Location Clusters and Supplier Clusters
FIRM uses the concept of supplier clusters and location clusters. A supplier cluster is a
collection of parts from a particular supplier. A location cluster is a collection of locations.
When one store operates independently, the location cluster has only one location. When the
total market is separated into five regions and each region has a distribution center, the location
cluster has five locations.
Cluster Buy is run when parts are stocked in location clusters that have more than one
location. It is noted where one location is chosen as the master location. Each location is
assigned a distribution level (non-stock, stock and 2- level- service). The cluster is assigned
a distribution type (master location buys for all, each location buys separately). Cluster Buy
coordinates the buy decisions across the locations in the cluster, and this depends on the
relationships of a part with the location cluster and with each location in the cluster. Cluster
Buy ensures the locations are adequately stocked and conform to the respective part- location
and part -location cluster relationships.
Transfer processes each part in a location cluster searching for mal-distribution situations.
The system scans all of the locations in the cluster to determine how much stock to transfer and
which locations are short of stock and which locations have excess stock to send. The
locations to receive and send are chosen to minimize the number of lines of transfer to a
receiver. Whenever possible the senders are selected from a sequenced list of preferred
sender locations for each receiver location.
Share pertains to a particular location cluster and supplier cluster and a specific location called
a share location. The routine scans each part in the supplier cluster to determine if any excess
stock is in the share location. If excess stock is found, the routine determines how to spread
this stock to the other locations in a fair share manner.
Allocate processes those parts where a replenish quantity is received from the supplier and the
quantity is to be shared by the locations in the cluster. The current inventory is compared with
the safety stock, the forecasts and other requirements by location to determine the fairest way
to allot the new stock to the locations. This process is important to avoid mal-distribution of
stock in the cluster.