How do I order raw materials before they run out and stop the line?
| Intagya ERP
Work out each material from the production plan, not from last month's use: the quantity of each product you will make times the material quantity in the bill of materials, less the stock and what is on its way, ordered ahead of the need by the vendor lead time. In Intagya ERP the Production plan does this for each material, shows Order by with its date, and creates the request for quotation for the vendor.
Ten in the morning and the filling line is idle. The juice sits ready in the tanks, the carton packs ran out yesterday. The buyer says he ordered last week, and the vendor needs two weeks.
Nobody forgot anything. The buyer ordered what he orders every month, and production decided this month to double the mango. Each did a good job; they were just looking at different numbers.
Why do materials run out when purchasing orders every month?
Because purchasing usually looks at what was used, while the need comes from what will be made. When production changes and the news does not reach purchasing the same day, the material arrives late by the whole vendor lead time.
The fix is not one more weekly meeting. It is working out the material need from the production plan itself, so that when the plan changes, the need changes with it.
How do I work out what I need of each material?
Multiply the quantity of each product you will make by the material quantity in its bill of materials. A made-up example: one pack of juice takes one carton and 0.12 kg of orange concentrate. So 1,000 packs of orange need 1,000 cartons and 120 kg of concentrate.
Then add up every product the material goes into, since the same carton is used for orange and for mango. Add the safety stock and take off the stock and what vendors are already sending. What is left is what you buy.
How does the plan show material needs in Intagya ERP?
When a manufacturing manager adds a product to the Production plan, its bill of materials components can join too, one level or all levels. A material in the plan has a Component demand row: what the open and suggested manufacturing orders of the products it goes into need, month by month.
Raise the expected demand for mango and the carton demand for that month rises at once, without anyone telling anyone.
When should I order so the material arrives on time?
Ahead of the month you need it by the vendor lead time. The plan takes that time from the vendor price on the product, and you can change it in Settings. With 14 days, the quantity shows Order by 17/11 for example, and turns red, Order today, once that date passes.
If the vendor will not sell fewer than 5,000 cartons, put that in Minimum order. The plan will suggest 5,000 even when you need 2,000, and it carries the rest into the next months so you do not order again too early.
Should I plan materials by week or by month?
By week when the lead time is short or use is fast, by month for the rest. Switch with the Weekly button at the top. A week with no figure of its own takes its share of the monthly figure by its days, so you never type the numbers twice.
How do I know what I will sell in the first place?
Start from your past sales. Press Suggest demand from sales and pick the basis: average of the last 3 months, same period last year, average of the last 12 months, or the last 30 days, with a growth percentage if you expect more or less.
The suggestion is a starting point, not a decision. Change the month you know has a promotion or a season; you know your market better than any average.
Does the system send the order to the vendor by itself?
No. Press Order by on the material, or Create the orders of this period, and a draft request for quotation is made with the material vendor, with materials from the same vendor grouped in one request. You review it and send it from Purchase. If you set the material to Automatic, that draft is made every morning on the order date, and sending stays your call.
Ask each vendor how long the last three deliveries really took, not what the contract says, and put that in the vendor price. The Order by date is only as good as that number.
Tomorrow morning pick the material that stopped the line last time, add the products it goes into to the plan, and see when you should have ordered it.
Read the production plan guide step by step
FAQ
Do I type expected demand for materials?
No. A material's need comes from the plan of the products it goes into and from open manufacturing orders, and shows in the Component demand row.
Where does the lead time come from?
From the vendor price on the product, and you can change it per material in the plan Settings.
What if the vendor has a minimum order?
Put it in Minimum order: the plan never suggests less, and counts the extra in the following months.
Does the system send the order to the vendor?
It makes a draft request for quotation with the vendor, which you review and send from Purchase.
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