RTSVisiblEdgeROIcalculator

8/3/2019 RTSVisiblEdgeROIcalculator

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The purpose if this calculator is to quic

To do so, the minimum amount of user data is

A The six areas of data focus are:

AREA

1 INVENTORY NET & Absolute*

a. Net item accuracy

b. Absolute accuracy

2

c. OTIF Fill Rates

3 LABOR COSTS OF RETURNS

d. Customer Returns/Labor Costs

4 LABOR*

e. Labor %

5 BAR-CODE SCAN

f. Labor %

6 Inventory Confidence Safety Stock

g. Safety Stock dollar value

B Ratings of Performance in each categ

Good

Best

VisiblEdge

Simple Instructions:

1 Go to raw "Simple Raw Data" tab

2 Review your performance agains

3 Review estimated opportunity o

4 Look at on "Simple Results Calc

* - Based upon 2005 Seber Logistics Study, 200

CUSTOMER SERVICE3


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VisiblEdge Calculator

kly ascertain the value of a RFID VisiblEdge system implementation.

required to quickly target the greatest value points

Description

"On time in Full" shipping best in class performance versus your actuals

Cost of reprocessing replacement orders and accepting returns

ry are based upon industry averages, and are depicted as;

These rates are typically produced with advanced WMS tracking

These rates are typically produced with standard WMS tracking

enter your data points

t Best in class and Visible Edge Rates on "Simple Rates Tab"

n "Simple Rates Tab"

Tab", determine and input your level of confidence in "achievable results"

6 Distribution FMI Benchmark Report

The difference between perfect net inventory (differences actual vs. book) and resulting inventories, basedupon applied inventory control measures

The difference between perfect item level inventory and actual inventories, based upon applied inventorycontrol measures

This measurement is considered the measurement of inventory control skill, whereas "net" is a measurementsof inventory "luck"

Measures the right quality/item's) delivered to the customer on the agreed order delivery date, Lack ofinventory controls and accuracy impacts order predictability.

Labor costs used to maintain your level of accuracy, includes are inventory controllers, auditors, validationsteps, and inventory support.

Labor costs performing barcode scanning validations. This includes the calculated time to scan bar-codes for agiven operation

Inventory confidence Safety Stock is the buffer against variability and uncertainty of inventory records.Because safety stock ties up cash by simply sitting on the shelves of plants or distribution centers, companiesmust identify the minimum safety stock required to meet service levels and avoid outages.


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Raw DataINPUT YOUR DATA HERE

1 Inventory On hand - Average Definition Pu

$4,000,000.00

2 Warehouse Labor Costs (burdened)

$2,500,000.00

3 Order Sales Shipped Weekly

$1,000,000.00

4 Invent. Confidence Safety Stock

$30,000.00

5 Net inventory accuracy

91.75%

6 Absolute item accuracy

88.50%

7 OTIF Rates

Average of previous year monthlydollar value of inventory maintained

to support the business including allsafety stock levels

Used to calculainventory contr

percentage gai

Employee and contract resourcepool costs including annualexpenses and benefits

Used to calculalabor and percthat control me

Orders dollar value shipped weeklyby Sales price

Used to calculaorders and perthat control me

The estimated dollar value of onhand inventory maintainedcompensate for inventory accuracydeficiencies. Most companies useinventory safety stock for 2 mainreasons, to hedge against lead timedelays and compensate for internalcontrol timing confidences.

Used to calculaorders and perthat control me

Net physical inventory resultaccuracy measured in dollar valueincreased, netted to dollar valuedecreases.

Used to calculanet inventory cimprovement oexpressed in do

physical inventory result accuracymeasured in dollar value increasesadded to dollar value decreases.

Used to calculaabsolute invenimprovement oexpressed in do


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97.50%

8 Labor Costs - Cust Returns

4.50%

9 Labor Hrs % maintaining Inv

15.00%

10 Labor Hrs % Bar code scanning

5.00%

Percent of orders not 100% shippedon time in full

Used to calculaorder fulfillmencontrol improvopportunity expercent of ordedollars

Percent of operations labor used tomanage order reconciliation, andorder return process, includingreplacement order fulfillment,Include cost of goods and shipping

Used to calculareduced returnlabor requiremadvanced contprovided by RF

Percent of labor (expressed inpercent of work force hours) of theentire work force on supplyoperations that are used to controlinventory accuracy including, cyclecounts management, execution,physical inventory managementcontrol as well as execution and

errors reconciliation.

Used to calculareduced invenmanagement lrequirements badvanced contprovided by RFmeasures the avoidance.

Percent of time determined that isused in the overall stocking andfulfillment process that is usedexpressed for bar code search andscan.

Used to calculareduced labor based upon adproperties of R


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VisiblEdge Value CalculatorINVENTORY NET & Absolute*

Estimated LOSS

1. Net item accuracy Good 97.85% $(86,000)

2. Net item accuracy Best 98% $(80,000)

3. Net Item accuracy VisiblEdge 99.99% $(400)

4. Your Rates >>> 91.75% $(330,000)

1. Absolute accuracy Good 95.00% $(200,000)

2. Absolute accuracy Best 97.00% $(120,000)

3. Absolute accuracy VisiblEdge 99.00% $(40,000)

4. Your Rates >>> 88.50% $(460,000)

Estimated RISK

1. OTIF Fill Rates Best 98.40% $(832,000)

Percent of Filled complete (first time) May not be act

2. Fill Rates with VisiblEdge VisiblEdge 99.50% $(260,000)

4. Your Rates >>> 97.50% $(1,300,000)

5. Customer Returns/Labor CosBest 2.60% $(65,000)

Percent of items returned typical WMS turns

6. Customer Returns/Labor Cos VisiblEdge 1.00% $(25,000)

typical WMS rates with optional Bar-code sc4. Your Rates >>> 4.50% $(112,500)

Percent used to validate counts, inventory and accuracy

1. Labor % Best 12.00% $(300,000)

2. Fill Rates with VisiblEdge VisiblEdge 4.00% $(100,000)

3. Your Rates >>> 15.00% $(375,000)

Percent time used to search and scan bar-codes

1. Labor % Best 2.75% $(68,750)

2. Fill Rates with VisiblEdge VisiblEdge 0.00% $-

3. Your Rates >>> 5.00% $(125,000)

Safety Stock (due to inventory confidence)

2. Safety Stock with VisiblEdge VisiblEdge 0.00% $- unique by com

(one time savin

3. Your Rates >>> $30,000.00 $(30,000)

Intangible Benefits to VisiblEdge

1 Better utilization of Bulk Storage areas - granular locating

2 Better utilization equipment with interleaving or workforce management

3 less customer dissatisfaction

CUSTOMER SERVICE3

3 of product

LABOR COSTS OF RETURNS4

4 not significan

LABOR4

4 not significan

BAR-CODE SCAN4

4 not significan


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ain


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VisiblEdge Value CalculatoINVENTORY NET & Absolute*

Your rate our Performance VisiblEdge Rate With VisiblEdge stimated S

Net item accuracy 91.75% $(330,000) 99.99% $(400) $(32

Absolute accuracy 88.50% $(460,000) 99% $(40,000) $(42

OTIF Fill Rates 97.50% $(1,300,000) 99.50% $(260,000) $(1,04

LABOR COSTS OF RETURNS

Customer Returns/Labor Costs 4.50% $(112,500) 1.00% $(25,000) $(8

LABOR*

Labor % 15.00% $(375,000) 4.0% $(100,000) $(27

BAR-CODE SCAN

Labor % 5.00% $(125,000) 0% $- $(12

Inventory Confidence Safety Stock $(30,000) 0% $- $(3

Safety Stock dollar value Annual Savings $(2,277

One Time savin $(30,0

CUSTOMER SERVICE3

4each


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Raw DataINPUT YOUR

1 Inventory Onhand - Average

$4,000,000.00

2 Warehouse Labor Costs (burdened)

$2,500,000.00

3 Order Sales Shipped Weekly

$1,000,000.00

4 Inven. Confidence Safety Stock

$30,000.00

5 Net inventory accuracy91.75%

6 Absolute item accuracy

88.50%

7 OTIF Rates

97.50%

8 Labor Costs - Cust Returns

4.50%

9 Labor Hrs % maintaining Inv

15.00%

10 Labor Hrs % Bar code scanning

5.00%

ThiscolumndataprovidedfromSimple

RawDatasheet


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ATA HERE

11. Per unit cost (enter) $1,000

12. Total Safety Stock % (enter) 4%

13. Per Unit Holding Costs (enter) $25.00

14. Average Profit margin (enter) 25%

15. Average Interest Rate (enter) 6%

16. A/R Days Term (20,30,45,60,90, etc.) (ente 30

17. Average Days Float on Term (enter) 10

18. Weeks of inventory on hand 3

19. Number of Inventory Turns per Year 8


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VisiblEdge Value CINVENTORY NET & Absolute*

Unit cost SS factor

1. Net item accuracy (holding cost onGood 97.85% $1,000 0.96

typical WMS rates (with 100% bar code

2. Net item accuracy (holding cost onBest 98.00% $1,000 0.96

typical WMS rates with optional Bar-co

3. Net Item accuracy (holding cost onVisiblEdge 99.99% $1,000 0.96

with VisiblEdge

4. Your Rates (holding cost only) >>> 91.75% $1,000 0.96

1. Absolute accuracy (holding cost onGood 95.00% $1,000 0.96

typical WMS rates (with 100% bar code

2. Absolute accuracy (holding cost onBest 97.00% $1,000 0.96

typical WMS rates3. Absolute accuracy (holding cost onVisiblEdge 99.00% $1,000 0.96

with VisiblEdge

4. Your Rates (holding cost only) >>> 88.50% $1,000 0.96

Performance based upon Transaction s

DiscountTerm Days

1. OTIF Fill Rates (float costs) Best 98.40% 0.015 30

Percent of Filled complete (first time)

2. Fill Rates with VisiblEdge (float cosVisiblEdge 99.50% 0.02 30

4. Your Rates (enter) (float costs) >>> 97.50% 0.02 30

LABOR COSTS OF RETURNS

1. Customer Returns/Labor Costs Best 2.60%

Percent of items returned

2. Customer Returns/Labor Costs VisiblEdge 1.00%

3. Your Rates (enter) >>> 4.50%

VisiblEdge Percent of items returned

LABOR* Percent used to validate counts, invent

1. Labor % Best 12.00%

2. Fill Rates with VisiblEdge VisiblEdge 4.00%


BAR-CODE SCAN Percent time used to search and scan

CUSTOMER SERVICE3


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1. Labor % Best 2.75%

2. Fill Rates with VisiblEdge VisiblEdge 0.00%


Safety Stock (due to inventory confidence)

2. Safety Stock with VisiblEdge VisiblEdge 0.00%

3. Your Rates >>> $30,000.00

Intangible Benefits to VisiblEdge

1 Better utilization of Bulk Storage areas - granular locating

2 Better utilization equipment with interleaving or workforce management3 less customer dissatisfaction

4 without human intervention validation

* - Based upon 2005, Seber Study, 2006 Distribution FMI Benchmark Report


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alculator

olding Cost **Estimated LOSS holding cost

$25.00 $(4,472) RAW Stats

scan at each pick movement confirm)

$25.00 $(4,160) Inventory Onhand

e scans 4,000,000

$25.00 $(21)

Warehouse Labor

$25.00 $(17,160) 2,500,000

$25.00 $(10,400)

scan at each pick movement confirm)

$25.00 $(6,240)

$25.00 $(2,080)

$25.00 $(23,920)

eed and confidence.

Float Days ****Estimated FLOAT Exposure

10 $(136,837) *expressed as float on COGS usin

discount rate defined as interest r

10 $(42,761) margin, annualized

10 $(213,807)

$(65,000)

typical WMS turns

$(25,000)

typical WMS rates with optional Bar-code scans

$(112,500)

ory and accuracy

$(300,000)

$(100,000)

$(375,000)

ar-codes


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$(68,750)

$-

$(125,000)

$- unique by company/division/site

(one time savings)

$(30,000)


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(100% - Net Accuracy) * Inventory on hand COGS

Next divide above result by your per unit cost to get # units

Next remove Safety Stock or # Units * (1-SS)

Multiply the result by the per unit holding cost to get aggregate cost

Assume on hand is 4 weeks.

Multiply the per unit aggregate cost by 13 weeks to annualize

Divide annual number by the number of inventory turns

*** assumes full manual inventory count periodic per turn

***incremental sigma with SS factored out

Short Shipments may result in short payment. The

interest earned on the outstanding monies is float

and may constitute loss. Here is how the formula works.

Take the annualized risk exposure =

(1-OTIF%) * order sales weekly * 52 = Annual Risk

Next discount it by the interest on the profit =

(profit margin * interest rate) = discount

Discount for opportunity cost = (discount / (1-discount))

Multiply out float percentage

Discount opportunity cost * (360 / (days terms - float days)

This is your float cost exposure

Assume a linear loss expectancy rate HOWEVER

Dont know when in time this occurs.

Apply the 3/5 rule to be conservative

Multiply float cost exposure by 60% = final float exposure

Assume underutilization as an expression ofholding cost removing a safety stock factor. Thisis an example of how this calculation works:


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V1 INVENTORY NET & Absolute*

Your rate our Performance

Net item accuracy holding cost 91.75% $(17,160)

Absolute accuracy holding cost 88.50% $(23,920)

2

OTIF Fill Rates interest float 97.50% $(213,807)

3 LABOR COSTS OF RETURNS

Customer Returns/Labor Costs 4.50% $(112,500)

4 LABOR*

Labor % 15.00% $(375,000)

5 BAR-CODE SCAN

Labor % 5.00% $(125,000)

6 Inventory Confidence Safety Stock $(30,000)

Safety Stock dollar value

CUSTOMER SERVICE3


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isiblEdge Value Calculator

VisiblEdge Rate With VisiblEdge stimated Saving Achievable % Factor

99.99% $(21) $(17,139) 50%

99% $(2,080) $(21,840) 50%

$-

99.50% $(42,761) $(171,046) 30%

$-

1.00% $(25,000) $(87,500) 30%

$-

4.0% $(100,000) $(275,000) 50%

$-

0% $- $(125,000) 50%

0% $- $(30,000) 75%

Annual Savings $(697,525) Annual Savings

One TimeSaving $(30,000) One TimeSavings4each


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Final Savings

$(8,570)

$(10,920)

$(51,314)

$(26,250)

$(137,500)

$(62,500)

$(22,500)

$(297,053)

$(22,500)

RTSVisiblEdgeROIcalculator

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