One of the main challenges many businesses find in inventory management is ensuring that you have the right amount of stock at the right time, in the right place, to meet your customers’ demands. But, at the same time, making sure that you are not tying up too much working capital in your inventory. This is where using inventory optimisation software such as AGR is valuable.
Find out how you can give your business greater visibility, control and confidence over your most valuable asset, your inventory, in our Optimise your inventory with AGR 30 minute webinar.
AGR is an inventory optimisation software application aimed at helping wholesalers and distributors minimise waste in their supply chain and, as a result, maximise profitability. It is simple to implement and easy to use and integrates seamlessly with NAV, Business Central and Bevica.
- A demand forecasting engine that generates sales forecasts based on proven statistical forecasting methods.
- Algorithms that will start to build and refine models based on existing data.
- The ability to reduce repetitive manual work by automating supply chain processes.
- Automatic order capabilities based on ABC analysis, demand forecasting and planning processes.
- Flexible reporting that enables your team to work from one version of the truth.
Welcome everybody to today’s webinar with AGR.
And I’ll be asking Martin to advance the slides for us.
Thank you for joining today, and I look forward to giving you a bit of an overview of what AGR can do, and how it’s worked with many businesses running similar systems.
Ooh … go to the next slide.
So, my name is Danusia Jolliffe and I am the Marketing and Customer Services Director here at TVision. I’ve been with the business for 6.5 years now, and in partnership with Martin will be talking to you about AGR. Please do note that, if you have any questions at all, post them either in the chat or in the question box, and I will be monitoring them as we go along. And I’ll be asking Martin, as and when it’s an appropriate time, at the end of this session, you will also get an e-mail from us with some information. And also, the webinar will be available on demand, Martin, over to you.
Thank you. So yes, I’m Martin.
I’ve been in demand, planning and forecasting now for the last seven or eight years. And really, helping businesses to optimise inventory, and look for the best ways to manage what stock they hold and when.
So today I’m just going to run through a bit of an overview of kind of, why you should do that, and what the benefits are to doing that, and working with AGR.
So, AGR is, as a business, what do we offer? We have a demand forecasting engine or demand planning optimisation tool that uses many different algorithms and algorithms and techniques to to really optimise what stock is being held.
And ultimately, we want to move away from the manual way of working, looking at spreadsheets all the time, and also automate all of those processes.
You can do this through a lot of different ways that we’ll cover off today, um, and also give you a lot more, a lot more visibility of what’s actually happening in the business, around your stock.
So, AGR as a business, we are not new. It may be new, a new name to yourselves.
We’ve actually been around for the last 20 or 25 years. Icelandic business that starts off with a small planning tool which is great now to be used by more than 350 businesses globally.
Most of our customers are in Northern Europe. So, the UK being one of our fastest growing markets and we work with a lot of partners in the UK, which are seen us grow significantly.
Our retention is something that the business is very proud of, and one of the reasons we achieve that is because we work very, very closely with our customers to achieve their goals and objectives going forwards around their inventory.
As a business for growing quite significantly, I think that’s largely due to the number of challenges that supply chains and different businesses are facing within their supply chains.
Whether that be the effects of Brexit or the pandemic or the Suez Canal or whatever it could be that had an impact somewhere along the line.
And made people think we need to gain more control of our supply chain.
As a business, we started last year with 80 people, we’ve now grown to more than 100, and that’s really so, we’ve got the consultants and the helpdesk support wise to build, support the projects that we’re bringing in and going forward.
As a business, we, we really encourage collaborations throughout our business and I think things like S&OP has become a hot topic over the last few years.
Because of that, we want to encourage as many people in the business to use AGR.
So, whether that be product purchasing or procurement side, or whether that’s on …, or from a sales side, or from an operations side to really have visibility of what’s actually happening.
Some of our UK customers, and I’d love to sit here and say, that customers are in one particular sector. But really, we work with many different sectors. And I think that’s largely due to businesses holding stock and having supply chain challenges, that we work with businesses that sell cosmetics.
Right the way through to building materials, to, to food and drink.
So, quite a wide range of different different companies.
One thing that a lot of our customers do have in common, though, is that more than 75% of our customers are running, some, some sort of Microsoft ERP system. Which is where our partnership here has come in.
So, because of this, over the last 20 years, AGR have worked with so many businesses running Microsoft, we’ve developed standard connectors which pull data from the ERP system.
That means that set up and implementation of AGR against the ERP is seamless, and quite a quick thing to do.
When we look at the challenges that businesses currently face.
And many of the businesses that I speak to you on a daily basis, face a lot of these challenges.
And that could be around excess stock, and by excess stock I don’t mean we sell 20 a week and we’re holding 30.
I mean, you’ve got significantly more than the business actually needs you to hold.
So, one thing we’ll do at AGR is take into account things like MO cues and lead times.
And if any of those factors mean that you’re holding more stock than maybe somebody would suggest, that actually, we don’t class that as excess.
That is stock that’s held strategically. Maybe it’s because you want to achieve high service levels, or maybe, because you have long lead times.
That is, is different to what we’re saying by excess. But excess stock is where holding too much of a particular product or group of products, and therefore, it’s limiting us in other areas. Maybe we can’t invest in stock into other areas?
Service levels have become more and more important. I don’t think they’ve ever been more important than they are right now.
I think a big part of that is because customers have this expectation of, I order something today, and I want it either today or tomorrow.
It’s something that older people…
Unless you have the luxury of being maybe a brand like Apple, where, actually, we haven’t got this computer today, we’ll … one of our other products, in most cases, case, if we don’t have a product today, and the customer goes elsewhere.
So, service levels have never been more important, and it’s about how we can maximize the opportunity to have the highest service levels out there.
We see a lot of stock, um, in businesses now, and I think because of that, it’s tying up a lot of capital in stock that potentially is the wrong start to be holding.
So, we see a lot of businesses where they want to rebalance their assortment.
And actually, hold may be more of their high impact products unless of those items that are just creating a very long tail for the business and potentially not making much money.
Another area we see is efficiency.
So, a lot of businesses have ERP systems that do so much for them now, but still find a couple of things that they end up working outside of their systems on. And this is typical of demand planning and forecasting, looking at stock.
So, with, with AGR, we’re able to automate a lot of processes and really just highlights the businesses that we work with, the items that are causing them an issue.
Maybe it’s because they’re going to run out and they need to get an order placed. Or maybe it’s the opposite and they’ve got far too much stock.
And their saying, can you push this order back or don’t order any more stuck on this particular item?
All of these things aren’t then helped by constraints that suppliers put on customers.
So, it might be that you have to fill containers or meet minimum order quantities, um, that can cause complications within what needs to be ordered and when.
So, if you have an assortment of hundreds or thousands of products, we’re in a position where we can’t really afford to treat them in the same way anymore.
I think what you can see on this slide here is that if a business has average sales of 100 units and a minimum order quantity of 20 and the lead time was five days, and you had 150 and stock.
Any of these graphs could show you how much and how, how that product is performing.
So, if we look at the middle graph, the orange one where we’ve got, it’s true that the demand is 100 units a month, and it’s really nicely split.
And if all products perform like this in your business, you probably don’t need AGR.
But if you’re in a business, where do you see any of the others?
Maybe it’s like the green one, which is trending, maybe it’s a new product that you’ve introduced, and demand is going up and up and up, and you’re trying to track it.
And measure how much stock you’re going to need.
Maybe it’s a bit more like the bottom left blue on where you’re seeing maybe a more of a seasonal profile.
Demand goes up at certain points in the year and then comes back down again over the rest of the year. Or it could be something that’s very lumpy. Maybe it’s a product that’s one of your customers buys in a big quantity, and then nothing for a few months, then, a big quantity.
Again, if we treated them all the same, then, we would hold 100 a month on the 300 quantities that are being ordered. There you would never have enough stock for.
Or it could be the bottom right, where we see a massive spike at some points in the year. And all of a sudden, the system thinks we should hold an equal amount across all months to manage that spike.
So, it’s really a case of, one rule doesn’t fit all when it comes to managing inventory anymore.
And when we look at the assortment, again assortments have grown and grown, but what we do find is that there are some products within your assortment that are more important than others. And it’s trying to highlight these items and work out well, how much do I order and when? And which of these items do I order more of to ensure that I have the right stock at the right time? So, it could be that any one of these products is your biggest seller.
And actually on this item we want to hold more buffer stock, it could be that we decide that we want to hold.
Um, additional stock to ensure that we, if we were to run out of this item. For example, we might look foolish.
So therefore, we are going to help more strategically. We also want to help more of this product, because our biggest customer buys this product. And therefore, again, we want to hold more of that strategically.
But then on other items we may decide that we want to hold less on. And it’s how do we identify these items, and choose what to do with them.
This is where something like an ABC analysis tool comes in, and you may be doing some form of ABC analysis right now. And maybe it’s done manually, or maybe you use a tool to do that.
But what we do here at AGR, is we use a multi-dimensional ABC methodology. So, what we’re looking at is not just one, one, one area, one criteria.
We’re saying, well, to be classified as a level product, it needs to fit some former criteria. Maybe it’s in the top 80% of that turnover.
What makes good margins?
Or a number unit sell regularly?
Then, right the way through to, on a C level, it could be that it doesn’t fit any of these criteria, and therefore, it sits at a C classification that’s a less important product.
But we could end up then with something that looks like a, an A A or even a C C level product.
And if we had an AA item, which was really, really important to you as a business, what we might say is, on that item, I want to achieve a 99% service level, or a confidence factor of 99%.
And by doing that, what we’re looking at is, where we’ve got a long lead time.
We’ve got a big MOQ, but then also, we want to achieve a high service level.
And because of all of those factors, we decided, well, this is how much stock we need to hold on this product to achieve that.
Now doing that on 50 or 100 products might not be too difficult to do manually, but as soon as we get into the hundreds and thousands of SKUs, it’s very, very time consuming and nearly impossible once you consider all the factors.
So what process do we go through when the data comes out?
The first step is that the data comes from your ERP system, and into AGR on a daily basis.
And all of that data is pulled through, and the first thing that happens is some kind of algorithm is placed on each SKU.
It’s selected automatically out of my 25 plus algorithms to decide, well, looking at the historic demand of this item.
We think it’s going to perform in this way, so we utilise that data as well as anything that, you know as a business, so it could be that, you know you’re running a promotion in a certain month.
It could be that you know that you’re a very seasonal business, and it would see that from the data, that there’s some kind of seasonal pattern and therefore we would see uplifts in demand, and that would be part of that statistical forecast.
On top of that, we would see any kind of trends and seasonality, and any information that you have from the sales team or any confirmed orders from your customers that mean we can actually see what the future sales look like on this product.
Once you’ve got to that point, we can then highlight anything that is out of the ordinary.
So, we start selling this product and all of a sudden, we see that demand is much, much higher than we expected it to be. Or maybe it’s much lower than expected.
AGR will highlight to the users’ demand is much higher than expected or it’s lower than expected, can you review this product? And you can go in and you can see, okay, what is it that’s causing that?
Is it? I can see this customer hasn’t bought as much of this product this month, or maybe we’ve had a new customer, which is buying a large quantity of our products.
On the other side, we might see, this item is, is on order, but actually, sales have dropped off.
We can start to manage our existing orders.
We can see, well, based on this, we don’t need this order to come when we originally asked it to come or expected to come. Can we push that order back?
We might want to decide to put another order forward, for example. But we need to get an urgent order on now for a particular product.
Once we’ve done this, we can then start to plan across the business. And we can say, OK. Well, how much stock is it that we’re going to need to hold, and at what points?
We can see that at very high level. So, from an S&OP point of view, we could see by product group or by location.
How much stock we were going to need to hold and when, what the forecasts looked like, and we can make enhancements to that, at that top level. And it would then pushed down to each individual SKU. So, if we, this year, we were planning to grow by maybe 10 or 15%, we can apply that at a top level, and it would go right down the way down to a SKU.
We can also then look at how we optimise our orders.
So, if one of our suppliers says you have a constraint on you, which is that you need to order 10000 products at once, or a container full, or £50,000, or whatever it might be, we can look at how we optimise that order.
So, if we, if we know that we need to hit back constraint, we can see, in the coming weeks, which items would we have ordered anyway, and how can we fill that container, or that order, in the most optimal way at the click of a button.
Once this is done, the orders are pushed back to your ERP system for the final button to be pressed in there. So, you keep full control and traceability in the, in the master system, in the ERP.
When we implement AGI, we typically see some pretty big benefits.
In most cases, we see significant imagery reduction. And, of course, this depends on what it is that you’re looking to achieve as a business.
If you’re sitting there at the moment with very low service levels, the chances are initial imagery is unbalanced.
That, actually, it’s going to be more a case of where do we need to invest in stock to improve our service level.
But, quite often, we see huge reduction in imagery. But, at the same time, we see that improvement in service levels.
We typically see a very quick return on investment, so when we implement AGR, depending on how long your lead times are, we want to see that return an investment, ideally within three months.
We typically see that, if not by, stock reduction or service level improvement, certainly by efficiency gains.
And big part of that is by a reduction in manual tasks that we see, um, a lot of users spending less time on Excel, on firefighting, more time on that is proactive value add tasks.
We also see a big improvement in service level and turnover.
These two, of course being linked, having the right stock at the right time, meaning that you’re able to sell that product. And that could be anywhere between 0.5 and 5% improvement.
So that’s a quick overview of what AGR can do, and how it helps many of our customers.
I’ll open up at that point for any questions.
Yeah. We had a question come in saying how long, roughly, what a project like this take? Obviously, we appreciate that every company is going to be different but have you got a feel for what that project timescale looks like?
Yeah, of course.
So, if we’re talking against a Microsoft ERP system here, we’ve developed those connectors to mean that we can get that done very, very quickly.
So, typically, we see an implementation take anywhere between as, little, as a couple of days, up to a couple of months. But we’re able to, to implement generally, and get data flowing between the two systems in a matter of days, in most cases.
And how many people does it normally take on either side to run this kind of project? I mean, what kind of skills and knowledge do you need, from client side, and also, on how many people will be dedicated from your side?
One of the nice things about an AGR implementation is, it’s not a heavy IT requirement to implement.
Because of the connectors that we’ve developed with, with Microsoft, it means that the, the days required to actually connect the two systems, again, it is often a matter of minutes, and not a matter of days, so it’s very light resource from IT.
Where there is a resource required from them, from a customer, is really to understand your supply chain. And at AGR, we want to understand what it is that is different about yours to everyone else’s.
What business logic do we need to take into account?
What are your goals and objectives so the system can be tailored to work for you.
We would typically say that a project would take, um, probably 4 or 5 days, to get to a point where we’re ready to start training, and then there’s a couple of days training to make sure that users are comfortable and confident to use the system.
We’ve also had a question specifically about the wine sector, and whether you’ve got a feeling for how the system cope with new vintages. Is that something that, you can answer, or, would we take that offline?
Yeah, it’s certainly something that we could, we could take into account and we manage product life cycle and new product introduction through some functionality in the system. So, we could link an old product to a new. But we could also look at maybe a similar product that is sold previously and use that kind of data to create forecast moving forward. But it’s definitely something I’d love to talk a bit more about specifically.
And are there any limitations in terms of what that inventory can look like in terms of?
I mean what does that feel like you? In terms of size of business or size of assortment?
Assortment. Yeah OK.
So, in terms of assortments, AGR have customers that have assortments as small as 50 and 100 different SKUs. But right the way up to businesses that hold hundreds of thousands of SKUs. So, there’s no minimum or maximum number of SKUs that can be managed by the system.
Okay, I’m sorry, I’m just responding to one of the questions. Okay.
There’s nothing else coming in at the moment, so anything else that you could perhaps explain in terms of how you would work alongside TVision or our solution, Bevica and a client?
Yeah. Of course.
So, I think quite often what we would see is AGR is, is an implementation that comes after the ERP, and it’s quite often the case of.
Once the ERP is bedded in, and we can see that there’s a requirement for demand planning and forecasting.
We can then scope and understand, well, what is it that you’re looking to achieve from implementing the tool? Is it that you’re, you’ve got a gap missing?
Is it that’s working with a certain group of customers is, potentially, meaning that you might want to forecast by customer level or location level or SKU level.
All of those things are achievable.
So, what we can do is we typically work with, with Bevica to understand what the requirements are and then we can set up either tailored demonstrations or actually just get the system up and running and start showing the benefit.
And there’s nothing else come in just now, that I can see. Anyone else have any more questions before we sign off?
No, for the time being, that, looks like it’s it. So, we will be sending out an email after this with a copy of your slides and we can pass on your contact details if anyone gets in touch. Thanks very much for sharing all that information with us today, Martin, it’s been really useful I know to us and our clients. So, thank you very much, everybody, for joining today.
Thank you for joining.