That's why StockAid was written.

And this new release of StockAid makes it the absolute best tool for stock management and control available to your RetailManager clients

Type  the words “Safety Stock Calculation” into Google, and it will return about 2,840,000 results

Software 4RM chief programmer, Neil Rieck, summarises some results:

I picked a couple of articles to highlight varied views from the extreme mosaic of mathematics gone mad, (way too complex for me) to the eloquent simple view of one formula fits all and finally to the chap who is not too proud to admit its confusing – even to him.

·  Us techies love it when someone solves it for us, so here is the SAP answer (I just love that these guys introduce the variable MAD in their calculations):

http://www.sap-img.com/materials/safety-stock-calculation-in-sap.htm

·  This next article is great in that it puts the problem into a definitive question. (If  you are looking for a high benchmark calculation it s in there.)

http://www.nextlevelpurchasing.com/articles/safety-stock-calculation.html

·  This article is well written (he tells us) and has the ultimate one formula fits all - (well almost anyhow)

http://www.kellogg.northwestern.edu/faculty/chopra/htm/research/Effect%20of%20Lead%20Time%20Uncertainty.pdf

 I’ve got to admit, if you want a simple solution this guy has cracked it, however collection of the data required might take you longer than ordering the stock. Also I love that he has used a standard deviation approach.  I just love that term standard deviation. Oh and I didn’t use his formula – but I was tempted to.

·  This last article is 24 pages long and reaches the inescapable conclusion – its confusing. The mathematics majors will love this one too.

http://www.kellogg.northwestern.edu/faculty/chopra/htm/research/Effect%20of%20Lead%20Time%20Uncertainty.pdf

The whole problem with the calculation of real safety stock to achieve Just In Time is that there are too many variables.  In truth, I never thought of factoring in cost as a variable in the calculation.  Every so often you can pick up a new article where someone claims they have cracked it.  So what is it all about?

The big deal is that getting safety stock right is THE DETERMINING FACTOR in the success of Just In Time trading.   Businesses want to achieve Just In Time Trading because it reduces the money tied up in stock, while meeting demand and protecting your market position. The real goal should not be the calculation of safety stock, it should be the attainment of Just In Time!.  

Our approach to the problem is that there is no substitute for a human being with a working knowledge of the stock.  Knowing the trading patterns and whether a discount influenced trading or that an unusually cold day created a demand on that day, is too hard to get right across all enterprises and all stock with maths. 

We use the last lead time days as our basis to calculate, we let you nominate the period of analysis for daily sales, and restrict the lines of stock for the calculation.  Further, we let you add your own lead time margin days to the calculation as a safety margin (nothing prevents you from using a negative factor).  You can therefore use different basis for different stock lines.   Further you can manually override the calculation if your instinct tells you.

So what makes Just In Time easier to achieve, and how can you advise your clients?

Develop lines of supply which are same day.  If you can get supply on demand in your business then you can trim the inventory holdings back.  You only need to weigh up the cost of transport and processing an order versus the cost of storage. By reducing suppliers lead times you decrease the safety stock requirement. Set up good lines of communication with your suppliers and establish ordering procedures which benefit you both.

Encourage customers to order in advance.  If you know what you need to supply in advance of the lead time, you don’t need to store the product at all.  You can probably ship directly from the supplier to the customer with a minimal handling fee.

Look at consignment.  Remember there is still a storage and administration cost, but if you can get stock on consignment, you are not tying up your own capital.  Also, in some cases the supplier will subsidise the storage cost as they do not have to store it.

Monitor the levels of stock in your business, both visually and electronically.  Casting your eye about the room can reveal shortages and overstocking at a glance,  but the computer can flag problems for you long before they hit the warehouse floor. The movement of stock through the business must be monitored, and is as vital a health check as the movement of cash.

With 4RM Stockaid  software for RetailManager,  you can get the inventory into a manageable state and keep it there.  You can set price points,  set up stock categories to make analysis easier, make global changes across nominated stock lines, and identify lines that don’t move at a glance.  The whole aim of the software is to give you the tools you need to manage your stock.

Now we have introduced the stock analysis page to show you 12 months worth of trading patterns and average sales per trading day.  It is a rough calculation, not allowing for public holidays and closures within the period of analysis.  We do let you nominate how many days a week you trade.  Someone who opens Monday to Friday plus Saturday morning enters 5.5 days for example.

We do not account for extended trading hours and abnormalities in the environment.  In short, we provide a very simple calculation for subjective analysis,  but we do it on ONE PAGE.  Your clients can benefit from the analysis and convert the cost savings from effective trading to productive spending.

The package is an encouragement to undertake some consultancy on inventory.  It provides pointers and data, but has a very limited capacity to provide answers. It relies on an understanding of trading and subjective analysis.

The cost to your client for this package?    RRP $418  PER Site      Your margin? ASK

So what do I do now?