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.

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 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