Order Plan Balancing
Built into the replenishment process, Servigistics has optional balancing functionality that causes Servigistics to check nearby stocking locations for excess or for inventory that is above Safety Stock as an alternative to sourcing parts from a central warehouse. Balancing optimizes part location and other factors to minimize the cost and time involved in stocking or replenishing parts. For example, if you were using balancing and you needed Part A, Servigistics would check all of the locations closest to you for extra Part A before requesting the part from the central stocking location, potentially saving time and shipping costs. Balancing can be configured to occur between any two locations within the network, including "reverse balancing" from field locations back to a central location.
For effective use of excess, the balancing process prioritizes locations based on available excess or based on proximity to the destination location. Prioritizing based on the available excess ensures that inventory is withdrawn first from locations that have the highest excess, thereby reducing the probability of obsolescence or scrap at these locations. Using distance to prioritize the source locations ensures transportation costs are minimized during balancing.
The balancing process also prioritizes shortage locations to ensure that excess is first redeployed to locations that have the greatest need. This helps to achieve the largest possible improvement in fill rates as a result of balancing.
Benefits
Balancing network inventory can provide the following benefits:
• Effective use of excess inventory in the service network, thereby increasing service levels while simultaneously reducing inventory costs.
• Lower procurement since new purchases can be deferred.
• Reduced obsolescence cost or scrap.
Enable Order Plan Balancing
Follow these steps to enable Order Plan Balancing:
Need Consideration
Balancing considers need as follows:
• Order plan considers maximum need over the greater of balance order’s lead time at source location or procurement/replenishment/repair lead time when computing the amount available to balance out. Note that this does not guarantee that balancing will not give away parts that it needs far into the future because the pipeline is empty. This behavior applies to all balance types (Excess Limit, Safety Stock, Zero or Safety Stock, Safety Stock/ Re-Order Point) except Days of Supply.
• Balancing will not cause the creation of a procurement/replenishment/repair order at the source on or before the balance order date except Safety Stock or Zero for a back order.
• The maximum need over the LT is used instead of the normal net need for NuNAD to prevent balancing away parts that it actually needs during the period.
• For balance type Excess Limit, Order Plan considers need over the balance order’s lead time + (procurement/replenishment/repair lead time). This prevents a balance order from causing an incoming order to be created before the balance order arrives at the destination. In other words, this is to prevent a ping pong effect when a parent location is balancing for downstream need and gets balance parts from a child location buts sends a new replenishment order on or before the balance order arrives at the parent. It could increase stock out days if the balance lead time is less than the procurement/replenishment/repair lead time. Excess Limit is the recommended balance type for all balancing parameters.
• Projected inventory should never go below the threshold amount over the period (balance order’s lead time + procurement/replenishment/repair lead time) and not just at the end of the period.
• Balancing will not cause the creation of a procurement/replenishment/repair order at the source on or before the balance avail date when using Excess Limit.
• Order Plan guarantees that no procurement/replenishment/repair order will be created on or before the date the balance order arrives at its destination when using Excess Limit.