MAS 500 allows manufacturing or distribution organizations to change their Inventory Calendar to be more effective for them. No longer are they locked into viewing inventory in the same periods that the accounting department must use for fiscal reporting.

Make no mistake about it: MAS 500, when properly used, will correctly period all inventory transactions so that they hit the General Ledger in the appropriate Fiscal Period, regardless of how you configure your Inventory Periods. MAS 500 simply keeps track of both your transaction's Fiscal Period and its Inventory Period in order to accomplish this feat.

Why would you want to have an Inventory Period that is different than your Fiscal Period?

The answer to this question is simple: To give you greater responsiveness to changes in your market.

Here's why.

MAS 500 uses Period End processing to assure that the module's periodic history is up-to-date and accurate. In fact, some history tables may only be populated during Period End processing. This is important because activities like Calculate Projected Demand and Calculate Replenishment Parameters are heavily reliant on data found in the Inventory Management (IM) history tables for their calculations. If Period End processing has not been executed for some Inventory Periods, then these calculations will not include valuable new information about changes in your market.

Consider that if you are using monthly Inventory Periods, your inventory replenishment parameters (like Average Daily Demand or Average Lead Time) MAS 500 will become aware of changes in Daily Demand or changes in average Lead Time only about every 30 days. If the market for some of your items began to show significant changes -- rapidly increasing or decreasing demand, for example -- on day one of October 2008 MAS 500 will not begin to take these changes into consideration in its replenishment parameters until at least the day following the close of the October 2008 Inventory Period (01 November 2008) and the execution of the recalculation routines. That's 31 days later!

If, on the other hand, you were using weekly or bi-weekly Inventory Periods, MAS 500 could become aware of and update your replenishment parameters on day 8 or day 15, respectively, rather than waiting until the end of what amounts to your "fiscal period" to take appropriate actions. Using shorter Inventory Periods means that appropriate changes would also be made in resulting calculates from MRP (material requirements planning) or IR (Inventory Replenishment) sooner, rather than later.

What Replenishment Parameters are included in MAS 500's dynamic recalcuations?

  • Order Cycle
  • Economic Order Quantity
  • Safety Stock Quantity
  • Order Point
  • Line Point
  • Lead Time
  • Average Daily Demand

Conclusion

If you serve a market where demand changes rapidly, and you do not wish to be caught with too much or too little inventory, take advantage of MAS 500's ability to optimize your investment in inventory through dynamic parameter updates. Furthermore, shorten your Inventory Periods to give your organization a faster response time to changes in market conditions.

More questions? Send your questions to richard.cushing@synergistic-us.com, or leave a comment on this blog.

-- Richard D. Cushing