27 Sep A Comprehensive Guide to Inventory Replenishment Methods and ABC Classification in Prophet 21 – P21 PORG

Managing inventory efficiently is vital for any distribution or retail business. With Epicor Prophet 21 (P21), companies have powerful tools to automate and refine their purchasing and replenishment processes. In this blog, we’ll explore key replenishment methods and how to optimize your ABC classification for improved purchasing and stock management.

Understanding Replenishment Methods

In P21, replenishment methods determine how stock levels are maintained and when purchase orders (POs) are generated. Two main categories exist: static and dynamic methods.

1. Static Replenishment Methods:

• Min/Max: This method sets minimum and maximum levels for each item. POs are created when stock falls below the minimum level, and the quantity is replenished to the maximum.
• Order Point/Order Quantity: Similar to Min/Max, but it specifies a fixed quantity to order when the stock level reaches the reorder point.

Pros: Simple and easy to maintain.
Cons: These values must be reviewed periodically as demand changes, and may not consider current lead times.

2. Dynamic Replenishment Methods:

• Up To Method: Uses factors such as historical usage, lead times, and ABC class to calculate the optimal quantity to order. It adjusts to current demand and changes in sales patterns, providing a more responsive replenishment method.
• BOQ (Best Order Quantity): A method that tries to balance stock levels with economic factors, like bulk discounts, but may lead to overstocking if not closely managed.

Pros: More accurate, adaptive, and considers fluctuating demand and lead times.
Cons: Can become complex without proper configuration, particularly with long lead times.

Key System Settings for Replenishment

When implementing replenishment in P21, ensure the following system settings are configured:

• Periods for Usage Calculation: Define the number of periods to be used for average monthly usage—typically 4, 6, or 9 months, depending on the item’s velocity.
• Advanced Demand Forecasting: Ensure trend options are reviewed annually to maintain accuracy, using parameters such as minimum trend change percentage and maximum trend.
• Direct Shipment Tracking: Depending on whether you carry stock for direct shipments, you can decide whether or not to include direct shipment usage in replenishment calculations.

ABC Classification Maintenance

ABC classification is crucial for managing your inventory dollars effectively. P21 typically ranks items based on annual cost of sales, allowing companies to focus on high-value items (A-class) and manage low-value items (C-class) with different strategies.

ABC Classes:

• A-class: Represents 80% of annual sales but only a small percentage of items (20%). These items are high-value and should have tight inventory control, often with a 1-1.5 month supply.
• B-class: Represents 10% of sales, generally with a 1.5-2 month supply.
• C-class: Low-value items making up the remaining 10% of sales. These items may have a 2-3 month supply.

In P21, you can also set up classes like X-class for dead stock or Z-class for obsolete items, which won’t be reordered.

Setting Up Replenishment Locations

Properly configuring replenishment locations is essential in multi-location environments. You may have a “hub and spoke” system where certain locations act as regional distribution centers (RDCs), supplying stock to smaller satellite locations.

• Location-specific Replenishment: You can assign each item to replenish from a specific location. For example, location 400 might replenish from a central hub like location 100.
• Purchase Transfer Groups: These group multiple locations together to manage stock replenishment through transfers or bulk purchasing.

Generating Purchase Order Requirements – PORG

P21’s PO Requirement Generation allows buyers to automate the purchasing process based on replenishment methods, ABC classifications, and current stock levels. Follow these steps to generate PO requirements:

1. Define Criteria: Set parameters for your purchase, such as suppliers, ABC classes, product groups, and date ranges.
2. Generate Requirements: Click the generate button to create a list of items that need to be ordered. You can configure the screen layout to display important information like supplier names, backorder status, and available stock.
3. Review the Calculation Tab: P21 provides detailed calculations for each item, explaining the reasoning behind the recommended order quantities. This is based on factors like average monthly usage, lead times, and safety stock levels.
4. Review Supplier Targets: P21 allows users to compare the total PO value against supplier minimums and promotional targets, ensuring you meet volume discounts or free shipping requirements.

Scaled Solutions Group Services

At Scaled Solutions Group, we specialize in helping businesses make the most out of their Epicor Prophet 21. Our services include:

• Inventory Management Optimization: We help configure P21’s replenishment methods and ABC classification to ensure your inventory is balanced and aligned with demand patterns.
• Training and Support: We offer comprehensive training on P21 system settings, ABC maintenance, and purchase order generation, so your team can operate with efficiency and confidence.
• Custom System Configuration: Our experts will tailor P21 to match your unique business needs, setting up replenishment locations, purchase transfer groups, and usage tracking according to best practices.
• Ongoing Consulting: We provide continuous support and review of your P21 configuration to adapt to changing market conditions, lead times, and usage patterns.

Conclusion

Epicor Prophet 21 offers a robust framework for managing inventory replenishment, ABC classification, and PO generation. By configuring the system according to your specific business needs, you can ensure optimal stock levels, reduce carrying costs, and improve overall purchasing efficiency. Scaled Solutions Group is here to support you every step of the way in optimizing your inventory and purchase order management.

Need help with P21 inventory management? Contact Scaled Solutions Group today for tailored support and consulting services.

Scaled Solutions Group offers a comprehensive range of ERP  p21 Implementation consulting services designed to help businesses achieve seamless ERP implementations and optimize their operations. For more information, contact Scaled Solutions Group at (866) 957-8419 or info@scaledsolutionsgroup.com or visit www.Get-Scaled.com.