The most important factor that may greatly influence storage management is the sales plan. A sales plan is the core of stock management, and stock is the result of a sales plan.
An ideal sales plan should at least include below factors:
1. Time Dimension: in days or in weeks.
2. Demand Prediction: the prediction of customer requirements in the future.
3. Sales Oder: the actual customer requirements. Sales order is constrained by the contract which both supplier and buyer should conform to.
4. Production Plan: products that are scheduled to produce every day or every week.
5. Material Supply: enough material to ensure smooth production.
6. Production Capability: equipment and human resources.
If a company did not take the above factors into consideration when making a sales plan, there will be two problems: one is overstock, and the other is a lack of material.
When a factory is processing orders, it may come into some bottlenecks in respect of production capability, which requires a high flexibility of sales plan.
We must prepare enough stock to meet all clients’ requirements. A sales plan which is made without considering other constraints can never be perfectly executed.
Sometimes the company may receive orders that may succeed the factory’s production capability. To achieve goals, the sales department shall never reject these orders. However, it may bring problems to finish production.
In order to accomplish impossible missions, the sales department always makes unpractical plans. And due to the constraints of bottlenecks, normal production plans will sometimes be disrupted. The result is running out of usable material, at the same time plenty of useless material is left.