Epicor Prophet 21 inventory management depends heavily on the PO Requirements/Generation window, commonly known as PORG. At the heart of PORG is the Calculation tab, which tells you how PORG is arriving at it’s calculation for how much of an item you need to buy. If you want to be successful with managing inventory in Prophet 21, it is critical to understand what you are seeing in the calculation. A clear understanding will help you diagnose those purchase suggestions that don’t seem right.
Prophet 21 Inventory Management: Up To Explained
Order Up To is the P21 implementation of lead time horizon replenishment. This means that Prophet 21 is factoring in the lead time, review cycle, and safety stock settings of the item to determine how much of the item to order. Let’s break down each of these elements:
Lead time is the number of days between creating the purchase order and when the goods are received into your inventory. The Prophet 21 Inventory Management system calculates this date for you based on a number of receipts as specified in your settings. This is saved in the average lead time field. It is important to not that this lead time is based on the first receipt of the item on the purchase order.
This can sometimes create a problem when you have multiple receipts on an item. Technically, your inventory is not fully replenished with a partial receipt, so this lead time is not completely accurate. This is something you should keep in mind when analyzing a lead time. Ideally, lead time would be based on the last receipt of an item, which completes the replenishment.
You can override the average lead time setting if this is a problem. The way to do this is to populate the published lead time field for the item. If you are going to do this, make sure the lead time setting for that supplier is set to Item. In a perfect world, you could run a routine periodically that recalculates lead time based on the final receipt of a number of recent purchase orders, and then update the published lead time.
Review cycle is an often misunderstood concept in the Prophet 21 inventory management engine. There are 2 ways I have found to phrase it that might resonate if you are struggling to fully grasp what it means.
- How often do I want to buy from this vendor?
- How many days of stock do I want this purchase to cover?
The best answer is based on the number of freight prepaid orders you can potentially place per year. For example, you purchase $100,000 a year from ABC vendor in an average year. ABC vendor gives you free freight on any order over $5,000. This means that, on average, you can place a freight prepaid order 20 times per year. Put another way, you can place a freight prepaid order every 18.2 days. In this case, I would probably set the review cycle to between 19 and 21 days. This means I need to look at ABC vendor’s PORG every 3 weeks.
The reason for this logic is that there is no incentive for you to buy more than the minimum amount for a prepaid order. The product doesn’t get any cheaper if you buy double the freight allowance. So your best move is to buy just enough to make free freight.
Safety stock is the extra inventory you carry to protect yourself from demand spikes and supply disruptions. It works kind of like insurance. There are several ways to calculate safety stock in the Prophet 21 inventory management system. These methods are explained in detail in this post. Safety stock is typically expressed as a number of days of usage.
When you add up the lead time, review cycle, and safety stock days, this gives you the total number of days in the lead time horizon. This number is multiplied by the average daily usage to calculate the order point.
Understanding Periods to Supply
There is yet another setting in the Prophet 21 inventory management system that can affect the order point calculated by Up To. On the calculation tab, you will see this field called
Periods to Supply. Unfortunately, there is not a setting anywhere called Periods to Supply, so this might be confusing for many users. This setting is controlled in ABC Class Maintenance. The setting is name
Order Up To Level. There is a setting for each velocity level in Prophet 21.
The way this works is like a minimum override on the lead time horizon calculation. Think of it as the statement: “Order at least this number times the average daily usage”. This is a decimal number setting, so you can set it to something like 0.50 for 2 weeks of usage, assuming you are using 1 month periods. Typically, a setting like this could be useful for B and C items that you do not want to be buying every time you turn around.
How They Work Together
When the Prophet 21 inventory management engine calculates the order point, it sets the order quanity to the larger of the periods to supply or the lead time horizon calculation. This comes into play most of the time on short lead time items that you are buying or making frequently.
For example, if you have a 2 day lead time, a 7 day review cycle, and a 10 day safety stock, that is a total of 19 days of inventory as your order point. However, if your Order Up to Level in ABC class maintenance is set to 1, and you are using monthly periods, then the 19 days is going to get overridden and become 30. This will cause you to overbuy the item.
Up To and Periods to Supply: TL;DR
Order Up To is a replenishment method in the Prophet 21 inventory management system. It calculates the order point by using the lead time, review cycle, and safety stock. However, there is a setting in ABC class maintenance that can override the lead time horizon. In ABC Class Maintenance, this setting is called the Order Up To Level. There is one for each velocity level. It shows up in the calculation tab as Periods to Supply. Prophet 21 will calculate the order quantity as the larger of the Periods to Supply or Lead Time Horizon calculation. This can cause you to overbuy an item with short lead time, review cycle, and safety stock settings.
Be sure to keep this in mind when reviewing an item. It might help explain an odd purchase suggestion.
Learn more about Prophet 21 at the FreeingERP P21 Knowledge Base