PLANNING 101

Oracle planning process demystified

Ram M. Pillai

Master Scheduling / MRP - Single Organization and Unconstrained planning of materials and resources ASCP - Multi Organization Planning and the option of constraint based and optimized plans

Basic Planning Logic:

Forecast: 25 Sales Orders: 10 On-hand: 20

Qty-per: 2 On-hand: 7 B C

1. Calculate Demand (25 + 10 = 35) 2. Net against existing Supply (35 - 20 = 15) 3. Plan additional supply (Planned Manufacturing Order for 15 4. Explode BOM (1 A needs 2 Cs) 5. Calculate demand (15 * 2 = 30) 6. Net against existing Supply (30 - 7 = 23) 7. Plan additional supply (Planned Manufacturing Order for 23)

Basic Planning logic involves the recognition of demands or requirements, the netting those requirements against available and scheduled quantities, and the generation of recommendations to meet those requirements.

Recognition of Demand: Demand initially starts as a statement of what a business expects to sell or ship. This type of demand is traditionally called independent demand. Independent demand determines the demand on components that are required to fulfil the same, and this demand is known as dependent demand. Independent demand is typically a combination of forecast and actual (Sales Order) demand. Depending on the stocking strategy, the mix of forecast and demand will vary. E.g. In a Make-to-Stock strategy, reliance will be more on forecasted data vis--vis a Made-toOrder strategy. The ratio of forecast to actual will also vary over the time horizon. In the near term production plan, one would rely more on actuals and in the mid and long term points of the plan rely more on the forecasts. In Oracle Applications, the forecasts that you want to use to plan, as well as the actual demand you want to recognize are stated in a Master Demand Schedule (MDS). Dependent demand is demand calculated from the explosion of the Bill Of Materials. An important premise of MRP Planning is that, dependent demand is calculated and not forecasted. It is however possible for an item to have both dependent and independent demand. Gross to Net Calculation: Once the demand is known, the next step is to determine how much of that demand can be satisfied by existing stock or existing Manufacturing Orders. E.g. You have a gross requirement for 100 units of A and you have 25 On hand, the net requirement is calculated as 75 units of A. If the demand for this hundred units are spread over a 4 week period, the on hand quantity would satisfy Week 1's demand. You will now see new planned orders being created for Weeks 2-4 for 25 units each. Recommendations: In the previous example, if there already existed a manufacturing order for 25 units in Week 3, the system would recommend you to reschedule the order from Week 3 to Week 2, to serve the demand and create new orders for Weeks 3 and 4.

Single Organization

Forecasts Master Demand Schedule (MDS) Master Production Schedule (MPS)

MRP Plan

Sales Orders

Traditional Planning

Organization 1

Organization 2

Forecasts Master Demand Schedule (MDS) Master Demand Schedule (MDS)

Forecasts

Sales Orders

Sales Orders

Advanced Supply Chain Plan (ASCP)

Forecast Terminology: Forecast Sets - A collection of Forecast names Forecast Names - A Unique Identifier for a forecast (limited to 10 Characters in Oracle) Forecast Items - Elements of a forecast

Forecast Consumption: In order to avoid overstating demand, as actual orders are booked, forecasts are typically reduced by the amount of the sales order demand. This process is called forecast consumption. The Planning Manager performs this task in Oracle. Forecast consumption reduces a forecast demand by the amount of the actual sales order demand in that period. The remaining forecast is known as the current forecast, the original forecast amount still remains available for comparison and analysis. Forward/Backward Days: Defines the window within which the forecast will be consumed. This is defined as a number of working days, as determined by the manufacturing calendar. Within this window, forecast consumption will first look backward and then forward to match the forecast with the actual demand. This is defined at the Forecast Set level. Forecast Level: You can forecast at 3 Levels Item/Organization Item/Organization/Customer Item/Organization/Customer Address MDS and MPS: A MDS is an anticipated shipment schedule; it is the statement of demand you want to recognize for a particular planning run. A MPS is a production plan, a statement of how you plan to schedule production. Parameters and Profiles: Listed below are some of the key parameters and profile options that affect the planning process. Detailed explanation for the same are available in the User Guides Planning Parameters - Planning parameters lets you specify execution defaults and repetitive planning parameters for MPS, MRP and DRP plans in each inventory organization. MRP Profiles Item and BOM attributes - Much of the detailed planning is controlled by the various item and BOM attributes. These are highlighted below General Planning Attributes Planner Make or Buy Order Quantity modifier Fixed Days Supply

Safety Stock Method, Bucket Days and Percent

MRP/MPS Planning Attributes Planning Method Forecast Control Pegging Exception Set Shrinkage Rate Acceptable Early Days Round Order Quantities Repetitive Planning attributes Calculate ATP Reduce MPS Time Fence Lead Times Preprocessing Fixed Variable Processing Postprocessing Purchasing and WIP Attributes BOM Information Operation Sequence Planning Percent Yield Material Control DRP Plan: Items that are designated as DRP planned are included in a DRP Plan. From an applications perspective, the plan type simply determines the items that will be considered in the plan, based on the items planning method. Although DRP is intended for use across multiple organizations, this plan type also uses the same planning engine as MRP.

MRP Planning process:

Define Plan Options

Alternatively, simulate the MRP Plan Generate the MRP Plan

1. Choose to launch snapshot. The snapshot process collects current inventory and order information and explodes the BOM. This ensures thatplanning is w orking w ith the current data

2. Launch Planner. The planner performs the netting and order planning

3. Plan Horizon. The plan horizon is calculated by adding the value of the MRP: Cutoff date offset months profile to the current date.

Reveiw the MRP Plan (Planner Workbench)

Implement Planning Recommendations

Advanced Supply Chain Planning: Advanced Supply chain planning (ASCP) offers marked enhancements over the traditional SCP. It offers the option of planning to material or capacity constraints (Constrained or Finite planning). You can enforce constraints selectively across the planning horizon. It also provides and automated optimization of the plans. In an optimized plan, the planning process determines the relative cost of the different options available and chooses the best alternative based on those costs. The nomenclatures of the plan types have been changed in ASCP. DRP is now known as Distribution Plan, MRP is known as Manufacturing Plan and MPS as Production Plan. The ASCP architecture is such that, it can run on a separate server from the ERP system.

ASCP Fundamentals: Multiple Sourcing Options Oracle provides sourcing rules and bills of distribution to model multiple sources, including splitting production or purchases across plants or suppliers. These sourcing rules and bills of distribution are assigned to items, organizations or categories using Assignment sets. Both souring rules and bills of distributions use effectivity dates, and for each effectivity range you define the following options for the rules Make at Buy From Transfer From

Sourcing Rules A sourcing rule is a statement of planned sources of supply. Sourcing rules can be global or local. Bills of Distribution A bill of distribution is essentially a collection of sourcing rules. Assignment Set Sourcing rules do not apply to any specific item. In order to associate an item with a sourcing rule, an Assignment set is used. An assignment set is a set of assignments that will be used in ASCP for the purpose of Global Order Promise. You can define an assignment set at the following levels Instance Instance Organization Item Instance Category Instance Category Instance Organization Item Instance Organization