How to Appreciate The Four Supply Planning Threads and Their Timing

Executive Summary

  • There are four major supply planning threads which are distinct from planning runs.
  • In this article, we explain using an MRP example. We also cover how a rough schedule or rough plan differs from a detailed schedule and S&OP, as well as the deployment plan, redeployment plan and the timing of various supply planning threads as well as the differences between the threads.

Introduction

There is often a good deal of confusion as to what are the primary planning threads for supply planning. Therefore, I have spelled them out in this article.

Different threads make up the supply planning portion of the supply chain process. The supply chain process would include demand planning, supply planning, production planning, etc..

Planning Runs or Planning Threads?

These are often referred to as “planning runs.” However, this is a less accurate way of defining them.

This is because, in system terms, there are often multiple jobs or runs scheduled within each thread. For instance, one may schedule one grouping of product location combinations to be placed into one run, and then another group to be placed in a second run and so on. For instance, one may hear someone say that after the “MRP run” the results were XYZ.

However, the MRP run that is referred to may, in fact, be comprised of one MRP run for a particular product group, another MRP run for another product group and so on. But when the person is using the term, MRP run they are in fact describing all of the MRP runs.

Therefore, I use the term threads instead of the more common “run” because there can be multiple planning runs within any one thread as part of that supply chain process.

Understanding the Threads of Supply Planning

These planning threads are most typically discussed independently from one another. However, they, in fact, have an everyday basis. They are the following:

  1. S&OP & Rough Cut Capacity Plan
  2. The Network/Initial Supply Plan
  3. The Deployment Plan
  4. The Redeployment Plan

S&OP & Rough Cut Capacity Plan

These are used for long-range planning and in most cases are off-line analyses and is not part of the live environment. The term rough schedule or rough plan or rough capacity schedule is used to differentiate it from a detailed schedule. A rough plan is aggregated and will have only high-level resources information if it uses any resource information at all.

A rough plan, schedule or capacity plan is intended to allow higher-ups to gain an overview, but the rough plan, schedule or rough-cut capacity plan is only a high-level representation of what will actually occur. A rough plan or rough schedule or rough cut schedule is the starting point.

The Network/Initial Supply Plan: (performed by MRP in ERP systems)

Produces initial production and procurement plan. Is focused on bringing stock into the supply network, and in creating stock with planned production orders. Can also be called the master production schedule (MPS), if the initial supply plan is run under certain criteria. This is covered in this article.

The Deployment Plan: (performed by DRP in ERP systems)

Focused on pushing stock from locations at the beginning of the supply network to the end of the supply network.

The Redeployment Plan: (performed by specialized applications with redeployment functionality or with a custom report)

Focused on repositioning stock, which is already in the supply network to locations where it has a higher probability of consumption. More on this in this article.

Timings of the Supply Chain Process Planning Threads

The following are the general frequency of the different supply planning processes.

  1. Rough Cut Capacity Plan / S&OP Run / MPS Run / Unconstrained Capacity Run: Weekly to Monthly
  2. Initial Supply Plan: Daily to Weekly
  3. Deployment Plan: Daily to Weekly
  4. Redeployment Plan: Weekly to Quarterly

Similarities Between the Supply Chain Process Planning Threads

similarities-between-sop-mps-and-rccp

The Differences Between the Supply Chain Planning Threads

differences-between-sop-mps-and-rccp

More Details on the Supply Planning Threads

This article will be very different from what you may have read on this topic. This is because I see S&OP, MPS, and RCCP as all different cuts or derivations of the initial supply plan (all of which also contain the forecast and at least production, but in some cases supply planning constraints).

They are also defined by their level of granularity, whether they are a rough plan or a detailed plan.

  • A series of supply planning method and method modifiers were developed over time to create the initial supply plan.
  • The MPS and RCCP are direct copies of the initial supply plan, with changes to their thread characteristics. For instance, a copy of the initial supply plan configuration may be put into a simulation version.
  • The planning time the horizon may be lengthened, and its resources made unconstrained. (This will be demonstrated in just a few paragraphs.)

The S&OP thread is not a complete copy of the initial supply plan, as extra information is required, for instance from finance. There are just a few adjustments and additions necessary to convert an initial supply plan into an S&OP plan and to fit within the supply chain process of planning.

The vast majority of supply planning applications are not designed to support S&OP within their applications natively. And the penetration of specialized S&OP applications is low. In most cases, supply planning applications support S&OP by providing extracts.

Remote Supply Planning Consulting

  • Questions About This Area?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, tell us your question below.

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

 References

The various supply planning threads are covered in the following books.

Capacity Planning Book

Combining Two Types of Capacity Planning

This book is called capacity management because it encompasses two areas of planning that are usually discussed independently. Short-term capacity leveling or capacity constraining, which is the movement of demand to fit within the available supply, and long-term capacity planning. This is the planning of long-term market demand to determine if the capacity should be changed.

Using Comparative Applications

In this book, both topics are covered, and they are included using multiple software applications to explain the concepts of capacity management. These are two closely related processes. However, they are often discussed separately. This book combines their explanation as well as their relationship to one another.

By reading this book you will learn:

  • How resources are modeled in capacity management systems.
  • How the structured nature of capabilities leveling and constraining differs from capacity planning.
  • How the various planning processes fit into one another, and where the gaps can be found.
  • The time horizons of the capacity management process.
  • How to improve capacity management at your company.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Capacity Leveling
  • Chapter 3: Constraint Based Planning
  • Chapter 4: Resources
  • Chapter 5: Forecast Consumption, Allocation, Scheduling Direction and Timing
  • Chapter 6: Capacity Planning with S&OP and the MPS
  • Chapter 7: The Relationship Between Planning Systems and S&OP System
  • Conclusion

Sales and Operations Planning Book

S&OP

Sales and Operations Planning in Software

Getting Clear on S&OP

S&OP is a commonly discussed, yet infrequently mastered area of planning. S&OP continues to be one of the most misused and overused terms in business.

S&OP is a type of long-term planning that attempts to match supply and demand and provides input to a financial plan to support the firm’s overall strategy. S&OP is in part a subcategory of consensus-based forecasting. It means driving to a consensus on what are branches within the company or entity that are often more competitive with one another than actually collaborative.

No Problem on Getting Consensus?

Obtaining this consensus is no easy task, and beyond the political aspects of S&OP, S&OP comes with its unique software challenges because it means both planning at a higher level of aggregation than other planning processes, while also exposing the specific constraints so that those constraints can be evaluated for possible alteration.

All of these issues and more are addressed in specific detail in this book. By reading this book you will learn:

  • What is the difference between S&OP and IBP, and how does this relate to the difference that is often described in the marketplace?
  • What are important features of S&OP applications and how do some standard S&OP applications differ in their design?
  • What are the implications of aggregation to S&OP application and process?
  • What are the political considerations that are required to be understood to be successful with S&OP?
  • What are the natural domains for executive adjustment versus lower level planning adjustment?

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Relationship Between Planning Systems and S&OP Systems
  • Chapter 3: S&OP Versus Integrated Business Planning
  • Chapter 4: SAP IBP, ANAPLAN & SAP Cash Management
  • Chapter 5: The Impact for SAP IBP with HANA
  • Chapter 6: S&OP, Aggregation, and Forecast Hierarchies
  • Chapter 7: Challenges in S&OP Implementation
  • Chapter 8: How Misunderstanding Service Level Undermines Effective S&OP
  • Chapter 9: Conclusion

The Four Factors that Make Up the Master Schedule for the Supply Plan

Executive Summary

  • Four planning controls define the master schedule. These are the constraints, the timing, a limited number of products and a limited BOM explosion, but it is necessary to consider why this is the case.
  • We explain these areas as well as how the master schedule is related to S&OP.

Introduction

Different companies use the term Master Schedule or Master Production Schedule (MPS) in often inaccurate ways. In the vast majority of cases, it is not the official definition of the term. In many cases, it is used interchangeably with the term MRP or even the forecast, which is incorrect. It turns out that Wikipedia has a reasonably good definition of the MPS.

“A master production schedule (MPS) is a plan for individual commodities to be produced in each time period such as production, staffing, inventory, etc.[1] It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded.[2] This plan quantifies significant processes, parts, and other resources in order to optimize production, to identify bottlenecks, and to anticipate needs and completed goods. Since an MPS drives much factory activity, its accuracy and viability dramatically affect profitability. Typical MPSs are created by software with user tweaking.”

However, Wikipedia falls a bit short in drawing a distinction between the MPS and other plans.

An MPS run is a combination of four things that relate to product, timing, constraining and the BOM. These are listed below:

  • Product: A subset of the overall product database.
  • Timing: Run ahead of the initial supply planning run.
  • Constrained: MPS runs are constrained, which of course is not possible with MRP (which is strange then that MPS is a type of MRP run.)
  • BOM: The Bill of Material is not exploded with the master schedule.

Why These Four Factors?

These factors make up the master schedule because it allows the master schedule to be created as almost a simulation run. The reason for each factor is included below:

A Subset of the Overall Database

The reason for making the MPS run a subset of the overall product database is twofold.

  1. The first reason is that the MPS run is to only be for critical parts.
  2. A second reason, which is now dated, is that earlier computer system was limited in processing capabilities, and order to get the MPS to run in a timely manner, and possibly to run it multiple times, it was important to limit the amount of data the system had to process.

This leads to a related topic of whether MPS itself is an anachronism, which is covered in this article.

Why Constraints?

This makes the master schedule more realistic. However, this is more of an additive factor. The master schedule runs tend to be constrained, but of course, a constrained planning run could lack any of the other three factors and not be a master schedule.

Why Timing?

The MPS must be run before the network or initial planning run.

Obviously, a simulation run like the MPS would make little sense if it were run after or at the same time as the initial planning run.

Why Limited BOM Explosion?

This is well described by a quote from SAP.

“In the MPS menu there is a separate single-level planning run, which can be executed as single-item planning or total planning. This planning run only includes the master schedule items. Dependent requirements are created for the BOM level directly below the planning level. Levels below this, however, are not planned. This means that the MRP controller can authorize any changes to the master plan before they affect the various BOM levels.” – SAP Help

Interestingly, the sentence in blue is no longer a selling point of MPS, as it assumes that the system does not have a simulation environment. That is a copy of the system model that connects to the user interface). However, with modern systems, simulation environments can be used to perform planning at any level of detail without affecting the “production” instance.

For more on MPS see this article.

Conclusion

MPS is used in a way by most companies in a way that does not meet the definition of MPS. Now the MPS has transformed to mean the initial planning run. Many of the purposes of an MPS can now be fulfilled with a simulation version which is not limited in any way regarding is BOM explosion or the segmentation of the product database. Beyond that, most companies do not have an MPS process or an S&OP process for that matter. So many terms are being used describe things companies do not do.

The vast majority of companies are just reacting and running their planning systems as short-term planning systems. They are not doing many of the sophisticated things that are often read about in books. The fact that they are using expensive systems does not change how the systems are used in practice.

Remote Supply Planning Consulting

  • Questions About This Area?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, tell us your question below.

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

References

Capacity Planning Book

Combining Two Types of Capacity Planning

This book is called capacity management because it encompasses two areas of planning that are usually discussed independently. Short-term capacity leveling or capacity constraining, which is the movement of demand to fit within the available supply, and long-term capacity planning. This is the planning of long-term market demand to determine if the capacity should be changed.

Using Comparative Applications

In this book, both topics are covered, and they are included using multiple software applications to explain the concepts of capacity management. These are two closely related processes. However, they are often discussed separately. This book combines their explanation as well as their relationship to one another.

By reading this book you will learn:

  • How resources are modeled in capacity management systems.
  • How the structured nature of capabilities leveling and constraining differs from capacity planning.
  • How the various planning processes fit into one another, and where the gaps can be found.
  • The time horizons of the capacity management process.
  • How to improve capacity management at your company.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Capacity Leveling
  • Chapter 3: Constraint Based Planning
  • Chapter 4: Resources
  • Chapter 5: Forecast Consumption, Allocation, Scheduling Direction and Timing
  • Chapter 6: Capacity Planning with S&OP and the MPS
  • Chapter 7: The Relationship Between Planning Systems and S&OP System
  • Conclusion

https://en.wikipedia.org/wiki/Master_production_schedule