Advanced Supply Chain Planning

Material Requirements Planning (MRP) is designed to assist manufacturers in inventory

and production management. Using MRP helps ensure that materials will be available in
sufficient quantity and at the proper time for production to occur, without incurring excess
costs by having the materials on hand too early. MRP assists in generating and (as needed)
revising production plans to meet expected demands and replenishment plans to assure the
timely availability of raw materials and all levels of product components.

Demand is the need for an item. Supply is satisfaction of a demand.

Dependent demand is demand for an item that depends on the need for another item.
Independent demand is demand for an item that does not depend on the need for another
item.

Oracle Modules integrated in planning process.

Oracle Master Scheduling/MRP products integrate with the following:

Oracle Inventory
Oracle Bill of Materials
Oracle Engineering
Oracle Work in Process
Oracle Purchasing

The Planning Process

The material planning process uses the following information from Oracle
Inventory:
Item numbers to identify each item being planned
Inventory balance as a portion of supply
Material issues from stock to determine the history of usage of an item for statistical
and focus forecasting

The material planning process uses the following information from Oracle Engineering and
Oracle Bill of Materials:
Planning and model bills of material for creating forecasts for independent demand
items through forecast explosion
Standard bills of material to determine the items the demand of which depends on a
given independent demand item
Engineering change orders to determine future changes to bills of material

Forecast: Estimate future trends by examining and analyzing available information. You
use forecasts to state expected shipments of goods due to customer orders that you expect
to receive. Use sales orders to state expected shipments of goods due to customer orders
that you have received. Make-to-stock, configure to- order, and make- to-order businesses
often use forecasts in their planning process.
Forecasts contain:
Item numbers
Dates
Original quantities
Current quantities
Original quantities are quantities of expected shipments of goods due to customer orders
that you expect to receive.

Use forecast sets to group multiple forecasts.

Five components of manufacturing Lead Times (the time between the initiation and
completion of a production process) are:
1. QUEUE - Time waiting for the operation to begin
2. SETUP - Time getting ready for the operation
3. RUN - Time performing the operation
4. WAIT - Time waiting after the operation ends
5. MOVE - Time physically moving between operations
(Lo que vimos con Luis)
rdenes de Produccin = OperacinPasos a seguir
1. Queuependientes
2. To moveterminado
3. Runningen proceso
4. Scrap pt inservible
5. Reject pt rechazado

Inventory Dates

The planning process plans that you should receive material to inventory by the day that
you need to issue it. Note that Oracle material planning expects that you will receive
material due into inventory by the beginning of the business day on which it is due (or at
least before you need to issue it). This may require you to receive it into inventory by the
close of business on the previous day.

Safety Stock, also called buffer stock and fluctuation stock, is used to prevent a
stockout. The amount of safety stock carried depends on:
Variability of ordering
Frequency of ordering
Desired Service level
Length of Lead time
Ability to forecast and control Lead times

You can use any of the following three methods to set the safety stock level for an
item:
Manual: You enter safety stock levels and a start date. A safety stock level
is in force until another safety stock level replaces it.
User-defined percentage: You provide a forecast name and a percentage.
Oracle Inventory calculates a safety stock level from each forecast entry as
the percentage of that forecast entry. The calculated safety stock level from
a forecast entry begins on the date of the forecast entry and ends on the
day before the next forecast entry.
Mean Absolute Deviation: You provide a forecast name and a service
level. Oracle Inventory calculates the forecast accuracy for each item by
comparing the historical entries in that forecast with the issues from stock
during the same time periods.
Master Demand Schedule

Master scheduling is used for:

demand management
scheduling production
validating the production schedule
managing the production schedule

You use the schedules generated by master scheduling as input to other manufacturing
functions, such as material requirements planning and rough-cut capacity planning.

The Master Demand Schedule (MDS) is a statement of demand and contains details of
the anticipated shipment schedule. You can consolidate all sources of demand into a master
demand schedule to represent a statement of total anticipated shipments. The MDS
provides an extra level of control that allows you to view and modify your statement of
demand before creating a detailed production schedule.

You can use the time-phased master demand schedule as input to the master production
scheduling process or the material requirements planning process. Some of the demand
types that the MDS considers are:
item forecasts
spare demand
sales orders
internal requisitions

A time fence is an item attribute that divides the time between today and the planning horizon
into two parts. Different rules apply on each side of the time fence.

The discrete planning process uses three time fences:

Demand time fence: You use this time fence to plan supply, in the short term, only to hard
independent demand. Often, service items have a forecast, but you prefer only to plan to
build that quantity for which you have sales orders.

Inside the demand time fence, the planning process will use only independent
demand from sales orders.
Outside the demand time fence, the planning process will use all independent
demand.

Planning time fence: You use this time fence to create a frozen zone in the short term in
which the material planner, not the planning process, is most responsible for insuring the
balance of supply with demand.

Inside the planning time fence, the planning process will not create planned orders
and suggest that you change the date of a scheduled receipt when the new due date
will fall inside the time fence.
Outside the planning time fence, the planning process will create planned orders and
suggest that you change the date of a scheduled receipt when the new due date will
fall outside the time fence.
Release time fence: You use this time fence to instruct the planning process in the amount
of human intervention needed to send planned order suggestions to
Oracle Purchasing and Oracle Work in Process. To use this feature, create a release time
fence for the item and the planning process performs as follows:

Inside the planning time fence, the planning process will automatically send planned
order suggestions to Oracle Purchasing and Oracle Work in Process with no human
intervention.
Outside the planning time fence, the planning process will never automatically send
planned order suggestions to Oracle Purchasing and Oracle Work in Process; you
must review the suggestions before sending them.

Bills of Material
You use bills of material to specify the component items that you use to:
Manufacture assemblies and subassemblies
Configure Sales Orders
Explode aggregate forecasts
Calculate Standard Cost

Resources are anything (except component material) that you use or need in manufacturing
a product. You identify resources and insert them into the routings. Once in the routings, the
resources are used for setting item standard costs, scheduling discrete jobs, and planning
capacity.

Production Lines are facilities on which you produce repetitive assemblies. Repetitive
planning uses the production line definition to determine:
 The times that a production line is available to perform work
Whether to use a fixed time or routing times for the lead time of the items that you
produce on the line

Departments are a collection of resources designed to do certain tasks; also called work
centers. You must assign a resource to a department, and you may share that resource with
other departments. A shift represents a period of time during which a resource is available
for work. You specify the times for your shifts in the workday calendar. When you assign the
resource to its department, you specify the shifts that the resource works.

Routings are used to specify the process that you use to manufacture both discrete and
repetitive assembly items. A routing consist of operation steps. Each operation step occurs
at a department and contains resources that perform work. Engineering routings are the
ones that your engineering function creates and that are not ready for production; created
in Oracle Engineering. Manufacturing routings are the ones that you use in production;
created in Oracle Bills of Material. Engineering Routings have the routing Engineering
selected and Manufacturing routings have in clear.
Material requirements planning (MRP) calculates net requirements from gross requirements
by evaluating:
the master schedule
bills of material
scheduled receipts
on-hand inventory balances
lead times
order modifiers

It then plans replenishments by creating a set of recommendations to release or reschedule

orders for material based on net material requirements.

You can review and implement recommendations suggested by the planning process with
the Planner Workbench. You can selectively implement these recommendations as new
and rescheduled orders, and release all or some of them.

You can:
review item details
review of supply/demand details
review components, using assemblies, and end assemblies
review the horizontal, material, and capacity plan
display a summary supply and demand
implement and maintain planned orders
create planned orders manually
implement repetitive schedules
release implemented orders
create firm planned orders and firm implemented orders
review material and capacity exceptions
display a summary of resource requirements

You can estimate future demand for items using any combination of historical, statistical,
and intuitive forecasting techniques. You can create multiple forecasts and group
complimenting forecasts into forecast sets.

Forecasts are consumed each time your customers place sales order demand for a
forecasted product. You can load forecasts, together with sales orders, into master demand
and production schedules, and use the master schedules to drive material requirements
planning.

General Long term strategic forecast - The sales group will develop a long term sales
forecast in an off-line system and update it monthly. This forecast will be in terms of revenue
dollars by customer. It may be used for long term strategic planning, but not fo normal
material and capacity planning. It is not processed through Oracle.

Specific Product Line / Product Family Long term strategic forecast A forecast may
be developed by sales, manufacturing, finance, and supply chain personnel at the
organization level based on projected requirements, historical data, or other information
sources. Information from this level of forecast can be entered into Oracle; however, they
will usually be used in simulation forecast sets through the use of planning bills as no
detailed information on end items probably exist. These forecast sets can be used for long
term strategic planning, for material purchasing, or judicious manufacture of stock-able
midlevel components that will later be used to make end items. These forecasts will not drive
manufacture of end items.

Specific Customer Forecasts These are forecasts either provided by the customer or
developed internally with the usage of historical data or other information sources that allow
us to predict the customers requirements at an end item level. These should be entered into
the ERP system to give an approximate capacity requirements and shipping schedule.
These forecasts will authorize purchase of raw materials and the judicious manufacture of
the end items to fill the forecast.

These types will be limited to:

Booked Kanban/VMI orders for which no scheduled ship dates appear on the sales
order. Releases against these sales orders will be processed through the normal
order management system.
Consignment Inventory agreements with the customer. Sales against these orders
will be processed through the ERP system as releases to a blanket order or as
individual sales orders. Do not use a forecast for this type of order if a replenishment
system or min-max planning is in place.
A letter of intent committing to buy a specific product or range of products. Sales or
finance approval may be required before entering this type of forecast. Refer to site
or division specific policies.

Two types of independent demand can be used during the MDS run

1) Sales Orders,
2) Sales Forecast.

We would like to use Sales Forecast to be able to predict mid to long term materials and
capacity requirements in the absence of Sales orders. When we utilize the Sales forecast
module, we always set it up to where consumption of the forecast quantity is reduced by the
quantity of the sales order. In other words, a Sales order, should always override a Sales
forecast.

Therefore, we need to determine the quantities and period(s) of time that the sales order
should override the sales forecast. If the sales order quantity is greater than the quantity
forecasted in a given bucket, then the sales forecast goes to zero, but we must determine
what we want MRP to do with the balance. In order to control that, Oracle provides us with
three fields that help us construct a framework for the sales orders and forecast to work
around.

There are 3 important data fields that will determine the consumption of the forecast:

1) The Demand Time Fence - This is the period of time in which MRP will ignore the
forecast for planning purposes and will only load demand driven from Sales Orders. This is
set at the end-item level under the items planning attributes.
2) Forward Consumption
3) Backward Consumption
It is the responsibility of planning to determine:
 The content and organization of the forecasts and forecast sets. A site can either
generate several forecast sets to capture customers forecast or one set for all
customers.
The specific items, product families, and planning bills in each forecast to suit the
demand requirements and the type of planning systems in use.
The quantity of each item and the planning period that best suits the demand and
customers requirements.
Ensuring that the forecast(s) continue to be necessary, appropriate, accurate, and
that the results meet the business requirements for the site.
Setup of all part templates as MRP planned, Min-Max planned, or Kanban. Do not
use MPS planning.
Planning should convert all monthly buckets forecasts into weekly buckets. We do
not want to use periods (month) buckets to enter forecast as it leads to problems in
the consumption of the forecast.

Restrictions
The naming conventions set by the planning GPO must be followed when defining
forecast names.
Forecast buckets must be maintained on days or weeks. Periods (Monthly buckets)
are not allowed.
All forecast sets must be set to Consume

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