Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

5.5 Summary

Business processes of planning & control in the MRP II  /  ERP concept can be classified as long, medium, or short term. There is a distinction between rough-cut and detailed planning. The tasks involved in the business processes are demand forecasting, bid processing, and order configuration; resource management; and order release, order coordination, and order checking, as well as delivery and billing. The processes and tasks are shown in a reference model.

A first subtask of master planning is sales and operations planning and resource require­ments planning. In the case of rough-cut planning, sales and operations planning produces an aggregate plan, which is a plan based on aggregated information (such as rough-cut business objects like product families, rough-cut product structures, or gross requirement) rather than on detailed product information. This allows quick calculation of different possible variants of the production plan. Another subtask of master planning is master scheduling and rough-cut capacity planning. The master production schedule (MPS) is the disaggregated version of a production plan, expressed in specific products, quantities, and dates. The appropriate level for scheduling (end products or assemblies) has to be chosen.

Customer blanket orders and blanket orders to suppliers are important instruments of planning & control in supply chains. These agreements set intervals for delivery dates and order quantities. In their most nonbinding form, they are purely forecasts. The intervals will be made more precise with decreasing temporal range. In the short term, precise short-range blanket orders replace blanket orders. Their quantities are set, and delivery dates will be set and confirmed by blanket releases as this becomes possible.

Business methods for detailed planning and scheduling as well as for execution and control of operations include tasks in materials management, scheduling, and capacity management. In materials management, techniques are classed as deterministic or stochastic. Scheduling and capacity management should be integrated, because capacity can generally not be stored. In dependency upon the flexible capacity as well as the flexibility of the order due date, techniques can be classed as infinite and finite loading. Individual techniques, however, handle either quantity (capacity) or time (dates). Techniques like available-to-promise (ATP) and capable-to-promise (CTP) allow an answer to the question of whether a specific quantity of a product is available at a specific date.

Business methods of planning & control in the area of R&D comprise the integration of the various tasks all along the business process — particularly overlapping execution (simultaneous engineering) — both during the time to market and time to product. The different viewpoints of all those involved in the business object make integration difficult.

Course 5: Sections and their intended learning outcomes

  • Course 5 – The MRP II / ERP Concept: Business Processes and Methods

    Intended learning outcomes: Disclose business processes and tasks in planning & control. Explain in detail master planning or long-term planning, Describe detailed planning and execution.

  • 5.1 Business Processes and Tasks in Planning & Control

    Intended learning outcomes: Describe the MRP II concept and its planning hierarchy. Explain the part processes and tasks in long-term, medium-term planning as well as in short-term planning & control. Present the reference model of processes and tasks in planning & control. Produce an overview beyond MRP II: DRP II, integrated resource management, and the “theory of constraints”.

  • 5.2 Master Planning — Long-Term Planning

    Intended learning outcomes: Describe demand management, sales and operations planning as well as resource requirements planning. Explain master scheduling and rough-cut capacity planning. Disclose supplier scheduling: blanket order processing, release, and coordination.

  • 5.3 Introduction to Detailed Planning and Execution

    Intended learning outcomes: Disclose basic principles of materials management, scheduling and capacity management concepts. Produce an overview of materials management, scheduling and capacity management techniques. Differentiate between available-to-promise and capable-to-promise.

  • 5.4 Logistics Business Methods in R&D

    Intended learning outcomes: Produce an overview on integrated order processing and simultaneous engineering. Describe release control and engineering change control. Differentiate between various views of the business object according to task.

  • 5.5 Summary


  • 5.6 Keywords


  • 5.7 Scenarios and Exercises

    Intended learning outcomes: Disclose master scheduling for product variants. Calculate the quantity available-to-promise (ATP). Examine an example of the theory of constraints. Elaborate the master planning case.