Managing Sparse Items in Recurrency
Sparse items are items that have had usage or demand in 6 months or less within the past 12 months. These items pose unique challenges due to their irregular consumption patterns, making them difficult to predict accurately and often leading to manual maintenance prone to errors.
Recurrency provides a specialized solution for replenishing sparse items by leveraging automation and efficiency. By analyzing average monthly demand, the number of months with recorded demand, and lead time, Recurrency helps ensure optimal stock levels are maintained for these items.
Why are Sparse Items Managed Differently?
By managing sparse items differently, organizations can optimize inventory levels, ensuring that the right stock is always available. The focus for these items is to maintain a predetermined number of months of demand in stock, minimizing the risk of stockouts.
Understanding Sparse Items in Recurrency
In the Demand Planning module under the Planning tab, users can filter by "Demand Pattern" to easily identify sparse items. Recurrency analyzes the last 12 months of usage data to calculate:
Typical Demand Quantity: The maximum value between the median and mode monthly usage, excluding months with zero usage.
Months with Demand: The number of months an item has had recorded demand in the past year.
Lead Time: The time it takes for new stock to arrive.
💡 Note that safety stock, order cycle, and Recurrency forecasts do not impact Sparse Items calculations. Additionally, when an item exhibits more than 6 months of demand within the past 12 months, Recurrency automatically updates its demand pattern classification accordingly.
Organizations can set the desired number of months of stock for each combination of lead time and months of demand.
Adjusting Organizational Settings
💡 Sparse item parameters are set at the company level. Only Admins have the ability to adjust parameters.
When defining the organization's desired months worth of stock, it’s important to consider your inventory management goals. For instance, if an item can be replenished quickly (in under two weeks), evaluate whether your priority is to minimize held inventory—potentially resulting in slight wait times for customers—or to maintain a small stock on hand to enhance fill rates, even if it means holding slow-moving inventory.
Organizations can adjust these settings to balance priorities like minimizing held inventory with increasing service levels. This strategic approach enables tailored management of sparse items, ensuring that inventory practices align with your overall business objectives.