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Kathy Barthelt

Infor LN & Baan Tips & Tricks for OPERATIONS: What is Statistical Inventory Control (SIC) and How Does It Work?

Statistical Inventory Control (SIC) is an inventory-controlled order system designed to maintain stock levels based on predefined thresholds, rather than being demand-driven like EP (Enterprise Planning). Since SIC relies on inventory levels, it may lead to higher stock levels. To minimize financial risks, SIC is best suited for:

  • Low-cost items.
  • Items with predictable demand or short lead times.


Applications of SIC

  • Low-Cost Items: Particularly effective for inexpensive goods.
  • Predictable Demand or Short Lead Time: Suitable when demand patterns are stable or lead times are minimal.
  • Warehouse-Specific Planning: Useful for planning by warehouse rather than across the supply chain.
  • Trading Industries: Commonly employed in sectors like supermarkets.
  • Immediate Demands: Effective for items required immediately by customers.
  • Ease of Use: Simple to implement and manage.


Limitations of SIC

  • Does not account for dependent demand from planned orders (e.g., MPS/MRP/INV).
  • Does not generate distribution orders.
  • Ignores time-phased planned orders.
  • Lacks forecast consumption techniques.
  • Uses both nettable and non-nettable warehouses.

How SIC Works

SIC operates based on the Reorder Point, Stock Levels, and Order Method.

Triggering SIC

When Economic Stocks (calculated as On-Hand Inventory + On-Order – Allocated Stocks) on the Horizon Date fall below the Reorder Point, SIC triggers the creation of:

  • Planned Purchase Advice.
  • Planned Production Advice.


Order Methods in SIC

The quantity for these advices is determined by the Order Method, which can be one of the following:

  • Replenish to Maximum Stock
  • Fixed Order Quantity
  • Economic Order Quantity (EOQ)
  • Lot-for-Lot

Example: SIC in a Supermarket

Scenario: Managing stock for Ice Cream (1 Kg Pack)

  • Current Stock: 10 PCs
  • Reorder Point: 5 PCs
  • Safety Stock: 2 PCs
  • Lead Time: 1 Day
  • Order Method: Replenish to Maximum (Maximum Stock: 20 PCs)
  • Maximum Anticipated Consumption: 3 PCs/Day

Process:

  1. Customer purchases reduce the stock.
  2. When stock reaches 5 PCs, SIC is triggered.
  3. A Purchase Advice is generated for 15 PCs to replenish stock to the maximum level (20 PCs).
  4. During the lead time (1 day), the remaining 3 PCs (excluding Safety Stock) meet customer demands.
  5. In emergencies, Safety Stock can also be utilized.

Statistical Inventory Control offers a practical approach for managing inventory levels, particularly in industries with predictable demand or fast-moving items. However, its limitations make it less ideal for complex or time-phased planning scenarios.

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Tips:  LX | BPCS | M3

Tips: LN | Baan

Note: The Blocked Operations (tisfc0540m000) session displays the blocked operations.

Introduction

Sometimes a problem occurs that must be solved before an operation proceeds. Examples of such situations are:

  • The quality of an intermediate product must first be inspected.
  • A machine is in repair.
  • A supplier cannot deliver an essential component in time.
  • A customer is late with its payments.

In these situations the operation can get the operation status Blocked.

An operation can be blocked:

  • Manually.
  • Automatically by Quality.

Blocking reasons

Every blocked operation must have a blocking reason. The blocking reason of a blocked operation has two purposes:

  • To indicate why the operation is blocked.
  • To determine which actions you can no longer perform on the operation.

Types of blocking

The following actions can be blocked by means of a blocking reason:

  • Reporting a quantity completed.
  • Reporting a quantity rejected.
  • Reporting a quantity to be inspected.
  • Reporting an operation completed.

You normally carry out these actions in the Report Operations Completed (tisfc0130m000) session.

You can define blocking reasons in the Blocking Reasons (tisfc2100m000) session.

Manual blocking

Use the Report Operations Completed (tisfc0130m000) session to block an operation. When you block an operation, you must also enter a blocking reason. If Quality has already blocked the operation, you can only enter a blocking reason, which is more restrictive than the blocking reason of Quality.

Blocking by Quality Managem

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