This chapter tells you everything you need to know about creating master schedules in configure-to-order environments
Many companies operate in configure-to-order manufacturing environments characterized by many different product configurations, each made from combinations of a few key subassemblies. Competitive pressures often demand that customer delivery lead times are shorter than manufacturing lead times in these environments. This forces companies to start building products before customers place sales orders for specific configurations. One solution to this problem is to master schedule and build key subassemblies only, based on anticipated demand, and to assemble specific configurations only after receiving customer orders.
Oracle MRP lets you use this approach, known as two-level master scheduling, to forecast and master schedule products and key subassemblies in configure-to-order manufacturing environments.
You can define multilevel planning and model bills to represent product families and products with options, and to maintain planning percents that represent estimates of anticipated product and option mixes.
You can forecast any item, anywhere on your bills of material, including planning items, models, option classes, options, and mandatory components. You can also define a configuration as a standard item and forecast it as you would any other standard item.
You can explode forecasts for planning items, models, and option classes to selected components using the components, usages, and planning percents defined on your planning, model, and option class bills. You can associate alternate bills of material to multiple forecasts for the same item and explode the same forecast using different components, usages, and planning percents. You can modify, re-explode, and re-consume forecasts for planning items, models, and option classes.
Oracle MRP automatically consumes forecasts for configurations, models, option classes, options, and mandatory components as you place sales order demand for configurations.
You can master schedule any planned item, anywhere on your bills of material, including models, option classes, options, and mandatory components. You can also define a configuration as a standard item and master schedule it as you would any other standard item.
Oracle MRP automatically relieves master production schedules for configurations, models, and option classes when you create final assembly orders for configurations. Oracle MRP automatically relieves master production schedules for options and mandatory components as you create work orders to build them.
Oracle MRP automatically relieves master demand schedules for configurations, models, option classes, options, and selected mandatory components as you ship sales orders for configurations.
You can use rough cut capacity planning to validate your master schedules for configurations, models, option classes, and options against key resource constraints, using bills of resources.
See Also
Overview of Configure to Order, Oracle Bills of Material User's Guide
Overview of Forecasting
Overview of Master Scheduling
Production Planning is one of the methods of two-level master scheduling used in managing the supply chain. In creating a production plan, a company looks at the big picture (the aggregate) rather than the level of the individual product or item, predicting a level of manufacturing output in accordance with predicted sales and other company goals and constraints.
Because production planning occurs at an aggregate level, creating a production plan involves grouping products into product families. These groupings are based on product's similarities in design, manufacturing process, and resource usage. You can assign planning percentages to the members of the product family, and use the relationship between product family items and its members in forecast explosion, consumption, master scheduling, and capacity and materials planning. Production Planning enables forecasts for the product family to be exploded down to the product family members (based on the planning percentages and effectivity dates for the member items) in a process similar to that of exploding a forecast for a model.
Sales orders for member items consume the forecast for the member items as well as for the product family. Throughout the application, processing is done at both the aggregate and the detail level. Thus, you will be able to get detailed and high-level information about how well your organization is executing its production plans.
Prerequisites to Production Planning
Before you can start production planning, you must:
Define an item as a product family. See: Defining Items, Oracle Inventory User's Guide.
Assign member items to the product family. See: Assigning Product Family Members, Oracle Bill of Materials User's Guide.
Set planning percentages and effectivity dates for member items. See: Setting Planning Percentages for Product Family Members, Oracle Bill of Materials User's Guide.
See Also
Overview of Forecast Explosion Consumption for a Product Family
Main Features of Master Scheduling
Planning Models, Option Classes, and Product Families
The following table illustrates the multilevel bill of material used to illustrate important two-level master scheduling concepts. All items are in the bill of material with quantity of one.
| Level | Item Description | BOM Item Type | Optional | Plan % |
|---|---|---|---|---|
| 1 | Training Computer | Planning | No | -- |
| . 2 | . Laptop Computer | Model | No | 60 |
| . . 3 | . . Carrying Case | Standard | No | 100 |
| . . 3 | . . Keyboard | Standard | No | 100 |
| . . 3 | . . Processing Unit | Option Class | No | 100 |
| . . . 4 | . . . Processor A | Standard | Yes | 65 |
| . . . 4 | . . . Processor B | Standard | Yes | 35 |
| . . 3 | . . Monitor | Option Class | No | 100 |
| . . . 4 | . . . VGA | Option Class | Yes | 70 |
| . . . . 5 | . . . . VGA Manual | Standard | No | 100 |
| . . . . 5 | . . . . VGA1 | Standard | Yes | 50 |
| . . . . 5 | . . . . VGA2 | Standard | Yes | 50 |
| . . . 4 | . . . EGA | Option Class | Yes | 30 |
| . . . . 5 | . . . . EGA1 | Standard | Yes | 55 |
| . . . . 5 | . . . . EGA2 | Standard | Yes | 45 |
| . . . 4 | . . . Monitor Manual | Standard | No | 100 |
| . . 3 | . . Operating System | Option Class | Yes | 90 |
| . . . 4 | . . . Windows | Standard | Yes | 80 |
| . . . . 5 | . . . . Windows Manual | Standard | No | 100 |
| . . . . 5 | . . . . Windows CD | Standard | No | 100 |
| . . . 4 | . . . Linux | Standard | Yes | 20 |
| . . . . 5 | . . . . Linux Manual | Standard | No | 100 |
| . . . . 5 | . . . . Linux CD | Standard | No | 100 |
Oracle Bills of Material provides these item types, identified by the BOM Item Type item attribute, that you can use to plan and build products with options:
Planning item
Model
Option class
Standard item
Product family item
Define the BOM Item Type for each of your items using the Define Item window in Oracle Inventory. You can combine each of these item types to define complex bill of material structures using the Define Bill of Material window in Oracle Bills of Material.
Use planning items to represent groups of related items. In a configure-to-order environment, you might use planning items to represent groups for your models, and state your high-level production plans in terms of these groups rather than individual models. You can also use planning items for forecast explosion.
Use models to represent products that include options chosen by customers during order entry. For example, you might use a model to represent a computer with many different CPU, monitor, and operating system options.
Assemble to Order Models vs. Pick-to-Order Models
Models can be assembled-to-order or picked-to-order. Use assemble-to-order models to represent products whose options and mandatory components are assembled, using a final assembly order, when customers order configurations. Use pick-to-order models to represent products whose options and included items are picked and shipped directly from stock, using a sales order pick slip, when customers order configurations.
Use option classes to group together related options. In a configure-to-order environment, you might use an option class to group together the different processor options that are available when customers order a computer.
Standard items are the only types of items that are actually built. In a configure-to-order environment, use standard items to represent your key subassemblies. Standard items that have the bill of material attribute Optional set to Yes are called options. Standard items that have the Optional attribute set to No are called mandatory components.
Assemble-to-Order Standard Items vs. Pick-to-Order Standard Items
Standard items are similar to models in that they can be assembled-to-order or picked-to-order. Use assemble-to-order items, also known as predefined configurations, to represent standard items that are assembled using a final assembly order. Use pick-to-order items to represent a collection of items that are picked and shipped from stock using a picking slip.
Use product family items to represent groups of items related by similarities in design, manufacturing, and resource usage. You can use the relationship between product family items and its members in forecast explosion, consumption, master scheduling, and capacity and materials planning.
See also Overview of Bills of Material, Oracle Bills of Material User's Guide and Defining Items, Oracle Inventory User's Guide
Production Forecast Establishment
You can define and maintain forecasts for any item, at any level on your bills of material. You can forecast demand for products directly, or forecast product families and explode forecasts to individual products through planning bills. You can forecast demand for option classes, options, and mandatory components directly. You can also explode forecasts for models and option classes, through model and option class bills, to selected option classes, options, and mandatory components.
You can define multilevel planning bills, with multiple levels of planning items, to represent groups of related products that you want to forecast as a unit in Oracle Bills of Material.
Typically, you can order components of a planning bill, but not the planning item itself. The planning item is an artificial grouping of products that helps you to improve the accuracy of your forecasting since, generally, the higher the level of aggregation, the more accurate the forecast.
When you load a planning item forecast into another forecast, you can choose to explode the aggregate forecast for the planning item into detailed forecasts for each of the components defined on the planning bill. The forecast quantities exploded to the components are calculated by extending the planning item forecast by the component usages and planning percents defined on the planning bill. You can also choose to explode forecasts when you load a planning item forecast into a master schedule.
The following table illustrates a planning bill for Training Computer, a planning item that represents a planning bill for three types of computers: laptop, desktop, and server. The planning percent assigned to each member of the planning bill represents anticipated future demand for each product. Although, in this example, the planning percents add up to 100%, it is equally valid for the sum of the planning percents to be less than or greater than 100%.
| Level | Item Description | BOM Item Type | Planning % |
|---|---|---|---|
| 1 | Training Computer | Planning | -- |
| . 2 | . Laptop Computer | Model | 60 |
| . 2 | . Desktop Computer | Model | 20 |
| . 2 | . Server | Model | 20 |
The following table illustrates forecast explosion, via the planning bill described in the previous table, for a forecast of 100 Training Computers. The table also illustrates forecast consumption after you place sales order demand for 20 Laptop Computers. Original forecast shows forecast quantities before forecast consumption. Current forecast shows forecast quantities after consumption by sales order demand.
| Level | Item Description | Original Forecast | Current Forecast |
|---|---|---|---|
| 1 | Training Computer | 100 | 100 |
| . 2 | . Laptop Computer | 60 | 40 |
| . 2 | . Desktop Computer | 20 | 20 |
| . 2 | . Server | 20 | 20 |
You can define model and option class bills, with multiple levels of option classes, options, and mandatory components, to represent your complex configure-to-order products in Oracle Bills of Material. You can then use forecast explosion to explode model and option class forecasts the same way you explode forecasts for planning items.
The logic for exploding models and option classes is the same as the logic used to explode planning items.
The following table illustrates a model bill for Laptop Computer, a model that includes two mandatory components and three option classes. The planning percent assigned to optional option classes represents anticipated demand for the option class. In this example, 90% of Laptop Computers are expected to be sold with an operating system, and the remaining 10% are expected to be sold without.
| Level | Item Description | BOM Item Type | Optional | Planning % |
|---|---|---|---|---|
| . 2 | . Laptop Computer | Model | No | 60 |
| . . 3 | . . Carrying Case | Standard | No | 100 |
| . . 3 | . . Keyboard | Standard | No | 100 |
| . . 3 | . . Processing Unit | Option Class | No | 100 |
| . . 3 | . . Monitor | Option Class | No | 100 |
| . . 3 | . . Operating System | Option Class | Yes | 90 |
Option Class Bills
The following example illustrates the option class bills for the Monitor, VGA, and EGA option classes. The planning percent assigned to each option within each option class represents anticipated demand for the option. In this example, 70% of all Laptop Computers are expected to be sold with a VGA monitor, and the remaining 30% are expected to be sold with an EGA monitor. Notice that the Monitor option class is not optional. This means that customers must always choose one of the Monitor options when ordering Laptop Computer. Of the 70% of Laptop Computers sold with a VGA monitor, 50% are expected to be sold with the VGA1 monitor and 50% are expected to be sold with the VGA2 monitor. The VGA option class also includes a mandatory component, VGA Manual, that is always shipped with Laptop Computer if the VGA monitor option class is chosen, regardless of the VGA option.
| Level | Item Description | BOM Item Type | Optional | Planning % |
|---|---|---|---|---|
| . . 3 | . . Monitor | Optiion Class | No | 60 |
| . . . 4 | . . . VGA | Option Class | Yes | 100 |
| . . . . 5 | . . . . VGA Manual | Standard | No | 100 |
| . . . . 5 | . . . . VGA1 | Standard | Yes | 100 |
| . . . . 5 | . . . . VGA2 | Standard | Yes | 100 |
| . . . 4 | . . . EGA | Option Class | Yes | 90 |
Predefined configurations are configurations that you have defined as standard items, with standard bills and standard routings. You might define a predefined configuration because you often use the configuration in sales promotions, or the configuration is one of your most commonly ordered configurations, and you want to build it to stock to reduce delivery lead times and improve customer service levels. Your customers can order predefined configurations by item number, just as they order any other standard item.
Forecast consumption, forecast explosion, master scheduling, planning, production relief, and shipment relief for predefined configurations behave as they do for any other standard item.
See Also
Overview of Forecasting
Overview of Forecast Explosion
Overview of Forecast Consumption
Forecast Consumption for Models and Predefined Configurations
Overview of Bills of Material, Oracle Bills of Material User's Guide
Planning Models, Option Classes, and Product Families
Oracle MRP lets you master schedule any planned item on your master schedules, including models, option classes, and product families.
With the two-level master scheduling approach, you typically master schedule your key subassemblies, your options and mandatory components, since they are the highest level buildable items in your model bills.
Although models, option classes, and product families are not buildable items, you may want to master schedule them so that you can calculate available-to-promise (ATP) information for promising order ship dates by model, option class, or product family. You might also want to master schedule your models option classes, and product families so that you can perform rough-cut capacity checks by model, option class, and product family. This is particularly valid when different configurations of your models have very similar capacity requirements.
Note: Oracle MRP does not support planning for pick-to-order models and option classes.
For product family member items that have forecast control set to None, the planning process explodes and passes the demand down to the member items based on the product family allocation percentage. Since forecast control set to None means that the item is not forecasted, demand for an item whose forecast control is set to None gets passed down during the planning process. Thus, the resulting explosion is independent of the quantity of existing sales orders for member items.