Order Screen

The engine of the demand planner is the detailed “order screen” where you work up a supplier order from the base predictions made by the system.

Let’s be straight - there are a lot of numbers on this screen. It can look pretty intimidating at first, but it’s worth taking the time to understand what’s going on.

The first set of columns show your current stock situation for each product: how many you already have, how many are committed on orders, how many are already on order etc. Those columns are there for reference. There are some other reference fields like “units per case” and “shelf life” which are there simply to make your life easier.

The next numbers warrant more detailed explanations.

Shortage

This is the number of units the system believes you are short by in order to get through the cover period. Think of it as the ‘raw’ prediction of the number of units you need to order (or that you are overstocked by, if the number is negative). This number takes into account the amount you already have of the product plus the predicted amount you need to get through the coverage period. At this point, it's not taking into account any that you already have on order.

Seasonality

This is intended to give an indication of whether the sales in the current planning period are likely to be different from the general average/upper bound for the product. This is the case for seasonable products which sell much more during particular seasons, such as Christmas trees.

This is calculated by taking the weighted average of sales for previous years within this window and comparing it to the upper confidence-interval bound for sales during the rest of the year. It is compared against the upper confidence-interval bound, because that is the value used to calculated the recommended amount to-order.

A seasonality of greater than 1, means you can expect to sell more during the current planning period than the rest of the year. A value less than one is normal because it is produced by comparing the average within the window period to that upper confidence-interval bound. Nevertheless a seasonality value of less than around 0.5 is quite striking and means that you can expect to sell less at this time of year than normal. This is unusual, seasonal products usually have a peak, rather than a trough. Click on the ref column to the left to see the graph of weekly sales to better inform your ordering if the seasonality is below 0.5.

A seasonality of 0, means that none of your stock was sold within the planning period. Perhaps have you have a highly seasonal product that's not in season. A seasonality of "Infinity", means that all of your stock was sold within the planning period. That means you have a seasonal product and it is in season now, plan accordingly.

You can choose to factor the seasonality multiplier into the 'to order' calculation by checking the 'inc seasonality' checkbox, either for individual items or for all items on the draft order.

To Order

Almost the net calculation now, the ‘to order’ recommendation is simply the shortage minus the number of units you already have on order, if any.

To Order (Pack Size)

This really is the net calculation. In most cases you have to adjust your order to fit the pack or carton size of the item. If you’ve supplied this number for the SKU, the system will round up your order to ensure you are ordering in full cases.

Expiry Danger

This is a very useful metric for products that have a limited shelf life, like food. You could even use it for products that become irrelevant after a certain time, like fashion items. For this metric to work, you must have set the “Shelf Life” field on the product. Shelf life is measured in days.

Remember we talked about “variability” above when discussing the calculations used by the demand planner? As part of that calculation, the system calculates a “lower boundary” for weekly sales. Think of this as the worst case scenario. So, for example, we gave the example of 10 units per week average above - but perhaps the worst case scenario over the course of the 4 week cover period is only 2 units per week. That’s a total of only 8 sales in the month versus an expected average of 40. Again, that’s the worst case scenario. If sales carried on like that we’d end up with 20 weeks of stock cover instead of 4 if we ordered the recommended 40 units. That might not be a problem for many items, but what if we were talking about a food product that only lasted 10 weeks? In that scenario there would be a very high “over order risk” ("expiry danger") and we might decide to adjust down our order.

If you want to skip over understanding the maths, just think of it as a measure of how high the risk is of you ending up throwing product away!

My Order, Kg and Price

This is the interactive part. The “My Order” field is going to default to the recommended “To Order” number (adjusted for pack size) but you can manually override that number as you build up your order. As you change the number to order, you’ll see the price and weight change on-the-fly, so you can get an idea of the overall cost and weight of your purchase order.

If your supplier insists on minimum orders, or if you are trying to fit the whole order on a single pallet, for example, you can keep an eye on these numbers as you build up your order.

Item Drilldown

If you need more intelligence on any particular SKU, just click it to reveal a detailed graph of sales and a breakdown of metrics. Here’s where you can get a more detailed picture of how sales of this item have evolved and a visual representation of seasonality. Average weekly sales, as well as lower and upper boundaries for sales (again, think worst-case and best-case sales scenarios) are shown on a year by year basis. This information is intended to inform expert decision making when manually tweaking orders.

Another example of something that can be seen here is an item in which sales are trending either up or down. If you can see that the sales of a particular item are generally increasing over time, then you may wish to increase the amount you order appropriately, and similarly for an item that is seeing decreasing demand over time.

Include zero weeks

When calculating statistics, such as the average weekly sales for each item, we typically exclude weeks with zero sales. The rationale for this is that zero sales within a week likely represents a week in which the item in question was out of stock, rather than not selling. Since we want to know how many to order to prevent an item being out-of-stock, we exclude zero sales weeks within such calculations. This column allows you to take zero sales weeks into account for such calculations. This usually makes sense for big/rare/expensive items which have a low sales rate, like 1-2 units a week, where zero is a likely value even if there is stock of the item. If you allow back-ordering of out-of-stock items then it also makes sense to include zero weeks, since that means lack of stock cannot be the reason for the zero sales.

In summary, include zero weeks if main reason for any weeks of zero sales was lack of demand rather than the product not being available.

Create Purchase Order

Once you’re happy with the tweaked order quantities, the final step is to hit the “Create Purchase Order” button. This will take you to a Purchase Order creation screen in Pakk with the lines pre-filled with the order you created in the demand planner. Now you can finish the order by adding all the meta information like delivery addresses, logistics information and specific instructions. From there, it’s just 2 clicks to send it off to the supplier by email!