some impact to business.This is due to gap in the purchasing system .How can this be avoided.
Are there any rules or purchase order system we can follow so that there are no gaps. Sometimes we end up having lot of non moving stuff in the warehouse at the same time we run out of stock for the most moving items.


Any help is appreciated. If you can point to a different thread also it would be great.
K

[nealrm]

I would go with a kanban type system. Each item has a card with the product name on it and a reorder point. When the item is removed from the warehouse, the card goes to purchasing. Purchasing order a replacement when they get a set number of cards for a product. Generally you will have more cards for a product than you have product in house, the extra cards are to allow for the time lag in full filing the order. The goal is to keep inventory at a JIT level but without any shortages. If you find that you are having shortages of a product, and cards into the system. If inventory is setting on the shelves too long, remove some cards. Once you get the warehouse under control, extend the system to include the branches into the kanban loop.

Another version of the kanban system uses the products themselves as kanbans. Place the items on a rack (a roller rack works best). Each rack is to hold a specific product and is to be labeled for that product. Pictures or actual parts mounted over the racks work well. Have the racks marked in red to show a reorder level, yellow and yellow as a warning level.

Based on past experience, most companies with reordering issue also have a 5S issue. I'm not going to go into all the details of 5S, but a good summary is: Everything has a place, it is only found in that place, that place is labeled both for the product and the amount, all packages and products have labels. I have literally visited hundreds of manufacturing plants in my past job, I never saw a plant had had good 5S that didn't produce good products. The opposite isn't necessary true, but it is a strong indicator that the products are questionable.

[broudie]

You can use an analysis of previous year's sales to determine which of your products will likely run out in the next X future periods. Then order accordingly such that the new inventory arrives as soon as the old inventory is projected to run out.