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Optimizing the Supply Chain in Odoo

Challenges within the supply chain?

Within Odoo, every process step can be configured to ensure proper continuity of the entire supply chain, also known as the production chain. This includes, among other things, carrying out purchases on time, entering lead times, taking internal production time into account, and of course delivery to the customer. If a delay occurs in any of these steps, it can have a direct impact on the supply chain; everything is interconnected. By properly setting up data fields and safety margins, disappointments become a thing of the past and promises made to the customer are kept.

Within Odoo, various data fields are used. Filling in these data fields realistically is of great importance for a smooth supply chain. If unrealistic data fields are entered, the chain will quickly become congested and work will pile up. 

If a delay arises at the supplier, the customer must be informed immediately. If safety margins have been defined, it is important to inform the customer when these are exceeded. Timely communication creates understanding; if delays are not communicated, friction can arise. With Odoo, you can stay ahead of this.

Various data fields in Odoo

In Odoo, various safety margins can be entered so that the supply chain remains intact, without bottlenecks. These margins can be configured in Odoo under Inventory and advanced scheduling.

Take, for example, the ‘sales security lead time’. Here, the number of days can be entered that serves as a margin of error on the promised delivery date to the customer. If a delay occurs, this margin of error absorbs the delay without direct consequences for the chain and promises made to the customer.

In addition, a margin can also be entered for the number of days needed to purchase components. Depending on the capacity of the relevant purchasing department, a purchase order is confirmed within a certain time frame. Make sure to allow enough margin here. If a company works with minimal stock and purchases are made weekly, enter this margin as realistically as possible for the continuity of the chain.

There may also be a ‘purchase security lead time’. In this case, receipts are scheduled earlier to prevent possible delays. Any delay from the supplier is absorbed so that there will be no consequences for the further progress of the shipment.

Odoo - Overview of advanced scheduling safety margins

Data fields at product level

Various data fields can be entered on the product card. This includes, among other things, delivery time to the customer, supplier lead time, and production times. Here too, the margins must be entered as accurately as possible in order to keep promises.

Purchases are made at product level, but also at bill of materials level when it concerns a ‘manufactured product’. When adding a supplier, the price and lead time are entered. This lead time is separate from the margins mentioned in the configuration, as those are the (additional) safety margins. 

Specific receipt date

It may happen that customers want to receive a product on a specific date. When creating the order, a specific delivery date can be selected under ‘other info’. Odoo then automatically calculates backward based on the various data fields and ensures proper follow-up of the supply chain. An example is given below:

Customer Jansen orders a product from his supplier on March 31 and indicates that he wants to have it by May 31 at the latest. Because of the various safety margins, Odoo will calculate backward to determine when a purchase must take place. Upon receipt of the product, it is prepared for shipment to customer Jansen. Thanks to the ‘sales security lead time’, the product is shipped on time and delivered no later than May 31. With a margin of two days, Mr. Jansen may therefore receive the product as early as May 29.

The example above shows that Odoo itself recalculates the data fields. If a product needs to be delivered faster than specified on the product card and in the configuration margins, it would therefore have had to be ordered in the past already. Of course, that is not realistic in practice, resulting in the supply chain ‘getting stuck’ and there being no ‘smooth’ process. Some flexibility is required (such as manual actions) to still serve the customer, given that ordering deadlines have passed.

It is advisable to analyze the data fields in Odoo afterwards and make adjustments toward a situation that better matches practice (including margins to continue guaranteeing the continuity of the supply chain).

A manufacturing order

A product that consists of various components and needs to be manufactured has a bill of materials. These components are ordered separately and, once complete, ‘manufactured’ into one whole. Here too, extra time is allocated.

The various ‘raw materials’ can have different lead times. The number of days until delivery to the customer must therefore be greater than the lead time of the components to be ordered.

The product card also indicates, under Inventory, the number of days required for production. Only after this is the ‘saleable product’ prepared for shipment.

Shipping the order

The final step in the chain concerns shipping the order. The sales security lead time ensures that the delivery is sent to the customer on time. The promised date is therefore guaranteed as well as possible. If a delay occurs at an earlier stage in the chain, there is still a buffer here as well. 

If a delay arises with the carrier, this margin may already have been consumed by circumstances earlier in the chain. It is advisable to analyze where the majority of customers are located and possibly adjust lead times and margins accordingly. The carrier may be involved in this, or special arrangements can be made. 

Finally, controlling the supply chain is a challenge involving, among others, the company, the supplier, and the customer. The shared goal is to bring value and efficiency together. With Odoo, you have come to the right place! 

Optimizing the Supply Chain in Odoo
Odoo Experts April 24, 2021
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