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

5.1.2 Part Processes and Tasks in Long-Term and Medium-Term Planning

Intended learning outcomes: Present long-term planning, also called master planning, Differentiate between master planning and master scheduling. Disclose medium-term planning & control, also called detailed planning and scheduling. Produce an overview on bid processing, customer blanket order, sales and operations planning, (detailed) resource requirements planning, requests for quotations, blanket order processing, and order proposal.



Figure 5.1.2.1 shows the sequence and tasks in long-term planning in MEDILS form (for an explanation of MEDILS symbols, see Section 4.1.3).

Fig. 5.1.2.1        Long-term planning: master planning.

Definitions of the tasks in Figure 5.1.2.1 follow here. For the methods and techniques used for long-term or master planning, see Section 5.2.

Bid processing handles a customer request for quotations and determines delivery (labor or product or product family, quantity, and due date). For details, see Section 5.2.1. 

A customer blanket order determines the scope of delivery. It can then be described by rough-cut business objects, or through product families or rough-cut work centers. In that case, the order due date is defined only as a time period. For details, see Section 5.2.1. 

Demand forecasting, defined in Section 1.1.1, estimates future demand. Demand planning combines forecasting techniques and judgement to estimate demand for products and services along the supply chain (compare [APIC16]). For details, see Section 5.2.1 and Chapter 10. 

Sales and operations planning brings together all the plans for the business (marketing, development, sales, manufacturing / production, sourcing, and financial) in one integrated set of plans. It is performed at least once per month and is reviewed by management at an aggregate (product family) level ([APIC16]). For details, see Section 5.2.2. 

Resource requirements planning (RRP), or resource planning, calculates the requirements for components and capacity (persons and infrastructure), based on the production plan, generally divided up along the time axis, and through analytical explosion of product structures (also called explosion of bill of materials) and routing sheets. RRP is gross requirements planning; inventory and open orders are not taken into consideration. For details, see Section 5.2.2.

The output of RRP includes in particular a procurement plan for components and materials.

Resource budgeting calculates the procurement (or materials) and capacity budget (direct costs and overheads), and the budget for other overheads. For details, see Section 5.2.2.

Thus, master planning yields the quantities of the resources to be used in the long-term planning horizon and calculates financial implications.

The planning horizon is the future time period included in planning.

The planning horizon for master scheduling must be at least as long as the cumulative lead time to manufacture all units in the master schedule (MS). This lead time encompasses production, procurement of all components, and customer-specific design.

Master scheduling is establishing a plan to produce specific products or provide specific services within a specific time period.

See Section 5.2.3. The most important output of master scheduling is the master production schedule (MPS), a disaggregated version of a production plan, expressed in specific products, configurations, quantities, and dates. The MPS serves as input for rough-cut capacity planning (RCCP).

Requests for quotations and blanket order processing turn over the procurement plan for salable products, components, and materials as well as the requirements for external capacities to suppliers in the supply chain. This task includes supplier selection, call for bids, and the processing of the supplier blanket orders.

For details, see Section 5.2.4. In data management, each blanket order is a business object, an order (see Section 1.2.1). If the minimum blanket order quantity on the blanket order is zero, the blanket order is a prediction only.

Figure 5.1.2.2 shows the process and tasks of medium-term planning in MEDILS form. The part processes and tasks in medium-term planning are similar to those in long-term planning. Precision-tuning accomplishes more exact determination of bids and blanket orders as well as the schedules (particularly the production schedule and the purchase schedule, that is, the plan that authorizes the factory to manufacture — or the purchasing department to purchase — certain quantities of specific items within a specific time (cf. [APIC16]).

Fig. 5.1.2.2        Medium-term planning & control: detailed planning and scheduling.

Detailed resource requirements planning calculates detailed material and components requirements and detailed capacity requirements (persons and infrastructure), divided up along the time axis, usually based on the master production schedule MPS (the disaggregated version of the production plan), divided up along the time axis, and through analytical explosion of detailed product structures and routing sheets. This is net requirements planning; inventory and open orders are taken into consideration. Order proposals for R&D, production, and procurement for covering these requirements, are worked out. 

An order proposal, or planned order, sets the goods to be produced or procured, the order quantity, the latest (acceptable) completion date, and — often an implicit given — the earliest (acceptable) start date.

On the basis of the order proposals, blanket order planning can be defined more precisely.




Course section 5.1: Subsections and their intended learning outcomes

  • 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”.

  • 5.1.1 The MRP II Concept and Its Planning Hierarchy

    Intended learning outcomes: Explain the business processes in logistics and operations management of an enterprise, structured according to temporal range. Describe the different degrees of detail in planning. Disclose the aim of data management.

  • 5.1.2 Part Processes and Tasks in Long-Term and Medium-Term Planning

    Intended learning outcomes: Present long-term planning, also called master planning, Differentiate between master planning and master scheduling. Disclose medium-term planning & control, also called detailed planning and scheduling. Produce an overview on bid processing, customer blanket order, sales and operations planning, (detailed) resource requirements planning, requests for quotations, blanket order processing, and order proposal.

  • 5.1.3 Part Processes and Tasks in Short-Term Planning & Control

    Intended learning outcomes: Present in detail short-term planning & control, also called execution and control of operations. Produce an overview on order release, order coordination, order monitoring and order checking, delivery, job-order costing, and billing.