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Navision MV8 Handbook
Step 5
Sales Space Management
Version 1.0
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This document is developed and produced through collaboration between Inter IKEA Systems B.V. and K3 Business Solutions B.V.
The content of this material is owned and updated by Inter IKEA
Systems B.V in collaboration with K3 Business Solutions B.V.
Inter IKEA Systems B.V
IKEA Concept and IKEA
Business Processes
Final document containing a
description of operating IKEA
business process in Navision
Master Version
Documentation of technical
work steps in Navision
Master Version in a number
of manuals
Documentation of IKEA
business process operations
in a number of manuals
K3 Business Solutions B.V
Navision Master Version
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Revision information
Edition Date Comment Author Verified Approved
1.0 01.04.2018 The document was
created
Ivaylo
Hristov
Ali Sultan
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Table of Contents Revision information .................................................................................... 3
5. Sales space management ................................................................. 5 5.1. Introduction .......................................................................................................... 5 5.1.1. Background ........................................................................................................... 5 5.1.2. Definition of terminology ........................................................................................ 6 5.2. Preplanning and setup ............................................................................................ 6 5.2.1. Setups ................................................................................................................. 6 5.2.1.1. Max Safety Stock Factor ......................................................................................... 6 5.2.2. Sales Method Setup ............................................................................................... 8 5.2.2.1. Min Qty Weeks ...................................................................................................... 8 5.2.2.2. Max Sasp Qty Weeks .............................................................................................. 8 5.2.2.3. Max Buffer ............................................................................................................ 9 5.2.2.4. Calculate Auto Bin ............................................................................................... 10 5.2.3. Replenishment Level ............................................................................................ 11 5.2.3.1. Calculated Replenishment Level ............................................................................. 12 5.2.3.2. Adjusted Replenishment Level ............................................................................... 14 5.2.3.3. Default Replenishment Level ................................................................................. 15 5.2.3.4. Sales Space Type................................................................................................. 16 5.2.3.4.1. Non flexible sales space ........................................................................................ 17 5.2.3.4.2. Flexible sales space .............................................................................................. 18 5.2.3.5. Overview recommended values ............................................................................. 20 5.3. Sales space management of new articles ................................................................ 20 5.4. Maintain sales spaces of selling articles .................................................................. 21 5.4.1. Managing sales spaces ......................................................................................... 21 5.4.2. Defining Sales Space Size ..................................................................................... 21 5.4.3. Safety Stock Calculations ...................................................................................... 26 5.4.3.1. Mathematical Safety Stock .................................................................................... 26 5.4.3.2. Auto Bin ............................................................................................................. 27 5.4.3.3. Maximum Safety Stock ......................................................................................... 27 5.4.3.4. Minimum Safety Stock .......................................................................................... 27 5.4.3.5. Lowest Sales Quantity .......................................................................................... 28 5.4.4. Product Dominance .............................................................................................. 29 5.4.5. Local PQ and MPQ ................................................................................................ 29 5.5. Range allocation in the warehouse ......................................................................... 31 5.6. Follow up ............................................................................................................ 33 5.6.1. Report “Maintain Sales Space - Summary” .............................................................. 34 5.6.2. Report “Maintain Sales Space - Suggestion” ............................................................ 36 5.7. Meetings activities connected to sales space management ........................................ 37 5.8. Performance indicators connected to sales space management .................................. 38 Appendix I – Calculations and Formulas ................................................................................. 39 A.1. Safety stock ........................................................................................................ 39 A.2. Sales Space size limits ......................................................................................... 41 A.3. EOQ calculations .................................................................................................. 45 A.4. Need calculation for internal replenishment ............................................................. 46 A.5. Replenishment Level ............................................................................................ 49
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5. Sales space management
5.1. Introduction
5.1.1. Background
Sales space management ensures that all sales spaces are properly dimensioned
so that they can accommodate incoming deliveries and are stocked with volumes
based on sales forecast. Two of the biggest success factors are making best use
of flexible sales spaces and optimizing the filling rate.
Managing sales spaces is an ongoing task because of constant changes in range
presentation and sales pattern. The objective of sales space management is to
maximize sales and minimize costs. In order to maximize sales the sales space
size must be dimensioned in such a way that the customers are always able to
buy the product they require. In order to minimize costs the sales space size
needs to accommodate the incoming delivery quantities and the safety stock,
which will optimize the door-to-floor goods flow.
The overall responsibility for sales spaces lies
with Sales. Sales is supported by ComIn and
Logistics. Logistics is supporting with
dimensioning of the sales spaces, identifying
sales spaces that do not have products available
the whole day with Navision. The system has all
needed information to predict the stock level in
the store. Based on this information it is possible
to suggest the optimum sales space size. The
sales space is an essential part of the IKEA
supply chain since this is where the article meets
the customer. It is also important for the need calculation, as the sales space size
is a part of the ordering process.
Navision defines the sales space size with help of different algorithms which give
four different sales space quantity limits: Min, MinDir, Suggestion and Max. These
sales space quantity limits are the borders between the different goods flow
classifications: Missing, Too Small, Indirect, Direct and Too Big.
The sales space quantity limits are set according to an optimal on the incoming
quantity and the average sales of an article. However, a main influence is coming
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from the three main parameters Min Qty Weeks, Max Sasp Qty Weeks and Max
Buffer.
Those parameters, if set correctly, will ensure that Navision can provide the
correct information for dimensioning the sales spaces to achieve the overall goals.
5.1.2. Definition of terminology
Sales space management is about dimensioning sales spaces efficiently by taking
into consideration critical elements like commercial needs, range size, sales
expectations, available space and incoming deliveries. It is a condition for selling
large volumes at low costs.
5.2. Preplanning and setup
Before sales spaces can be maintained on a regular - weekly and daily – basis,
some parameters need to be defined and set up in Navision.
To secure the optimal sales space management all sales spaces need to be set up
according to the Global Naming Convention and daily and weekly indices need to
be updated.
5.2.1. Setups
5.2.1.1. Max Safety Stock Factor
Safety stock is part of the sales space. The Max Safety Stock Factor is used in the
calculation of the used safety stock and in sales space management. With this
setup an upper limit of the used safety stock can be defined. Recommended value
is 10. This means the maximum possible safety stock in the sales space can be 10
times the AWS if required. This results in a maximum of 10 weeks of safety stock.
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In order to avoid overstock in the sales spaces the Max Safety Stock Factor (10)
plus Max Sasp Qty Weeks (4) should not be greater than 15 weeks. Otherwise
this article will have the Goods flow classification as “Too Big”.
The KPI “Overstock” within IKEA is defined as the stock value of an article which
is 15 times AWS or more. (see also 5.2.2.2)
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5.2.2. Sales Method Setup
5.2.2.1. Min Qty Weeks
The Min Qty Weeks is the minimum order quantity in weeks that will be ordered if
the sales space size is dimensioned big enough to fit the in-delivered quantity, in
other words: when the sales space is classified as “Direct” or “Too Big”.
The Min Qty Weeks determines the minimum order quantity on Sales Method. The
minimum quantity ordered will be either one pallet quantity or, for multipacks,
the Min Qty Weeks times the AWS, rounded up to the next multipack. The
recommended value is 2.00. This means that the DC has to pick once every two
weeks only. Also the replenishment is done every two weeks.
This keeps the cost within the IKEA supply chain low. This minimum order
quantity will be taken into consideration to dimension and propose the sales space
size. The result of this calculation is MinDir (see 5.4.2).
It can be defined under the Sales Method page.
5.2.2.2. Max Sasp Qty Weeks
The parameter Max Sasp Qty Weeks is used to calculate the Max value. The
defined sales space size for the majority of the articles should not be higher than
Max. Otherwise those articles will have the goods flow classification of “Too big”.
The recommended value is 4.
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In order to avoid overstock in the sales spaces the Max Safety Stock Factor (10)
plus Max Sasp Qty Weeks (4) should not be greater than 15 weeks.
10 + 4 = 14 < 15
Otherwise this sales space would be classified as “Too big” (see also 5.2.1.11).
For Full serve, due to the low forecast of most of the articles, Max Sasp Qty
Weeks can be increased to improve efficiency within the supply chain and internal
replenishment. This decision needs to be balanced out with potential overstock in
the sales spaces.
5.2.2.3. Max Buffer
The Max Buffer is the order quantity in weeks that will be ordered if the sales
space size is not dimensioned big enough to fit the in-delivered quantity, in other
words: when the sales space is classified as “Missing”, “Indirect” or “Too small”.
The quantity ordered will be either one pallet quantity or, for multipacks, up to
Max Buffer times the AWS.
This will reduce the picking at the DC for an article that will anyhow be picked in
the store due to its small sales space. Recommended value is 4.00.
The in-delivered quantity will not fit in the sales space. The stock which cannot be
replenished in the sales space or neighbourhood locations will be back flow and
need to be put into buffer. This backflow is accepted and part of the normal goods
flow process.
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5.2.2.4. Calculate Auto Bin
The auto bin effect is the safety stock needed, when a sales space in the Market
hall has to be bigger than the normal standard (Mathematical Safety Stock + Max
Sasp Qty Weeks). This is done in order to promote sales by having a higher stock
level in the sales space and to create an attractive facing for the customer. The
auto bin should only be used in Market hall for commercial reasons to show
volume in the sales spaces (e.g. soft toys).
The Auto Bin is limited by the max safety stock factor. A sales space should not
have more than 15 weeks of stock (= over stock) in total.
If auto bin is activated, the quantity needed is calculated as soon as the sales
space size is changed for every article taking into account the new sales forecast.
Safety Stock
Auto-Bin =
Safety Stock
Increase
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5.2.3. Replenishment Level
The Replenishment level is used for replenishment of sales spaces. There are
three different types of replenishment levels available:
Calculated Replenishment Level percentage (calculated %)
Adjusted Replenishment Level percentage (adjusted %)
Default Replenishment Level percentage (default %)
Navision will always use the Calculated % in case no Adjusted % is set. Default
Replenishment Level % will only be used in case the article has an assigned sales
method, that is not equal to the three default ones – S, M, F. The used
Replenishment Level is indicated by a bolded font.
In order for the user to have an easy overview on what is the exact limit when
replenishment will be triggered, a Replenishment Point (in unit of measure) and a
Replenishment point External Warehouse (if available) are also calculated. This is
done by multiplying the used Replenishment Level percentage to the Total Sales
Space Size and adding the Product Dominance quantity. When the actual stock in
the picking bin is equal to or below this level, Navision detects a Need for
replenishment.
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All relevant formulas can be found in Appendix I.
5.2.3.1. Calculated Replenishment Level
In order to secure commercial sales spaces at low operational costs, avoid local-
local shortages and support high on-shelf availability, Navision automatically
calculates an optimal replenishment level for each article.
The following parameters are used for this calculation:
Sales Method Default Filling Rate percentage
Multipack Qty and Pallet Qty
Flex factor
Autobin
Minimum Safety Stock
Lowest Sales Quantity
Forecast of next opening day
The replenishment level in unit of measure (pieces or meters) is then divided by
the Total Sales Space Size. The result is called Replenishment Level calculated %.
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As all sales methods are based on specific business rules, Navision is applying
different calculations in order to meet the priorities for each one. Therefore the
logic of Replenishment Level calculated % is based on the SM value (0, 1 or 2).
In order to secure availability, operational efficiency and commerciality for
Markethall and Self Serve areas (Sales Methods 1 and 0), Navision is calculating
in the background the following three sub-Replenishment Levels:
Minimum Replenishment Level
Maximum Replenishment Level
Commercial Replenishment Level
Minimum Internal Replenishment Level secures the availability in the picking
location for the next day by considering the Minimum Safety Stock and Lowest
Sales Quantity (see 5.4.3), and the forecast for the next opening day. As the
Minimum Safety Stock can be manually a by the user, a misuse of the parameter
can lead to an inefficient result of the calculation.
Maximum Internal Replenishment Level supports the goods flow efficiency by
securing that a minimum of one full multipack is always replenished and thus
backflow is minimized.
As suggested by the name, Commercial Internal Replenishment Level aims to
secure commerciality of the sales locations, based on the Default Filling Rate
percentage set for the Sales Method or the Auto Bin value.
Availability in the sales locations is not a priority for Sales Method 2 (Full-Serve),
as replenishment can be done during opening hours. Since customers don’t have
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access to these articles, there is no need to focus on commerciality either. That is
why the replenishment level for Full-Serve is supporting only efficiency, by
securing that the maximum number of full multipacks can be replenished, with a
minimum of the Lowest Sales Quantity or Daily Sales Forecast in order to reduce
replenishment during opening hours. This helps keep the handlings per cubic
meter low.
As handling of full pallets is the most efficient flow, for Total Sales Space
Capacities exceeding the pallet quantity, the Replenishment Point will be reached
as soon as a full pallet can fit in. This helps reduce the manual adjustment of
replenishment levels for items with multiple pallet locations on the sales flor
(Open the Wallet, End Podias, Activity Areas, etc.).
The relevant formulas can be found in Appendix I.
5.2.3.2. Adjusted Replenishment Level
The Replenishment Level calculated % is an optimal result, supporting availability,
efficiency or commerciality, and should be used as frequent as possible. However
it can still be manually overwritten for exceptional cases by manually setting a
percentage value in Replenishment Level adjusted % field (the default value is 0).
If there is an Replenishment Level adjusted % is set for an article, it automatically
becomes the used replenishment level percentage.
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5.2.3.3. Default Replenishment Level
The Replenishment Level default % is equal to the default value set for the Sales
Method. It is a reflection of the decision of the store Commercial Team regarding
the targeted replenishment level that balances between high commerciality and
efficiency.
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The Default Replenishment Level of a Sales Method can be changed under in the
Sales Method page. The recommended values for a standard store are SM 0:
50%, SM 1: 40%, SM 2: 25%.
5.2.3.4. Sales Space Type
The sales space type defines if the sales space is “flexible” or “non flexible”. The
sales space type is a default that will be used if a new article will be created in the
item master. The options are “Non Flexible” or “Flexible”. The articles in Market
hall should always be flexible.
The sales space type need to be defined in Sales Method page.
In case the Sales Space Type for a running article needs to be changed this needs
to be done in the Sales Space Size Adjustment Table or directly in the Item Card.
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5.2.3.4.1. Non flexible sales space
Non flexible sales spaces should be dimensioned for safety stock plus in-delivery
quantity. This is the maximum stock for this article. Every non flexible item has its
own space which is not shared with any others. If the stock sells down until the
next in-delivery arrives, the location will not be 100% full. Having non flexible
sales spaces will lead to an overall empty looking Market hall.
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5.2.3.4.2. Flexible sales space
The flexible sales space concept was implemented to secure a commercial, full
looking Market hall. The general idea is that articles which are located next to
each other share the space for their sales spaces. This will increase the
commercial filling rate and will increase efficiency.
Flexible sales spaces will be dimensioned for average stock, being equal to Safety
stock plus half of the in-delivery quantity. The other half of the in-delivery
quantity will be accommodated in the neighborhood spaces.
Nothing will change when it comes to the stock level over time. At any time some
articles will be closer to maximum and some will be closer to minimum. The
articles with in-delivery must use the space made available by the article being
near minimum.
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The graph above shows the sales pattern of an article between maximum stock
and minimum stock. The idea is that more than one article share space to achieve
an overall higher filling rate regardless if one article is sold down. The available
space of an article which is sold down will be used by an in-delivery quantity of
another article located close by. The sales space size for flexible articles will be
the average stock, for non-flexible it would be maximum stock.
Non flexible sales space Flexible sales space
Flexibility supports better sales space allocation and will enable that more
products can fit in the same sales space. They are more commercial and look
always full because the filling rate is overall higher. Flexible sales spaces are more
efficient as they reduce backflow.
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5.2.3.5. Overview recommended values
Parameter SM 0 SM 1 SM 2
Max Safety Stock factor 10.00
MinQtyWeeks 2.00 2.00 2.00
MaxSaspQtyWeeks 4.00 4.00 4.00
MaxBuffer 4.00 4.00 4.00
Calculate Auto Bin Yes No No
Default Replenishment Level 50% 40% 25%
Sales Space Type Flexible Non flexible Non flexible
Flex Factor 40
Full Pallet Direct Share % 85
EOQ Round %: 70
The above recommended values are meant for stores with sufficient m2 in Market
hall, Self-serve and Full Serve. Stores with over or under capacity can deviate
from the recommendations.
5.3. Sales space management of new articles
The initial forecast of an article needs to be set in order for Navision to support
the sales space dimensioning. Once this field has been populated, Navision will
calculate the sales space quantity limits Min, MinDir, Suggestion and Max. The
Sales department, supported by Sales & Supply Support, has to update the
agreed sales space size in Navision.
The goal is to set the sales space size as close as possible to the "Suggestion"
provided by Navision. As a minimum requirement every store should have the
20% top selling articles set as “Suggestion”, 65% of medium selling articles as
‘Direct’ and the remaining (15%) as ‘Indirect’. This should lead to a minimum
85% Direct flow for Market hall.
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5.4. Maintain sales spaces of selling articles
5.4.1. Managing sales spaces
The sales space of an article should not be considered as static. It needs to be
maintained and adjusted over time in accordance with the sales pattern. By
setting the sales space size as close as possible to the "Suggestion" given by
Navision, one ensures that the goods flow classification will remain “Direct” even
if the sales pattern fluctuates over time. As a result, the door-to-floor percentage
will be as high as possible with a minimum of maintenance. The sales spaces of
the top 20% articles should be planned as ‘Suggested’. The share of articles which
need to be ‘Indirect’ should be the lowest selling articles.
5.4.2. Defining Sales Space Size
The sales space size is part of the sales space where the customer picks the
article for take away. The sales space size contains the in-delivery quantity and
the safety stock.
The sales space size should always consider the actual available physical space on
the shop floor. It should never be bigger than the available space because this will
create backflow. It should also not be smaller as this will leave empty space which
is not commercial.
The sales space size can be given for picking and if applicable for add on space as
well. The sales space size is the sum of these sizes. The sales space size is used
to calculate how many pieces the picking bin can hold.
Sales space size can be changed under the Sales Space Management Fast Tab in
the Item Card.
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In the above examplel the sales space size is 280 which is higher than the MinDir
of 224. This means the Goods Flow Classification for this artilce is ‘Direct’.
In this example above the sales space size is below MinDir but above Min. This
sales space is ‘Indirect’. The classification is not “Direct” because the Sales Space
Size is smaller than MinDir. It is not “Too Small” because it is greater than Min.
This sales space is classified as ‘Too small’ as its size is below Min.
The field Sales Space Size has a drill down page which will enable to adjust the
sales space size and to add or remove Add On locations. After clicking the Total
Sales Space Capacity size (in blue), a window with a list of all bins and quantities
will appear. There should always be one – and only one - Picking Bin and as many
Add-on bins as there are in the store for this article.
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Every Add-on location should be registered individually. The Picking location is the
home location of this product. Navision will sum up the sales space sizes of all
Add-on locations plus the Picking location. This will be the Total Sales Space Size
which is used for the calculation of the need.
In the Ordering Fast Tab you can find the EOQ (Economic Ordering Quantity)
parameters:
Minimum Order Quantity
Result for minimum order quantity according to set parameter MinQtyWeeks.
Maximum Order Quantity
Result for maximum possible order quantity according to set parameter
MaxSaspQtyWeeks.
Maximum Buffer
Result for order for indirect articles according to set parameter MaxBuffer.
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In addition the following parameters can be found:
Full Pallet Mark - if set to “P” Navision or DSP/FF will always order a full pallet.
If set to “M” the article can be ordered picked.
Delivery Type – indication if the article can be picked or delivered on full
pallets based on the supply setup rules.
Maximum Delivery Quantity – the number of pallets that can be ordered as
“flex range” (see 5.4.5.)
Certainty factor - is equal to used Safety stock / EWS. This information is
provided to the supply chain, DSP/FF, and is not used in the stores.
Maximum Delivery Quantity (see 0)
Local Multipack Quantity (see 5.4.5)
Local Pallet Quantity (see 5.4.5)
The sales space size can also be adjusted via the Sales Space Size Adjustment
page.
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In addition to the sales space size the Product Dominance and the Sales Space
Type can be adjusted here. Please note that the default Sales Space Type, which
is defined in the Sales Method Setup is valid for new articles only. In case a user
changes the default value in this setup the Type will not change for the articles,
which are already in Navision. In case a later change is required this can be done
in the Sales Space Size Adjustment page or the Item card.
The field Full Pallet Mark is set manually. The Full Pallet Mark is used to define
that full pallets will be ordered only. If one is set to “P” then full pallets only will
be ordered. The value “M” stands for Multi Packs.
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5.4.3. Safety Stock Calculations
Navision has five different types of safety stock: Mathematical Safety Stock, Auto
Bin, Maximum Safety Stock, Minimum Safety Stock, and Lowest Sales Quantity.
The bold font indicates which of the five is active and actually used by Navision.
The prioritisation rules and formulas for all safety stock calculations can be found
in Appendix I.
5.4.3.1. Mathematical Safety Stock
The Mathematical Safety Stock is used
to cover for uncertainties in the supply
chain and in the buying behaviour of
customers. Its purpose is to secure
availability in the store even if things
do not go according to plan.
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This is the most commonly used safety stock calculation based on Service Level
Classification, Lead time and Lead time variation, sales and sales variation. This
calculation is used if its result is bigger than Minimum Safety Stock, Lowest Sales
Quantity or Auto Bin, but smaller than Maximum Safety Stock.
5.4.3.2. Auto Bin
The purpose of the Auto bin is to
secure a commercial amount of
stock holding in sales spaces, not to
secure availability. Auto Bin is the
automatically calculated Bin effect
to secure a commercial stock
holding in a sales space.
This calculation must secure the filling rate of all sales spaces, whatever their
size. This calculation is used as safety stock if its result is bigger than
Mathematical Safety Stock, Lowest Sales Quantity or Minimum Safety Stock, but
smaller than Maximum Safety Stock. It is controlled on sales method level. It
needs to be defined in Setup/Sales Method per Sales Method if the system should
calculate an Auto Bin.
5.4.3.3. Maximum Safety Stock
This is the upper limit in pieces for
the safety stock calculation. The
used safety stock will never be
higher than the Maximum Safety
Stock, except when the Minimum
Safety Stock or Lowest Sales
Quantity are higher.
5.4.3.4. Minimum Safety Stock
The Minimum Safety Stock can be set manually to secure a minimum amount of
stock in the sales space. The default value is 2.
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The default of 2 is based on the
consideration that 1 piece should
always remain for sell if one item is
lost or damaged. This supports the
goal of On Shelf Availability.
Types of articles that usually need to be revised are:
Articles that are occasionally sold as multiples and Lowest Sales Quantity
does not cover that need should have a higher Minimum Safety Stock as
they should satisfy at least 1 customer’s need (e.g. kitchen fronts, dining
chairs, hard floors, kitchen rails)
Articles with inventory issues – often lost or unsellable quantities Low-
sellers that tend to be damaged
5.4.3.5. Lowest Sales Quantity
Lowest Sales Quantity reflects the
average quantity of an article that
one customer purchases per
receipt, taking into account
deviation from the calculated
average.
This safety stock fulfils the purpose to hold a minimum amount of stock for one
single customer even if the forecast for this article is very low. This could happen
with products like dining chairs or kitchen doors. The forecast of a particular chair
could be as low as 0.1, however if a customer wants to buy a dining chair, he or
she will buy 4, 6 or 8.
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5.4.4. Product Dominance
The Product Dominance is the upper part of the sales space and is not part of the
sales space size. Product Dominance helps visitors to orientate, find products and
reinforces the low-price profile. This level shall always be fully stocked and must
not be part of the sales space size. Therefore it needs to be registered correctly
otherwise the sales space could be empty. It is only used for Sales Method 0
(Market hall) articles.
The Product Dominance can be updated in the Sales Space Management Fast Tab
or the Sales Space Size Adjustment page.
5.4.5. Local PQ and MPQ
Local multipack quantities and local pallet quantities can be set on article level in
the Sales Space Size Adjustment page.
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They will appear in the Item Card under the Ordering Fast Tab in brackets.
The store users can rectify incorrect central values, to secure that the real MPQ
and PQ quantities are reflected in the values in Navision which are used for
internal replenishment. This will reduce handlings in the store as the internal
order process will consider the real values instead of the central ones.
For articles, with the same multipack quantity as pallet quantity, like articles with
distribution method DD, a local MPQ can be set. If the local MPQ is smaller than
the PQ, Navision will be able to replenish this smaller MPQ instead of the PQ. This
supports Sales Space Management and reduces back flow and internal handlings.
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Setting too many local MPQ and ordering internally more MPQ instead of PQ can
increase the internal handlings.
Please note that for replenishment from the external warehouse the local PQ, if
set, will be taken into consideration.
5.5. Range allocation in the warehouse
5.5.1. Range split between Self-serve furniture area and Full Serve
For the range allocation in the warehouse some specifics need to be considered
which are different compared to range allocation in Markethall.
The furniture range needs to be allocated either in Self-serve or Full Serve. Top
selling article should be sold via Self-serve. The related KPI’s to measure this
correct allocation are “volume sold pieces” and “sold volume”.
Minimum 80% of the sold pieces should be sold via Self-serve. This ensures
instant gratification for the customer but also efficiency in the store to keep the
prices as low as possible.
5.5.2. Self-serve
If the range is split between SS and FS it needs to be grouped. In SS the
customer buying process needs to be considered. HFB and product families will be
usually kept together. High selling articles need to be allocated close to the main
aisle. This will help the customer to find their products easier and quicker and will
reduce distances for goods flow replenishment.
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High selling products at the end podia indicate towards the customer which type
of product they can find in which aisles and support big enough sales spaces for
high volume articles.
5.5.3. Full Serve
In Full Serve the picking process needs to be considered. Articles and families
with higher picked frequency should be allocated closer to the merchandise hand
out to keep picking and waiting time for the customer low.
Families should be grouped together to allow for efficient picking process.
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The range split and allocation need to be revised with every PCD split.
5.6. Follow up
It is essential to evaluate the sales space sizes per article on a weekly basis.
There are two reports in Navision to assist the user to maintain the sales spaces:
“Maintain Sales Space - Summary”
“Maintain Sales Space - Suggestion”.
As all reports in Navision MV8, these can be exported in .xls, .pdf, .html and
more, and can also be scheduled to be run at a pre-set time with pre-set criteria.
The responsibility to follow up on sales space sizes lies within the sales
department. The maintenance with the Navision report should be done on a
weekly level.
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5.6.1. Report “Maintain Sales Space - Summary”
The ‘Maintain Sales Space - Summary’ report will give an overview on how the
different Product Areas (PA), Range Area (RA) and Home Furnishing Businesses
(HFB) are performing regarding correct dimensioned sales spaces. It shows the
percentage of ‘direct’ and ‘indirect’ and in each goods flow classification. It will
state the number of articles that are involved, and the percentage.
Missing
Goods Flow Classification for articles without sales space size registered. This
must be corrected as soon as possible as the automated replenishment will never
replenish these sales spaces.
Too small
Goods Flow Classification for articles with a sales space size smaller than the MIN
quantity. Those products are at risk that they will sell out during trading hours.
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Indirect
Goods Flow Classification for articles with a sales space size between the MIN
quantity and the MIN DIR quantity. For these articles the availability is secured
but goods flow is not cost efficient.
Direct
Goods Flow Classification for articles with a sales space size between the MIN DIR
quantity and the MAX quantity. As well availability as efficient goods flow are
secured.
Too big
Goods Flow Classification for articles with a sales space size bigger than the MAX
quantity. The automated ordering system cannot keep this sales place full. The
space can be used to improve the sales spaces of other articles.
At the last page a summary on Sales Method can be found.
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5.6.2. Report “Maintain Sales Space - Suggestion”
After analyzing the Sales Space Summary the report “Suggestion, Sales Space
cap.” can be used to analyze in more detail, on article level. It should be used by
the sales co-worker to analyse specific articles which are not meeting the required
criteria. It is possible to filter on the different Goods Flow Classifications according
to the needs.
All detail information is available on this report. The Sales space size capacity
report shows article details.
Max Min direct Suggestion Min 0 Sales Space
qty limits
Too Big Too Small
Direct Missing Indirect
Report
classifications Indirect Direct
Goods flow
classifications
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5.7. Meetings activities connected to sales space management
The entire Commercial Team is involved in sales space management and has a
role to play. The task, responsibilities and also the meeting structure need to be
agreed in an Internal Service Agreement. The Internal Service Agreement needs
to be reviewed and amended minimum once per year before the catalogue drop.
WHAT WHO WHEN
Follow-up sales space sizes:
Backflow analysis
Goods flow and Sales Daily
Follow-up sales space sizes: Maintain
Sales Space
Sales Weekly
Walk the sales floor Commercial Team Weekly
Follow up on KPIs regarding SSM Sales Weekly
Flexible sales space training Logistics, Sales and Com&In Tertially
Ready to Sell packaging update Commercial Team Tertially
Internal Service Agreement Commercial Team Yearly
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5.8. Performance indicators connected to sales space
management
SM 0 SM 1 SM 2
Direct flow >= 85% >= 70%
Direct Flow Top 100 = 100% >= 80%
Average max density
(m3/m2) >= 0.29 n/a n/a
Internal handling <= 0.8 <= 1.0
Local local shortage <= 0.1
<= 2.0
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Appendix I – Calculations and Formulas
A.1. Safety stock
Mathematical
safety stock =
K-factor * SQRT((Lead Time * (1.25 * Forecast Error))² +
(Expected Weekly Sales² * Lead Time Variation²)
Auto Bin =
Calculation Non-flexible:
Total Sales Space Size – Minimum of (Maximum of (Max SASP
Qty Weeks * Average Weekly Sales and Multipack) and Pallet
Qty)
Calculation Flexible:
Total Sales Space Size – (Minimum of (Maximum of (Max SASP
Qty Weeks * Average Weekly Sales and Multipack) and Pallet
Qty)/2)
Minimum
Safety Stock =
Manually set, default value = 2
Maximum
Safety Stock =
Max Safety Stock Factor * Average Weekly Sales
Lowest Sales
Quantity =
Average sales receipt quantity + 1.25 * Mean absolute deviation
of the sales receipt quantity
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Used Safety
Stock =
Calculation:
Safety Stock1 = Max (Mathematical Safety Stock, Autobin)
Safety Stock2= Min (Safety Stock1, Maximum Safety Stock)
Safety Stock3 = Max (Min Safety Stock, Lowest Sales Quantity)
Used Safety Stock = Max (Safety Stock2 , Safety Stock3)
Example:
Mathematical Safety Stock = 231
Auto Bin = 320
Minimum Safety Stock = 2
Maximum Safety Stock = 612
Lowest Sales Quantity = 3
Safety Stock1 = Max (231, 320) =320
Safety Stock2 = Min (320, 612) = 320
Safety Stock3 = Max (2, 3) = 3
Used Safety Stock = Max (320, 3) = 320
*All results are rounded up to Unit of Measure
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A.2. Sales Space size limits
Min =
Calculation Non-flexible:
Min = Average Weekly Sales
If Min > 2 * Pallet Qty => Min = Average Weekly Sales / 2
[Rounded up to Unit of Measure]
Example Non-flexible:
AWS = 102,4; Pallet Qty = 40; MPQ = 40
Min = 102,4
102,4 > 2 * 40 = 80 ? Yes => Min = AWS/2 = 51,2
Rounded up to pieces => Min= 52
Calculation Flexible:
Min = Average Weekly Sales / 2
If Min > 2 * Pallet Qty => Min = Average Weekly Sales/4
[Rounded up to Unit of Measure]
Example Flexible:
Min = 102,4/2 = 51,2
51,2 > 2 * 40 = 80 ? No
Rounded up to pieces => Min = 52
In this examples the result for Min Flexible and Non-flexible is
the same.
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Min Dir =
Calculation Non – flexible:
Min Dir = (Min QTY Weeks * Average Weekly Sales) [Rounded
up to Multipack] + Biggest value of Mathematical Safety Stock
and Lowest Sales Quantity
If Min Dir > 2 * pallet qty=>
Min Dir = Average Weekly Sales / 2 [Rounded up to pallet qty]
with a minimum of two pallets
If Min Dir < Min => Min Dir = Min
Example Non – flexible:
Min Qty Weeks = 2
[2 * 102,4] + 25 = [204,8] + 25 => 240 + 25 = 265
265 > 2 * 40 ? Yes =>
[102,4/2] = [51,2] = 80
80 < 52 ? No=> 80
Calculation Flexible:
Min Dir = (Min QTY Weeks * Average Weekly Sales) [Rounded
up to Multipack] / 2 + Biggest value of Mathematical Safety
Stock and Lowest Sales Quantity
If Min Dir > 2 * pallet qty =>
Min Dir = Average Weekly Sales / 4 [Rounded up to pallet qty]
If Min Dir < Min => Min Dir = Min
Example Flexible:
[(2 * 102,4)]/2 + 25 => [204,8]/2 + 25 => 240/2 + 25 = 120
+ 25 = 145
145 > 2 * 40 ? Yes =>
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[102,4/4] => [25,6] = 40
40 < 52 ? Yes => 52
Suggestion =
Calculation Non – flexible:
Suggestion = (Max SASP Qty Weeks + Min QTY Weeks) / 3 *
Average Weekly sales + Mathematical Safety Stock [Rounded
up to Multipack]
If Suggestion > 2 * pallet qty => Suggestion = Average Weekly
Sales / 2 [Rounded up to pallet qty]
If Suggestion < 110% * Min Dir => Suggestion = 110% * Min
Dir [rounded up to next UoM]
Example Non – flexible:
[(4 + 2) / 3 * 102,4 + 25] = [229,8] = 240
240 > 2 * 40 ? Yes => [102,4/2] = [51,2] = 80
80 < 110% * 80 ? Yes => = [110% * 80] = 88
Calculation Flexible:
Suggestion = (Max SASP Qty Weeks + Min QTY Weeks) / 3 *
Average Weekly Sales / 2 + Mathematical Safety Stock
[Rounded to Multipack]
If Suggestion > 2 * pallet qty => Suggestion = Average Weekly
Sales / 4 [Rounded to pallet qty]
If Suggestion < 110% * Min Dir => Suggestion = 110% * Min
Dir [rounded up to next UoM]
Example Flexible:
[(4 + 2) / 3 * 102,4 / 2 + 25] = [127,4] = 160
160 > 2 * 40 ? Yes => [102,4 / 4] = [25,6] = 40
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40 < 110% * 52 ? Yes => [110% * 52] = 58
Max =
Calculation Non – flexible:
Max SASP Qty Weeks = 4
Max Safety Stock Factor = 10
Average Weekly Sales = 102,4
Max = Max SASP Qty Weeks * Average Weekly Sales [Rounded
up to Multipack] + Max Safety Stock Factor * Average Weekly
Sales [rounded up to the next UoM]
Example Non – flexible:
[4 * 102,4] + [10 * 102,4] => 440 + 1024 = 1464
Calculation Flexible:
Max = (Max SASP Qty Weeks * Average Weekly Sales)
[Rounded up to Multipack] /2 + Max Safety Stock Factor *
Average Weekly Sales [rounded up to the next UoM]
Example Flexible:
[(4 * 102,40]/2 + [10 * 102,4] = 220 + 1024= 1244
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A.3. EOQ calculations
Minimum
Order
Quantity =
Calculation:
MinQtyWeeks * AWS
[rounded up to the next multipack quantity]
Example:
MinQtyWeeks = 2; AWS = 102,4; MPQ = 40
2 * 102.4 = [204.8] => 240
Max Order
Quantity =
Calculation:
MaxSaspQtyWeeks * AWS
[rounded up to the next multipack quantity]
Example:
MaxSaspQtyWeeks = 4; AWS = 102,4: MPQ = 40
4 * 102.4 = [409.6] => 440
Max Buffer = Calculation:
MaxBuffer * AWS
[rounded up to the next multipack quantity]
Example:
Max Buffer = 4; AWS = 102,4; MPQ = 40
4 * 102.4 = [409.6] => 440
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A.4. Need calculation for internal replenishment
Total Sales
Space Size
Flex =
Calculation:
Total Sales Space Size + Flex Capacity
Note: Total Sales Space Size (or Capacity) equals the capacity of
the “home” picking bin, including all Add-on bins.
Example:
Total sales space size = 100
Flex Capacity = 40
100 + 40 = 140
Flex
Capacity =
Calculation:
If Total sales space size < Pallet Quantity = >
Total sales space size * Flex Factor / 100
If Total sales space size > Pallet Quantity = >
Pallet Quantity / 2
Example:
Total sales space size = 120
Flex Factor = 40
Pallet Quantity = 180
120 > 180 ? No => 120 * 40 / 100 = 48
Example 2:
Total sales space size = 420
Flex Factor = 40
Pallet Quantity = 180
420 > 180 ? Yes => 180 / 2 = 90
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Need
identification
=
Calculation:
Stock – Qty sold not posted – Qty going out + Qty coming in <
Total Sales Space Size * Replenishment Level % / 100 + Product
Dominance
Example:
Stock: 100
Product Dominance: 20
Total Sales Space Size: 200
Replenishment Level: 50%
Qty sold not posted = 0
Qty going out = 0
Qty coming in = 0
100 – 0 – 0 + 0 = 100 ? 200 * 50 / 100 + 20 = 120
100 < 120 ? Yes => need identified
Calculation of
the need =
Calculation Non-flexible:
Need = Total Sales Space Size – (Stock – Qty Sold Not Posted –
Product Dominance – Qty Going out + Qty Coming In) [rounded
up to the next Multipack Quantity]
Example Non-flexible:
Stock: 100
Total Sales Space Size: 200
Multipack Quantity = 20
Product Dominance: 20
Qty sold not posted = 0
Qty going out = 0
Qty coming in = 30
200 – (100 – 0 – 20 – 0 + 40) = 80
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Calculation Flexible:
Need = Total Sales Space Size Flex – (Stock – Sold Not Posted –
Product Dominance – Qty Going Out + Qty Coming In) [rounded
up to the next Multipack Quantity]
Example Flexible:
Stock: 35
Total Sales Space Size Flex: 100
Multipack Quantity = 20
Product Dominance: 20
Qty sold not posted = 0
Qty going out = 0
Qty coming in = 40
100 - (50 – 0 – 20 – 0 + 40) = 100 – 30 [rounded up] = 70
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A.5. Replenishment Level
Minimum
Internal
Replenishment
Level =
Calculation:
Maximum of (Minimum Safety Stock and Lowest Sales Quantity)
+ Rounded forecast of next opening day.
Example:
Minimum Safety Stock = 2
Lowest Sales Quantity = 3
Forecast of next opening day = 7,13
Max (2, 3) + 7,13 [rounded to UoM] = 3 + 7 = 10
Maximum
Internal
Replenishment
Level =
Calculation:
Total Sales Space Size Flex – Multipack quantity
Example:
Total Sales Space Size Flex = 100
Multipack Quantity = 25
100 – 25 = 75
Commercial
Internal
Replenishment
Level =
Calculation:
Total Sales Space Size Flex - Rounddown [(Total Sales Space
Size Flex – Maximum (Auto Bin, Default Replenishment Level %
* Total Sales Space Size/100) ) / Multipack Quantity] *
Multipack Quantity
Example:
Total Sales Space Size Flex = 220
Total Sales Space Size = 200
Auto Bin = 120
Default Replenishment Level % = 50
Multipack Quantity = 20
220 – [(220 – Max (120, 50 * 200 / 100)) / 20] * 20 =
220 – (220 – 120) / 20 * 20 = 120
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Calculated
Replenishment
Level =
Calculation for Sales Method 0 or 1:
If Total Sales Space Size < Pallet quantity =>
Maximum of [Minimum of (Commercial Internal Replenishment
Level and Maximum Internal Replenishment Level), Minimum
Internal Replenishment Level]
If Total Sales Space Size > Pallet quantity =>
Total Sales Space Size Flex – Pallet quantity
Example:
Commercial Internal Replenishment Level = 60
Maximum Internal Replenishment Level = 115
Minimum Internal Replenishment Level = 22
Total Sales Space Size = 100
Pallet Quantity = 250
Multipack Quantity = 25
100 > 250 ? No =>
Max [Min (60, 115), 22] = 60
Calculation for Sales Method 2:
If Total Sales Space Size < Pallet quantity =>
Total Sales Space Size – Rounddown (Total Sales Space Size /
Multipack Quantity) * Multipack Quantity
If Total Sales Space Size > Pallet quantity =>
Total Sales Space Size Flex - Pallet quantity
Example:
Total Sales Space Size = 110
Pallet Quantity = 250
Multipack Quantity = 25
110 > 250 ? No =>
110 – Rounddown (110/ 25) * 25 = 10
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Calculated
Replenishment
Level % =
Calculation:
Calculated Replenishment Level / Total Sales Space Size * 100
Example:
Calculated Replenishment Level = 92
Total Sales Space Size = 200
92 / 200 * 100 = 46
Replenishment
Point =
Calculation:
(Calculated Replenishment Level % * Total Sales Space Size) /
100 + Product Dominance
Example:
Calculated Replenishment Level % = 46
Total Sales Space Size = 200
Product Dominance = 30
(46 * 200) / 100 + 30 = 122