Order promising: shall we reserve available replenishment to avoid this is used when promising other demand?


Order promising is about using available-to-promise or capable-to-promise functionality to commit dates with customers. There is a functional difference between those two:

  • ATP is based on existing replenishment, on what is available to promise. This has nothing to do about reservations. We are just running the availability calculation.
  • CTP is based on creating new replenishment. Here, we need to create an action line in the planning (or req.) worksheet which defines the new replenishment required. This action line requires reservation to ensure that new replenishment is link to the committed demand.

Having said this, asume we have a reservation for an existing replenishment, does it mean the above that we will just use that replenishment when running order promising for another sales? No. If that replenishment is reserved, it is not available for the order promising.

Now, going back to the question here: assume I run ATP and promised a sales order. Should I reserve the sales order against the replenishment to ensure no other demand is using it? I would say No. Two reasons:

  • Even when there is another sales order, you might want to use this replenishment for that new demand since this might be earlier and we will reduce carrying costs. An example is when you promised a sales order for Dec 2014 based on existing stock. If another sales order comes for October 2015, why not using the stock here? We will reduce inventory costs here if we are using this for October and use CTP to create a new replenishment for the other demand.
  • If you are using reservations, you will disturb planning. Assume you have a demand/supply set reserved. This will be ignored by planning since it is considered as satisfied. Instead what we will like to do is to proceed with a planning run to ensure all demands and supplies are going through the planning parameters and an optimal plan is achieved. For instance, assume we reserve a demand to a purchase order. And, for the same date with have another demand. Here, we might run CTP since there is no availability. This will create a new replenishment for this second demand. Up to here, planning parameters from item card are not considered. However, we would like to still calculate plan to optimize this and combine both replenishment into one purchase order if this is a lot-for-lot ítem. If replenishment is reserved against the demand, it will be ignored and won’t be combined into one purchase.

But, if we are not using reservations with ATP, how will I prevent that promising a new order will not jeopardize my earlier promised demands? That is a very good question. Here, we have the Avail. Check Warning functionality. If you are entering a new sales order and this jeopardizes availability for another existing sales, it will raise a warning. User is required now to check availability here and perform actions (ie. re-promise the existing sales order and use available for new one). Avail. Check Warning is based on “Check Avail. Period Calc.” and “Check Avail. Time Bucket” (Company Information) to determine the horizon from shipment date where this availability is checked. In other words, this horizon determines the demands which will be considered when checking if new sales jeopardizes availability.

 

 

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