ASCP Recommendations Influenced

by Order Modifiers for Make Items

Sankar Das
BearingPoint Inc.
Agenda
l ASCP Process Overview
l Manufacturing Scenarios
l Planning Parameters
l Item Parameters
l Order Modifiers
l Suggested Parameters for MTO and MTS Items
l Q&A
ASCP Process Overview
MTO & MTS
Products

A B C D E F
Raw and
com ponent
suppliers
Plant Distributors End Users
50% Stores
DCs Customer
25% 50% Custom er
98%
DCs
100 75% 100%
%

2% Qty = 5
 Manufacturing Scenarios
• Make to Order (MTO)
Some manufacturing units manufacture products only against
customer orders. This is an example of make to order (MTO)
scenario. In case of MTO products manufacturing lead time
need to be low enough to meet the customer requirements.
However organizations may stock sub assemblies used in
multiple finished products to enable them to satisfy customer
demand within a reasonable time.
Manufacturing Scenarios
• Make to Stock (MTS)
Products are also manufactured in advance expecting future
customer orders. This is the example of make to stock (MTS)
scenario. Organizations making MTS products are very much
dependent on forecast. In such cases forecast accuracy is a
very important factor to maintain a cost effective operation.
There are manufacturing units which has both MTO and MTS
type of products.
Manufacturing Scenarios
MTO & MTS Decision Factors
Depending on different factors like manufacturing lead time,
product cost, market demand, competitor’s capability, storage
space, change over time, change over cost etc,
manufacturing organizations decide to operate the plant as
MTO or MTS. The item parameters are to be set accordingly
so that the recommendations provided by ASCP support
MTO or MTS strategy.
Planning Parameters
Planning Parameters
• Demand Time Fence Control
When this parameter is set ‘Yes’, ASCP will drop all forecast
within the demand time fence period. The demand time fence
days can be set at item-organization level. Organizations
having MTO products will set this parameter ‘Yes’. Even when
the Organizations have MTS products, this parameter can still
be set ‘Yes’ and the demand time fence days for all the items
can be set zero.
Planning Parameters
• Planning Time Fence Control
Planning time fence days can be controlled at item-
organization level. MTS type manufacturing units having
higher change over time may not like to change any
production scheduling within the planning time fence. For such
requirement the ‘Planning Time Fence Control’ can be set as
‘Yes’. In case organizations like to ship all sales order within
due date (Enforce Demand Due Date – EDD type plan),
‘Planning Time Fence Control’ should be set as ‘No’ unless
the ship date for customer orders is always promised beyond
planning time fence days.
Planning Parameters
• Append Planned Orders
When this is set ‘No’, the plan output do not recommend
additional planned orders for additional demand. In both MTO
and MTS manufacturing scenarios to take care of additional
demand it is suggested to set this parameter as ‘Yes’.
• Overwrite
This option works along with ‘Append Planned Orders’.
Normally ‘Append Planned Orders’ is set ‘Yes’ for planning
MTO and MTS products. ‘Overwrite’ has three different options:
‘All’, ‘None’ and ‘Outside Planning Time Fence’.
Planning Parameters
Overwrite – All
When option ‘All’ is used every time the plan runs all firm
and un-firm planned orders are overwritten. MTS types of
product are manufactured as per forecast in advance. As
forecast is not adjusted frequently, a production schedule is
prepared and it is not suggested to change the firm planned
orders every time the plan runs. Thus in MTS scenario
‘Overwrite’ option normally will not set as ‘All’. However
MTO type of manufacturing plants may need to support
immediate customer requirements or change in customer
orders. To support a rapid order change process it may be
required to change the production scheduling frequently and
so ‘Overwrite’ option can be set as “All’.
Planning Parameters
Overwrite – None
‘Overwrite’ option ‘None’ means every time the plan runs all
firm planned orders is retained as it is. The un-firm planned
orders however are deleted. For MTO type of products due
to change in customer orders this option may result in
additional stock and thus may not be a best option. For MTS
type of product when there is no fixed days of production
scheduling process, ‘Overwrite’ option ‘None’ may be used.
Planning Parameters
Overwrite – Outside Planning Time Fence
‘Outside Planning Time Fence’ is an option in between
‘None’ and ‘All’ and may be suitable for most of the MTO,
MTS scenarios. When ‘Overwrite’ option is set as ‘Outside
Planning Time Fence’, every time the plan runs all firm
planned orders within the planning time fence days as
defined for the specific items are retained as it is. Firm
planned orders beyond planning time fence days and all un-
firm planned orders beyond and within planning time fence
are deleted. This option will keep the production scheduling
intact for certain days decided by the planning time fence of
respective items.
Item Parameters
Item Parameters
Item Parameters
• Inventory Planning Method
‘Min-Max’ and ‘Reorder point’ plan are known as ‘Inventory
Planning’ method. Unless there is any specific requirement
items which are planned by ASCP are set as ‘Not Planned’.
• Make or Buy
For all manufactured items this is to be set as ‘Make’.
• Planning Method
Unless MPS planning process are used, the planning method
may be set as ‘MRP/DRP Planned’ so that ASCP can plan
these items in both MRP and DRP planning processes.
Item Parameters
• Planner
Planners are persons in the manufacturing organization
responsible for planning. A person can be associated with
one or multiple planners. Sometimes planners are configured
as departments. Planner can be used for grouping of items
during releasing from planner work bench. Planners are also
used for move order transaction. Planner specific folder will
help planners to restrict view of items in the planner work
bench for which the planner is not responsible. As planner
may vary for same MTO, MTS or Sub-Assembly, planner
code may be excluded from the basic item templates.
Item Parameters
• Safety Stock
(1) Non MRP Planned - MTO products are manufactured
against sales order and safety stock is not maintained.
‘Safety Stock’ option for MTO products can be set as ‘Non
MRP Planned’. In case of MTS items there may be a
requirement of maintaining safety stock. This safety stock will
bridge the gap created by forecast inaccuracy or will absorb
the shock partially or completely due to sudden customer
demand. There are two different ways to set the safety stock
level (a) MRP Planned Percentage and (b) Fixed Safety
Stock Level.
 Item Parameters
(2) MRP Planned Percentage - MRP Planned Percentage
method is a dynamic way of setting safety stock value. Every
time the plan runs the safety stock level is calculated on the
basis of the percentage of the average demand over a
predefined period. The percentage and the period can be set at
item organization level through ‘Bucket Days’ and ‘Percent’ item
parameter under General Planning Tab. This option may not be
suitable when there are space constraints for stocking of
inventory. Under such circumstances organization would like to
maintain safety stock at a fixed value and the safety stock item
parameter is to be set as ‘Non MRP Planned’. The safety stock
level is to be set at user defined item safety stock. Depending
on business requirements safety stock levels are reviewed and
adjusted from time to time.
Item Parameters
• Forecast Control
There are three options for forecast control (1) ‘None’, (2)
‘Consume’ and (3) ‘Consume and derive’. For MTS and MTO
product scenario ‘Consume and derive’ may be used.
• Pegging
There are different options for setting up pegging at item level.
The pegging output is influenced by other profile options and
pegging option as set in the planning parameter definition.
‘Hard Pegging’ are normally used only in case of project
manufacturing scenario. The most flexible way to set the
pegging at item level for both MTO and MTS products is ‘End
Assembly / Soft Pegging’.
Item Parameters
• Round Order Quantities
This is used to avoid decimal numbers. Once this is set ‘Yes’,
planned orders are recommended as rounded up to next
whole number.
• Planning Time Fence (PTF)
Planning time fence may be decided by the production
scheduling sequences for the specific items. Production
scheduling is indicated by firming the respective planned
orders. In case the plant uses a specific production scheduling
pattern such as scheduling three days in advance, ‘User –
Defined’ planning time fence would be a better choice. PTF is
low in case of MTO and high for MTS products.
Item Parameters
• Demand Time Fence (DTF)
For MTO products the DTF is to be set high enough (at least
greater than planning time fence for scheduling only against
customer orders) so that ASCP does not provide any
recommendation in near term against forecast. However
higher planning time fence will drop the forecast and
consequently the dependent demand for sub assemblies and
purchased items. Unless there is any specific requirement like
planned production output being used for promising shipment
date to customer, for MTO products the demand time fence
may be set same as planning time fence days. Demand time
fence for MTS product are normally set as zero.
Order Modifiers
Order Modifiers
• Order Quantity Minimum
To reduce the product changeover cost and time certain
products may always run for some minimum time or quantity.
Once this is set, ASCP will recommend planned orders at
least for ‘Order Quantity Minimum’ quantity as set for the
respective items and will adjust quantity with future demand.
‘Order Quantity Minimum’ are normally set for MTS but not
for MTO products.
Order Modifiers
• Order Quantity Maximum
There are different reasons like limited storage capacity or
requirements of product mix up plant may not be running
some products longer than specific maximum time or quantity.
ASCP will not recommend any single planned order more than
the ‘Order Quantity Maximum’ value. ‘Order Quantity
Maximum’ may be set for both MTS and MTO products.
• Fixed Order Quantity
‘Fixed Order Quantity’ are used only when products are run for
a fixed amount of time. This parameter is normally set for MTS
but not for MTO products. Once ‘Fixed Order Quantity’ is set
for an item, normally no other order modifiers are set for the
specific item.
Order Modifiers
• Fixed Days Supply
This parameter is widely used when organization runs
product at certain frequency for both MTS and MTO
products. ASCP combines all the requirements for the
number of days as set in ‘Fixed Days Supply’ and
recommend a single planned order. For MTO products
‘Order Quantity Maximum’ can be set simultaneously with
‘Fixed Days Supply’. In case of MTS products ‘Fixed Days
Supply’ can be used along with ‘Order Quantity Minimum’
and ‘Order Quantity Maximum’. ‘Fixed Days Supply’ is
normally decided by the production frequency of the item.
Order Modifiers
• Fixed Lot Multiplier
This parameter is used when products are manufactured in
multiple of specific quantity decided by truck size, pallet
size, bundle size, packing size etc. Depending upon the
situation this may be set for both ‘MTO’ and ‘MTS’ products
and can be used with ‘Order Quantity Minimum’ , ‘Order
Quantity Maximum’ and ‘Fixed Days Supply’.
 Suggested Parameters - Planning
Parameters Make to Stock Make to Order
(MTS) (MTO)
Demand Time Fence Yes
Control
Planning Time Fence For EDD plan set ‘No’. For other type set
Control as required
Append Planned Yes
Orders
Overwrite As Required
 Suggested Parameters - Items
Parameters MTS MTO
Inv Planning Method Not Planned
Make or Buy Make
Planning Method MRP/DRP Planned
Planner As Required
Safety Stock As Required Non MRP Planned
Forecast Control Consume and derive
Pegging End Assembly / Soft Pegging
Round Order Quantity As Required
Planning Time Fence User Defined -High User Defined – Low
Demand Time Fence Zero Same as PTS
Suggested Parameters – Order Modifiers
Parameters MTS MTO
Order Quantity As Required Null
Minimum
Order Quantity As Required
Maximum
Fixed Order Quantity As Required. Null
Others are null
Fixed Days Supply Number of production frequency
days
Fixed Lot Multiplier As Required
 Q&A
sankar.das@bearingpoint.com