iPlan is Inventory Planning for SAP Business One. It enables organizations to improve their inventory management processes by

• Forecasting (what to sell and how much)
• Budgeting (when to buy and how much) AND
• Defining replenishment policies and plan for the entire organization.

iPlan helps in reducing inventory holding costs, improve inventory turns so that the organization spends less money on costs of maintaining the stock of goods to be sold.

Everybody forecasts, Businesses have to forecast sales in order to plan procurement or production, and to prepare even the simplest business plan. Unfortunately, many companies use judgmental forecasting where they should not. Sales Forecasting in iPlan utilizes as many as 6 industry standard statistical forecasting techniques AND separates the process of forecasting from that of goal setting. It makes it systematic and objective.

It is not important to memorize the 6 different techniques and their calculations, but the fact that Sales Forecasting in iPlan generates forecast at 4 different levels:

• At the company level
• At the Warehouse or the store level
• At the Item Group level
• AND at the individual item level.

It does so by taking into consideration the historical sales of an item, belonging to a product group sold from a warehouse or store at a specific price on a specific date. It is possible that the customer who is implementing iPlan may not have this historical sales data in SAP Business One. And to ensure that the customer does not have to wait to generate historical data, iPlan provides an Excel based tool to record the historical sales which can be imported into the Sales Forecasting module.

Once the historical data is imported the forecast can be generated based on any of the different models. The forecast is not only for quantities but is also for the value (based on the price list defined in the system). There can be unlimited analysis templates defined to generate the sales forecast. Once we have generated the sales forecast – what to sell and how much, the next logical step is to start the budgeting exercise – when to buy and how much.

Now, if the sales forecast details month on month sales, traditional wisdom says I should buy at a value which is sales price minus margins AND since I have my monthly sales figures, it is a simple math to calculate the corresponding purchase values.

Let me try to explain this with an example.

A Retailer plans to sell T Shirts worth 8000 dollars in March and worth 10,000 dollars in April.

If he were operating at a 30% margin, he would be procuring T shirts worth 5600 dollars for March and for 7000 dollars for April.

The inherent assumption in this calculation is that at the end of March the retailer should have sold all the T shirts EXACTLY as per plan (no excess sales no backlogs). In real life this will hardly be the case. The retailer may sell more or may sell less than what was planned. Let’s say the retailer sold more than what he had planned to sell for March. In that case, the retailer will start consuming the stocks that he had planned to sell in April.

This will result in a stock out situation well before 30^th April.

To ensure such a situation does not arise, the retailer will always have some buffer stock planned for every month. This means that the retailer will start March with more T Shirts than he plans to sell in March (to cater to stupendous sales) and also to have some opening inventories for the next month – April.

Now, should the retailer go ahead with the budgeted procurement plan for April OR should he also take into consideration the extra sales he did for March? To ensure that the procurement that the retailer does is MORE REALISTIC he should fine tune his procurement for April – buy more (because he sold more in March)

It is this difference which is called OTB (Open to Buy) – the amount of money which is now left Open for the retailer to buy.

In real life, the situation is compounded by longer lead times, planned or unplanned markdowns (discounts) and other market fluctuations.

At this stage I propose that you think the value add this simple concept can bring to a trader or a retailer. This is a case where the purchase manager is using the sales information to fine-tune the purchase costs. Imagine the impact this has on the overall cashflow of the company. This analysis can help the company utilize the extra costs which were budgeted for procurement into something which could be more pressing – may be expansion, or renovation, etc.

Open to Buy generates one more interesting analysis – the Inventory Turn Over Report. Inventory Turn is a measure of the number of times inventory is sold in a time period such as a year.

It is calculated as a ratio of Cost of Goods Sold to Average Inventory OR simply Number of units sold over a given period divided by Average number of units for that period.

What does this report tells the user?

1. A lower inventory turnover rate may indicate overstocking (you have more number of units than what you sold)
2. A higher inventory turnover rate may indicate inadequate inventory levels (you are trying to sell more than what you have)

Between the above two scenarios, it is always preferable to have a higher inventory turn over rate since

1. it reduces inventory holding costs (you always have just enough to match your sales)
2. Reducing inventory holding costs increases net income and profitability

The report also tells the uses that with inventory turn over rate you are clocking in the given date range, what is the average number of days it will take for you to sell your inventory. An extremely powerful report which can tell the retailer on the items which need to be pushed faster through the stores. The first step here is to define the budget. This budget can either be imported from the sales forecast OR can be imported from an Excel sheet. Once the budget is created, you can start executing OTB. The application considers Actual sales or purchase data for the months which have gone by and uses budgeted figures for the coming months. Similarly the Inventory Turn Over report is executed for a data range can be executed for a range of item groups or range of items.

So lets move over to the third module of the application – Enhanced MRP

Three points which you have to remember here:

1. Enhanced MRP executes MRP at the warehouse level thereby giving out recommendations for stock transfer – in addition to the normal purchase or produce recommendations.
2. It allows to define Replenishment Policies
3. Replenishment Plans

Imagine a retailer who has multiple stores spread across different locations. The first thing that the retailer would like to define is which store will be fulfilled from which store or warehouse. Whether the stocks in a store will be stock transferred from another store OR will the stocks be purchased from the supplier. It will be impractical to fulfill all the stores from a central location in case the stores are spread across the country. – we call this the replenishment policy.

The retailer would also like to specify the minimum levels of inventories of items which should be maintained at each store. And given the fact that stocks move around the locations in specific pack sizes, the retailer would also like to specify the order multiple and minimum order quantities for an item applicable to a particular store. – we call this the replenishment plan. And one can have multiple replenishment plans for the same item across the retail chain.

Potentially there could be a situation where the demand across the organization is more than what can be furnished by the supplier. In such a case, the retailer may like to prioritize the stores which have to catered to first. MRP can be extended to be executed on a range of Product Groups across a range of stores and warehouses.

Summarizing the points that you should remember while evaluating iPlan:

1. iPlan is Inventory Planning for SAP Business One. It enables organizations to improve their inventory management processes by
   • Forecasting (what to sell and how much)
   • Budgeting (when to buy and how much) AND
   • defining replenishment policies and plan for the entire organization.
2. Horizontal application and can be positioned at all industries who manage inventories.
3. Forecasting has 6 models of forecasting generating forecast at 4 levels – Company, Warehouse or Store, Item Group and Item
4. Forecasting can be done for quantity or value
5. OTB is a purchase budgeting technique based on the principle – you buy more when you are selling more and you buy less when you are selling less
6. OTB also generates Inventory Turn Over Report – which helps in reducing the inventory hold costs thereby increasing net income and profitability
7. Enhanced MRP lets you define Replenishment Policies & Plans improving stock movement across the stores and warehouses

Download iPlan Lite

Lite versions are free to use in a production environment, however, if you do require support, you may purchase a support package based on a per incident basis. This is optional as you may keep using the Lite versions forever by continuing to update your free licenses from CitiXsys website by clicking ‘Request a License’ button.

Free MRP functionality.

Feature	Lite Version	Full Version
Material Requirement Planning (MRP)
Open to Buy
Forecasting

Available in English only.
Compatible with SAP Business One 8.8, 8.81, 8.82.