To many people, par is just the target number of attempts for each hole in a game of mini golf, but to those in healthcare inventory manage, PAR means so much more. Periodic Automated Replenishment, the method of restocking the items in a PAR location, has many functions in common with Min/Max inventory management. It is a shame that most implementers relegate PAR to hospitals, and Min/Max to warehouses. In this article, I review some of the key functions and differences and make the case for implementing PAR in most clients, alongside Min/Max. Now that Oracle has launched their Mobile Inventory application, which includes effortless entry of PAR counts without requiring subscriptions to third party RF device providers, every Oracle Fusion Cloud customer can consider how PAR could support their operations.
Traditionally, PAR is used for expensed items: large quantity, high turnover, low individual value and therefore, not tracked in inventory as individual units–atleast after a certain point. That is, the items in a PAR location may be inventory items in a warehouse where they are stored in pallets, but get expensed out when they are delivered in smaller bin quantities to a PAR location.
Min/Max is used for inventoried items: large or small quantity, with more moderate turnover, a higher total value. Because these are inventoried, the system always knows the current on hand quantity, which is incremented or decremented by inventory transactions such as receipts or issues. Therefore, at any time a Scheduled Process can be run which compares the current stock, minus planned demand within a time horizon, plus planned receipts within a time horizon, to a Minimum stock level, and plan a reorder to return to a Maximum stock level, possibly with Order Modifiers that ensure we order atleast some minimum order quantity, and in a set multiples quantity.
Consider the situation where there are 10 items on a shelf, but pick lists generated to take 3 and issue them out of the system, and planned deliveries from the supplier of 5. The effective on hand quantity is 10-3+5=12. If our Min is 15, our Max is 25, Minimum Order Quantity is 10 and Fixed Lot Multiple is 2, the system calculates that we need to order 25-12=13, which is greater than MOQ of 10, but it’s not in multiples of 2. Depending on your configuration, you can have the system round up or down, so we would order either 12 or 14.
There are some useful tools where Oracle can help you determine the appropriate Min and Max levels; and those levels may be set at the organization or subinventory levels. In many situations though, organizations plan their Min and Max and Order Modifiers in a simple or manual calculation outside of Oracle.
By contrast, PAR does not know the current on hand quantity for expensed items, the traditional use case. Unlike Min Max, which tends to have very controlled access to the inventory, PAR items may be grabbed at any moment without a transaction occurring–expensed items don’t exist for a transaction to occur. Instead of comparing on hand to the stock level by running a job, a user visits the subinventory and enters a PAR Count. That PAR Count may take 3 different forms, the first of which behaves very much like Min Max: On Hand Quantity
If you Enter Count Quantity, then the system performs the calculation between PAR Max – PAR Level. This simple calculation doesn’t include demand, supply, or order modifiers. This is because PAR is usually used for items with a short replenishment timeline–shorter than the time until the next count, so there is no need to consider supply. It’s for the last step in the supply chain, for expensed items, so there is no need to include demand documents either. And, as a low quantity location, the expectation is that suppliers or internal supply sources can supply even very small orders like a single unit if necessary, so order modifiers are not required either.
The next count type option is Order Par, and this does not require entering a count quantity at all. Think of it as a single button that orders a preset quantity, the value entered in the PAR level field, every time you hit it. This is analogous to “two bin” replenishment, and similar to Kanban as well. Practically speaking, this looks like a bin of small parts that is so difficult to count, that it’s better just to have 2 bins, with the second bin sized enough to handle atleast the normal count frequency, such as daily or weekly. When the first bin is empty, you open the next, and on that next count, enter Order Par to trigger you to send an extra bin so you have 2 again.
The final count type option is Order Quantity, and this one is also simple, but requires you to enter a quantity. Here, you aren’t confirming the actual on hand, nor are you simply ordering a predefined quantity. It behaves more like a requisition, ordering the quantity you enter.
The good news is, while you can default the count type for a subinventory, you are not limited to this, and can set unique settings for each item in the location. Better still, you can configure to allow a user to override; so if you normally do On Hand Quantity, but need to order extra for a long weekend, you can override and count as Enter Quantity. Finally, you can enter the counts using Oracle’s Mobile Inventory solution, which is HTML based and included with inventory licenses at no extra cost, and works on nearly any device that is internet enabled. But, you can also enter these with an Excel spreadsheet using Oracle’s Visual Builder Add in for Excel tool.
You can easily see then, that we can make this tool behave like Min/Max, with significant additional flexibility, and only a few limitations. While you may have been scared to venture beyond Min/Max before, I hope you can now see that many industries have strong applications for PAR. Consider a manufacturing facility with cleaning and preparation supply closets near the assembly lines, which are replenished daily or weekly from their central warehouse; or a research lab with supply closets on each floor. In the past, they have either overburdened users making them enter internal requisitions, or used cycle counts to decrement the inventory.
Last year, I dedicated some time to building an iPhone application that lets users enter cycle counts, physical inventory, and PAR counts. It was designed to be sufficient for actual production use, but it really shines for testing, where it enabled users to create PAR items, edit PAR details, enter PAR counts and override the count type from a single screen.
Oracle followed suit with their Mobile Inventory application, which lacks some features like count calculators and the ability to edit PAR location details from the same screen, but improves on the production stability front. There is no need to pay for additional licensing like RF Smart for most clients, and therefore, no longer any significant barriers to beginning to use PAR inventory in your business today.
What opportunities do you see in your business or clients to implement PAR alongside Min/Max inventory?