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

5.1.4 Priority Planning and a Reference Model of Processes and Tasks in Planning & Control

Intended learning outcomes: Explain the manufacturing planning & control processes and priority planning within the temporal ranges in the MRP II concept. Describe the reference model of business processes and tasks in planning & control. Differentiate between materials management, time management and scheduling, and capacity management. Produce an overview on inventory management and control, and master data.



Figure 5.1.4.1 summarizes the concepts presented in the previous sections, showing the relation between the planning processes within the temporal ranges. This type of representation is common in teaching materials explaining the MRP II / ERP concept. [note 503]

Fig. 5.1.4.1        Manufacturing planning & control processes within the temporal ranges in the MRP II concept.

Figure 5.1.4.2 summarizes the sections above. It presents an overview of the planning processes according to — vertically — temporal range (long, medi­um, and short term) and — horizontally — all the planning & control tasks. The processes and tasks are shown in the logical temporal sequence that derives from Figures 5.1.2.1, 5.1.2.2, and 5.1.3.1.

Fig. 5.1.4.2        Reference model of business processes and tasks in planning & control.

Representing the processes in this condensed form allows us to conceive of planning & control tasks as cross-sectional tasks. In principle, these tasks appear in the same forms in all time ranges and in all kinds of orders, although there are some deviations. However, a particular task may not arise in every time frame or in every business process. Also, during execution of a particular task, not every logistics object is required in data management. The reference model characterizes the elements of a planning & control system as well as various options for forming part systems — either along the business processes or along equal tasks.

Demand forecast, stock planning and sales planning, bid processing and order configuration, and cost estimating accord with the definitions in Sections 5.1.2 and. 5.1.3. Furthermore, the model breaks down resource requirements planning into three classical planning & control tasks.

1. Materials management ensures that the goods required by demand are provided cost effectively and according to schedule (such as end products, semifinished goods, single parts, raw materials, and information).  

2. Time management and scheduling and 3. capacity management ensure cost-effective and timely provision of the capacities needed to cover the load on persons and the production infrastructure as determined by orders. [note 504] 

The distinction among these planning & control tasks is based on the fact that goods can usually be stocked for a certain period of time (with the exception of continuous production; see Chapter 8), whereas this is generally not the case for time and capacity (see the end of Section 5.3.3). As a natural consequence, the business methods for these resources differ.

The term management keynotes the fact that our perspective has broadened from pure requirements or costs considerations to the more compre­hensive task of improving company performance (see Section 1.2.2). Goods management would actually be a more appropriate term than materials management, for this task also handles finished products.[note 505] But as materials management is the term commonly used, we retain it here.

Stores management comprises tasks involved in storing goods as well as in handling inventory transactions, such as delivering stocked goods to user sites or receiving goods from suppliers. 

Inventory management is the branch of business management concerned with planning and controlling inventories [APIC16]. It includes all tasks involved in the inventory control process within the supply chain.[note 506] 

Inventory control includes the activities and techniques of maintaining the desired levels of items, such as those shown in Figure 4.2.3.2.

Figure 5.1.4.2 does not show explicitly the process of store and inventory management itself; instead, it defines the task in these processes, or store and inventory management. In data management, all inventories of stored items or work-in-process items build a business object. Depending on the degree of detail of inventory management, the business object type assigned may be item (see Section 1.2.2) or order (see Section 1.2.1). Figure 5.1.4.2 also introduces two further categories of objects in data management.

The term master data comprises the data of all order-independent business objects, as described in Section 1.2. 

The term statistics refers to appropriately combined data on consumption, as well as data on bid and sales activity.

The values of performance indicators in Section 4.2 can be derived from certain statistical data. As for an example, see Section 11.2. For an in-depth description of master data, see Chapter 17.

Order release, order coordination, order checking, and delivery correspond to the definitions in Section 5.1.3. As we examine business processes and methods in more detail in the following, we will refer again and again to the reference model on planning & control shown in Figure 5.1.4.2. Moreover, the reference model serves as the starting point for a detailed look at the individual planning & control tasks in Chapters 10 through 17.




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.