Featured
Author - Dr.
Scott Hamilton
- March 24, 2004
Understanding Planning Calculations
The
S&OP game plans can be expressed as master schedules for stocked items and a
finishing (or final assembly) schedule for make-to-order manufactured items.
These game plans drive coordination of supply chain activities based on planning
calculations. The single term planning calculations refers to two major
tasks termed the forecast scheduling task and the master scheduling
task. Further explanation starts with the demands and supplies considered by
the planning calculations. The separate tasks will then be explained, along
with several guidelines for planning calculations.
Sources
of Demand and Supply
The
sources of demand and supply are summarized in figure 5.1. The previous section
covered several sources of demand such as sales orders and sales forecasts,
and how the system handles the combination of actual and estimated demand through
forecast consumption logic.
Figure 5.1 Sources
of Demand and Supply
Other sources of demand shown in figure 5.1 include un-posted inventory journals, component requirements stemming from production orders, and transfer order requirements. The sources of supply include on-hand inventory, quarantine inventory, and scheduled receipts reflecting purchase orders, production orders, transfer orders, and un-posted inventory journals. These sources of demand and supply are covered in future chapters, but are introduced now to understand the basics of planning calculations. Planning calculations can selectively include or exclude some of these sources of demand and supply.
Master
Scheduling Task
The
master scheduling task represents the primary engine for coordinating supply
chain activities. As shown in figure 5.2, the master scheduling task uses information
about demands and supplies and a set of master plan policies to calculate material
and capacity requirements (termed a set of master plan data or requirements
data). It also generates planned orders and action messages to synchronize
supply chain activities.
Figure 5.2 Overview
of Planning Calculations
The master scheduling task includes order point, MRP and DRP logic, finite and infinite scheduling logic for production orders, and vendor selection logic for planned purchase orders. It reflects the calendar of working hours assigned to each warehouse, customer, vendor, and work center. The master scheduling task employs a set of master plan policies to calculate a set of master plan data. For example, these policies specify the selective consideration of demands and supplies. They specify the scheduling method and use of finite scheduling logic for planned production orders. They also indicate the selected set of forecast plan data and the forecast consumption approach.
The system supports multiple sets of master plan data and associated master plan policies for simulation purposes. However, the displayed data reflects several company-wide policies such as the selected sets of data for the current master plan and forecast plan. Using this displayed data, the system helps coordinate supply chain activities through planned orders, suggested action messages, and capacity requirements planning.
Forecast
Scheduling Task
The
forecast scheduling task represents a second coordinating engine, as
shown in figure 5.1 when forecasted demands are applicable. It calculates forecasted
demand (termed a set of forecast plan data) based on a set of policies
such as a time horizon and the relevant forecast identifier. Forecast scheduling
must be performed after changing forecast information so that the master scheduling
process recognizes forecasted demands. Multiple sets of forecast plan data can
be calculated, typically to reflect various scenarios for simulation purposes.
A set of forecast plan data represents gross requirements, whereas a set of
master plan data represents net requirements.
Suggested
Actions
The
master scheduling task generates suggestions about planned orders and existing
orders.
This
is Part Two of a four-part excerpt from the book Managing Your Supply Chain
Using Microsoft Axapta by Dr. Scott Hamilton.
The
book can be ordered on amazon.com.
Part
One began the discussion of "Sales and Operations Planning".
Part
Three will present "Common Scenarios".
Part
Four will propose "Guidelines and Case Studies".
Reprinted
with permission from McGraw-Hill
Considerations about the Master Scheduling Task
Explanations about an item's planning data provided some baseline considerations. Additional considerations include the master plan policies, pegging information, realistic scheduling assumptions, vendor selection for planned purchases, and master scheduling with two sets of data.
Master
Plan Policies. The master plan policies allow the selective consideration
of demands—such as forecasts, sales order quotations, and CRM quotations—in
planning calculations. Ignoring these demands provides one view of the minimally
required activities to meet current sales orders. Other master plan policies
ensure that the requirement dates associated with unrealistic sales order commitments
are automatically updated based on projected completion dates. Another policy
determines whether planning calculations are based on infinite or finite capacity
planning.
Realistic
Scheduling Assumptions for Planned Orders. Several policies ensure
that the master scheduling task generates realistic suggestions about planned
orders. A realistic planned order, for example, reflects the item's lead-time
and a start date no earlier than today's date. A planned production order reflects
variable lead-time and optional consideration about finite material and capacity.
When a requirement date cannot be met, the system suggests a projected completion
date.
Automatic
Vendor Assignment for Planned Purchase Orders. The suggested vendor
for a planned purchase order can be based on purchase price trade agreement
information, using either the lowest price or delivery lead-time to suggest
the vendor.
Pegging
Information about the Source of Demands and Supplies. Analysis of planned
orders and action messages typically requires pegging information about the
source of demands and supplies. The system supports single-level pegging (via
a Requirements Profile form) and multi-level-pegging (via an Explosion form).
Master
Scheduling with Two Sets of Data. So far the explanations have focused
on using a single set of data as the current master plan, since this is applicable
to many environments. With the system's approach to sales order delivery promises,
some environments are better served by two sets of master plan data, as described
in the next section.
Considerations about Delivery Promises on Sales Orders
Realistic
delivery promises for a sales order line item can be calculated, with optional
updating of the sales order delivery date. The calculations represent a combination
of available-to-promise (ATP) and capable-to-promise (CTP)
logic. That is, the calculations consider on-hand inventory and scheduled receipts
(ATP logic), and automatically consider the item's lead-time (CTP logic) when
inventory and scheduled receipts are insufficient. These calculations apply
to the multilevel product structure for a manufactured item. In addition, the
planning calculations automatically update projected completion dates so that
delivery promises can be kept up-to-date.
The system's approach to making sales order delivery promises involves the generation of planned orders that will be needed when inventory and scheduled receipts are insufficient. The system immediately communicates the need for planned orders so that planners and buyers can take the appropriate actions. Alternatively, the order entry person can immediately generate actual production and purchase orders from these planned orders.
Some
sales order environments involve multiple checks of delivery promise information,
and even deletion of the sales order when the customer finds them unacceptable.
Since the system's approach to delivery promises involves the immediate generation
of planned orders, buyers and planners can have difficulties in determining
appropriate actions for planned orders, especially when planned orders are constantly
changing. One approach to handling this problem involves two sets of data termed
the static master plan and dynamic master plan. The static
master plan contains the results of the previous master scheduling task that
generated suggestions about planned orders. The dynamic master plan starts with
the same set of data, but is continuously updated by new sales order commitments.
This approach supports insulates buyers and planners from planned orders stemming
from delivery promise simulations.
This
concludes Part Two of a four-part excerpt from the book Managing Your Supply
Chain Using Microsoft Axapta by Dr. Scott Hamilton.
The
book can be ordered on amazon.com.
Part
One began the discussion of "Sales and Operations Planning".
Part
Three will present "Common Scenarios".
Part
Four will propose "Guidelines and Case Studies".
Reprinted
with permission from McGraw-Hill
About
the Author
Dr.
Scott Hamilton has specialized in information systems for manufacturing
and distribution for three decades as a consultant, developer, user, and researcher.
Hamilton has consulted worldwide with over a thousand firms, conducted several
hundred executive seminars, and helped design several influential ERP packages.
He previously co-authored the APICS CIRM textbook on How Information Systems
Impact Organizational Strategy and recently authored Managing Your
Supply Chain Using Microsoft Navision. Hamilton is currently
working closely with Microsoft partners involved with manufacturing and distribution,
and can be reached at ScottHamiltonPhD@aol.com
or 612-963-1163.