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Articles about SCM and AX

Some Common S&OP Scenarios


Basis of
Key Elements of
Scenario Additional Considerations Delivery
S&OP Game Plan Promises

Coverage Code = Period


Make-to-Stock
Demand Forecast Forecast consumption by sales orders ATP
End-Item Using an inventory plan (safety stock)
No Link to Sales Order

Make-to-Order Sales Order


End-Item for End-Item CTP

with Coverage Code = Period


Stocked Demand Forecast Forecast consumption by all demands
for stocked components
Components Using an inventory plan (safety stock)
Forecasts & Shipment
Sales Orders & Invoice
Lead Time

Demand ~ 100 Units/Week


End Item
3 Days Final Assembly 10 Units/Hour

Intermediate
3 Days
Subassembly 10 Units/Hour

Raw
3 Days
Material

Manufacturing Site
Policies for a set of Master Plan Data

Special Cases
APS
Logic

Demand
Forecasts
Policies for a set of Master Plan Data
Understanding the time fences

APS Logic

Special
cases

Assumptions about
a perfect world,
for selected items
Basic Question:
Parameters for Master Planning 1 vs 2 Master Plans

A key basis for the


Rescheduling Assumption
& the Advance Action Message

12
Related Policies for an Item
Reduction Principle
Applicable Reduce Forecast By Estimated
and Description
Reduction Key = Sales Orders Usage

1 Transactions – Reduction Key


Sales orders consume demand forecasts Yes Yes > 80%
within specified forecast periods
- Using a Reduction Key with a fixed start date
- Using a Reduction Key with a floating start date < 5%
2 Transactions – Dynamic Period
Sales orders consume demand forecasts N/A Yes < 10%
within implied forecast periods
3 None
Manually adjust demand forecasts N/A N/A < 5%
to reflect forecast consumption
4 Percent – Reduction Key
Automatically reduce demand forecasts Yes N/A ~ 0%
within specified forecast periods
= Dominant Business Practices
Delivery Date
Scenario Comments
Control Option
Use Basic Rules Auto-assign requested dates based on basic rules
Sales Lead Time or Enforce basic rules for manually entered dates*
Quoted Lead Time Analyze supplies using ATP form or Supply Overview form

Auto-assign requested dates based on basic rules + ATP logic


MTS or MTO
ATP Enforce basic rules + ATP logic for manually entered dates*
End-Item Analyze supplies using ATP form or Supply Overview form
Delivery Date
Scenario Comments
Control Option
Use Basic Rules
Sales Lead Time or

Quoted Lead Time

MTS or MTO
ATP
End-Item

MTO/CTO Auto-assign requested dates based on basic rules + CTP logic


CTP Enforce basic rules + CTP logic for manually entered dates*
End-Item
Allow Unrealistic
None Ignore basic rules for manually entered dates
Dates

Sales Lead Time Enforce basic rules for manually entered dates
MTO/CTO/ETO
with CTP Logic via Requires a user-initiated net change explosion, and you can
Net Change Explosion End-Item transfer the calculated futures date to the confirmed ship date
Common S&OP Scenarios
Basis of
Key Elements of
Scenario Additional Considerations Delivery
S&OP Game Plan Promises
Coverage Code = Period
Demand Forecast Forecast consumption by sales orders
Using an inventory plan (safety stock)
Make-to-Stock
Coverage Code = Min-Max ATP
No Link to Sales Order

End-Item Min-Max Quantities


Calculation of minimum quantity
Manual
Coverage Code = Manual or Period
Master Schedule
Completely
Sales Order Coverage Code = Period or Requirement CTP
Make-to-Order
Make-to-Order Sales Order Coverage Code = Period or Requirement or
End-Item for End-Item
Coverage Code = Period
Demand Forecast
with Forecast consumption by all demands CTP via
for stocked components
Stocked or Using an inventory plan (safety stock) Net Change
Components Min-Max Quantities Coverage Code = Min-Max Explosion
for stocked components Calculation of minimum quantity
Common S&OP Scenarios with Linkage to Sales Order
Key Elements of
Scenario Variations in Creating Linked Orders
S&OP Game Plan Approach
Create production order from the Automatic
With Linkage to Sales Order

Make-to-Order or sales order line Marking


Configure-to-Order Sales Order Firm a planned production order Update Marking
End-Item for the End-Item stemming from sales demand Policy = Extended
Manually identify linkage between Manual
with orders for an actual cost item Marking
Stocked Demand Forecast
Firm a planned production order Update Marking
Components or Min-Max Quantities for a stocked component Policy = No
for stocked component
or with
Make-to-Order Reference Order Auto-create the production order Automatic
Components for pegged supply component for a pegged supply component Marking
Identify Linkage via Reference Fields
Marking
Companywide Site-Specific Site/Warehouse
Policies Policies Policies
Relevant Inventory Dimensions Specify
Planning Data for Manufactured Items

For Coverage Planning Policies


Specify BOM as Specify BOM as
BOM Version Company-Wide Site-Specific
N/A
Specify Routing as
Route Version N/A Site-Specific
Primary Source of Supply
(Planned Order Type = Production)
Coverage Code (Reordering Policy)
N/A
Action Message Policies Override
Specify
Coverage Group (Set of Policies) Act as Defaults

Production Lead Time


(when routing data does not apply) Override
Order Quantity Modifiers for Production Orders N/A
Minimum Quantity (Safety Stock) N/A Specify
N/A
Planner Responsibility Specify N/A

Use Released Products form Use Site-Specific Use Item Coverage


or Default Order Settings Order Settings form form
Planning Data
Logic Coverage Code Primary Order Qty
Safety Stock
Basis and its significance Parameters Modifiers**
Min-Max
Order
Point

Minimum Quantity
Suggested order quantity achieves maximum Multiple N/A
Maximum Quantity
subject to order quantity multiple
Period Minimum
MRP

Period Size Minimum


Suggested order quantity covers demands Multiple
(in days) Quantity*
in period subject to order quantity modifiers Maximum
Minimum
Planning Driven

Requirement
Manual Order

Minimum
Suggested order quantity covers one Multiple
Quantity*
demand subject to order quantity modifiers Maximum

Manual N/A N/A N/A


No suggested orders
Suppress Messages

Tolerances

Assumption about
a Perfect World Look-Ahead Horizon
based on
Futures Messages
Message Filters
Message Significance
Tolerance Suppress Horizon
Advance
Advance Expedite the order to an earlier date Tolerance Yes/No
(in days)
Postpone
Postpone De-expedite the order to a later date Tolerance Yes/No
(in days) Actions
Yes/No Look-Ahead
Actions

Increase Increase order to a suggested quantity


Horizon
(in days)
Decrease Decrease order to a suggested quantity Yes/No*
N/A
Delete order because the requirement
Delete N/A*
has been changed or cancelled
Derived Identify messages for components
Yes/No N/A
Actions of a production order
Futures
Futures

Projected completion date does


Delay N/A Yes/No Look-Ahead
not meet requirement date Horizon
(in days)

* = Suppressing the decrease message will also suppress the delete message.
Derived
Actions for
Component
• Expedite existing order within lead time rather than create new order

• Suggested approach: Specify a large number (to reflect horizon of actual orders)

• Exception to normal netting logic: Ignore inventory and create new supply order

• Suggested approach: Specify a large number (e.g., 365 days)


(Pegged Supply Component & Reference Orders)

• Key issue: Visibility of inventory at subcontractor


Net Change “Explosion”
for a Sales Order line
or a Production Order
Impacts on master scheduling logic & sales order processing
Domestic Foreign
Customers Customers
Forecasts Shipment Forecasts Shipment
& Sales Orders & Invoice & Sales Orders & Invoice
Planned
Mfg Site #1 Mfg Site #2 intercompany demand Dist Site #3
End Item Intercompany End Item
Transfer Sales Purchase
Order Order Order
Intermediate Intermediate

Raw
Material

Company A Coordination Company B


between companies
Contact: SCH@ColumbusGlobal.com