How to Reduce Inventory Carrying Costs in Sage X3

One of the biggest challenges the Distribution and Manufacturing industries face today is accurate material planning. Accuracy is not only required for meeting customer commitments but is also needed for keeping inventory carried at a cost minimum. Sage X3 is designed to assist material planners via a rich and very flexible functionality of Allocations. It is the process of assigning or reserving material in inventory for a particular demand. Once a firm demand has an approval in the form of a Sales Order, Forecast or Work Order Sage ERP X3 can then reserve the material based on FIFO, FEFO (First Expired First Out), LIFO or by LOT.

Based on Allocation, the material planner can then accurately plan the Procurement to meet Shipments dates without slippages.  Also they will be able to bring the material Just In Time (JIT) to reduce the inventory carrying cost.

The functionality offers two options of Allocation:

1. Global Allocation: This is a quantity reservation for a product-site combination.

2. Detailed Allocation: This is a reservation for a stock line – an association of Lot, Sub-lot, Serial number, Status (Hold /Available), Location, Packing unit etc.

Once an order/demand is approved in Sage X3, the system can be configured to automatically reserve the material based on the principles of FIFO, FEFO, LIFO or by LOT or manual allocation and there is the option to select the stock line. Sage X3 also has the capability to highlight the shortages.

Once the system has done the reservation a Dashboard gives the planner a clear picture on available stock and reserved stock and the shortage. Based on this visual, planners can plan procurement which could be JIT. Sage X3 is backed up by a very strong MRP (Material Requirement Planning) engine for procurement planning.

Sage X3 provides flexibility of many configurations to accommodate the most difficult allocation principles in many business scenarios like available Lots (Quality Approved), Customer Priority etc.

Graphical view for Stock Status in Sage X3

Process flow with allocation in Sage X3 for supply in Distribution/Manufacturing environment

Allocation engine in SAGE X3

Sage X3 also offers additional flexibility in that it is also possible to reserve material against a customer through another functionality called Customer Reservations.

If you involved in Distribution or Manufacturing  then we have a great solution to optimize your material planning and can help you to save huge inventory carrying costs.  Please contact us at 1-866-320-8922 to find out more about how to leverage this opportunity.