In our previous post we shared scenario 1, which was a straight forward example. For scenario 2 production output is altered by lowering it as it is currently above the capacity level. (Production output is reduced to 600 in week 19).
Scenario 2:
Production quantity is adjusted to 600.
Total production receipts in Plant P100
Dependent location demand from plant to DC
Dependent demand from customer to DC
Analysis:
In this scenario you can see the net effect of the production reduction does not have any effect on the end distribution quantities and the end result is the same. The only difference is that projected stock is negative and the supply planner jobs is to handle such scenarios and adjust other receipts to make sure net Supply Planning is accurate.
Scenario 3:
In scenario 2, we reviewed how reducing the production receipts did not affect the customer demand, while showing how the efficiency of the supply plan is dependent on the planner to make manual adjustments. In scenario 3 we’ll review how Supply Propagation is different.
Total production receipts in Plant P100
Dependent location demand from plant to DC
Dependent demand from customer to DC
Analysis:
Now you can see that the total demand fulfilled to the customers has been reduced to the production quantity. Note: the projected quantity is “0.”
Summary:
Supply Planning utilizing heuristics with infinite capacity and the customer receipts quantities are equal to the demand in all circumstances. This works fine in the case of no constrains, but in a case of constrains or capacity overload it can affect customer receipts. To manage this situation proper alerts and analytics need to be created to predict short falls and adjust the entire supply plan.
In contrast, Supply Propagation Heuristics used the same infinite capacity, but any reduction in the receipts quantity will impact customer receipts. The total proposed/promised quantities to the customer reflects the correct quantities.
It’s also important to remember Supply Propagations uses predefined priorities, which include:
- Demand caused by adjusted min key figures
- Adjusted inventory correction
- Independent demand
- Dependent customer demand
- Dependent location demand and dependent production component
