The motto in the materials business is to have as few materials as possible and as much as necessary. If the levels of stock are high, if delivery periods are erratic and consumption hard to predict, standard material management systems and “manual optimisation” are insufficient. The Advisory House has developed BOL, an application that helps procurement managers solve the conflict between low stock and high availability.
BOL consists of sophisticated stochastic optimisation routines. The convenient graphic user interface comprises data import options and extensive analysis functions, as well as filter systems.
BOL proposes to the procurement manager the optimal reporting stock for each material, taking risk management into account. The probability distribution of future warehouse stock is determined by the uncertainties of incoming and outgoing materials. BOL analyses the relevant factors replacement periods, lot sizes and process costs. They can be presented using business administration processes or heuristic models.
The required probability of availability is decisive, i.e. the percentage of requests that must be met immediately. Often BOL identifies materials for which a small reduction in probable availability would permit a major reduction in stock. Often a small increase in the stock of materials can lead to a significant improvement in probable availability.
A whole range of flexible selection and grouping options permit optimising very large material volumes simply and systematically. One of Germany’s largest energy suppliers regularly imports the data from SAP and analyses them using BOL. The calculated potentials are filtered according to volume and procurement manager. The procurement manager checks the calculated potentials and adapts the parameters in SAP. A first run investigated 3,500 materials. BOL calculated 33.5% optimisation potential. 87.5% of the calculated potential was confirmed by the procurement manager.
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