Setting Up Distribution Planning

This chapter covers the following topics:

Overview of Setting Up Distribution Planning

This section outlines the steps required to set up Distribution Planning. You begin by setting up organizations, ship methods, shipping lanes, and calendars the same as in other Oracle Advanced Supply Chain Planning plan types. You then define the following:

The set up steps detailed in this section are specific for distribution plans and assume that the user has completed all of the usual source instance set up tasks such as enabling Oracle Bills of Material, Oracle Work in Process, Oracle Order Management, and Oracle Purchasing.

Prerequisites for Distribution Planning

To run Distribution Planning, the following prerequisites are required:

Please see Setting Shipping, Receiving, Carrier, and Supplier Capacity Calendars for more details.

These steps are the same as in other Oracle Advanced Supply Chain Planning plan types, such as MRP, MPS, and MPP.

Defining Items as Distribution Planned

When setting up Distribution Planning, the first step you need to take is to define which items to include in your distribution plans.

To define items as distribution planned

  1. On the MPS/MRP item attributes tab, select the Distribution Planned check box.

    Distribution Planning selects items to include in a distribution plan based on the following plan options for planned items.

    Planned Item Description
    All planned items All Distribution Planned items are included.
    Demand schedule items only Only Distribution Planned items in the demand schedule are included in the distribution plan.
    Supply schedule items only Only Distribution Planned items in the supply schedule are included in the distribution plan.
    Demand and Supply schedule items Only Distribution Planned items in the demand and supply schedules are included in the distribution plan.
    Demand schedule and WIP components Distribution Planned items in the demand schedule and WIP jobs, as defined by the MSC: DPP Discrete Job Cutoff Window (Days) profile option, are included in the distribution plan.
    Demand schedule items and all sales orders Only Distribution Planned items in the demand schedule and all sales orders are included in the distribution plan.
    Demand schedule items/WIP components/all sales orders Only Distribution Planned items in the demand schedule, all sales orders and all WIP jobs are included in the distribution plan.

    In each case, an item between two included Distribution Planned items is also included.

Defining Bills of Material for Kitting

Oracle Bills of Material is used to define Bills of Material for kitting. Distribution Planning plans components of kitting planned orders the same way MPS/MRP/MPP explodes Bills of Materials and plans lower level components. Routings and resources are not considered by distribution plans and kit assembly is constrained by component availability.

Lead-time

When planning a discrete job, distribution planning calculates the start and complete times based on the item-organization fixed lead-time attribute.

If the supply is due for 24 units at 10:00 AM on Day 5, the fixed lead-time is 1 day, and there is one 24 hour shift, the job start time is at 10:00 AM on Day 4.

Order Size

For discrete jobs, the size of planned orders is the value of item attribute Fixed Lot Multiplier. If this attribute is null, no order size modifiers are applied and each discrete job is the size of the associated demand. The item attributes Fixed Lot Multiplier, Rounding Control and the Fixed Lead-time should be considered together during the data setup.

Releasing Kit Jobs to Oracle WIP

Distribution Planning can release a planned order for a discrete job to Oracle WIP. If substitute components are selected, these will be released and appear as component requirements in the WIP job. If substitute components are not selected, the planned order header is released. The WIP job explodes and creates the component and resource requirements based on the BOM and routing. The planned order header includes the completion date and the primary or alternate BOM/routing designation. If a routing exists in the source instance, the start date of the released WIP job may be different from the start date in distribution planning.

Since distribution planning treats Oracle Work in Process jobs as firm supplies, it does not recommend their reschedule. For these jobs, distribution planning:

To control which of these jobs the distribution planning engine considers, set profile option MSC: DPP Discrete Job Cutoff Window (Days).

Defining Demand Priority Rules

Distribution plans consider demand type priorities and you can set priorities based on demand class within each demand type. There are six demand types:

With the first three demand types, you can define additional priorities by demand class. If a sales order or forecast has an associated demand class, it gets the priority of the demand class. However, this is only within the demand type. Priorities for safety stock, target, and excess always default to the lowest three priorities in that order.

To define demand priority rules

  1. From the Navigator, select Distribution Planning > Setup > Demand Priorities

    The Define Priority Rules window appears.

  2. In Name and Description, enter information for the new demand priority rule.

  3. To enable the demand priority rule, click the Enabled check box. To set the demand priority rule as a default, click the Default check box.

    A rule must be completely defined before it can be enabled.

  4. Specify a demand priority by selecting a level from the Priority Specified For drop-down list.

  5. In the Demand Type field, enter one of the following:

    • Sales Orders

    • Over-Consumption Sales Orders

    • Forecasts

    This priority is applied to all demands of the demand type, unless the demand class or demand type - demand class has been specified. An entry must be made in this field.

  6. Enter any demand class in the Demand Class field. This priority is used to rank demands within each of the demand types. If no demand class is specified, it is set to the lowest priority within the demand type. You can also select All Other Demand Classes which allows you to set this priority directly. An entry must be made in this field.

  7. Enter a numeric value in the Priority field.

  8. Click the Save button.

When the form is saved, the read-only Calculated Demand Priorities area of the form is populated with the resulting calculated demand priorities. A row is created for each demand type and demand class combination and one additional row is created for the demand type and all other demands.

For demands in a distribution plan that use the above demand priority rule, any sales order line with a specific demand class will have that priority. For example, a sales order line with demand class RS-B will have priority 2.

Daily Load Consolidation

Distribution planning performs load consolidation and distribution by the minute. If supplies are available at 10:03 AM then you can create an outbound shipment with shipment time at 10:03 AM. Available supplies at 3:12 PM may lead to another outbound shipment to the same organization then. If you prefer to consolidate transfers consolidated by days, use one of these daily load consolidation.

For the first approach, adjust your supply schedules so that your supplies are available at the same time of day. If you use an ASCP plan as a supply schedule, run it in daily buckets so all supplies have the same timestamp.

For the second approach, use a calendar with shift duration at least one minute as the shipping calendar of your source organization. For example, set the shift to start at 10:59 and to end at 11:00. Distribution planning creates outbound shipments with timestamp 10:59. Supplies ready before 10:59 ship today and supplies ready after 11:00 ship tomorrow. You can change times as you manage actual shipments in your shipping and transportation management products.

Oracle recommends not to use this calendar for any other purpose. Define your transit calendars and receiving calendars appropriately.

Defining Trip Limits for Ship Methods by Lane

For the truckload (TL) ship methods, the concept of a trip limit is used in Distribution Planning. The trip limit is a weight maximum, a volume maximum, or both. You must define trip limits for TL ship methods for each shipping lane. The shipping network must be defined in the source instance before the user can access the trip limits on the planning servers.

You define trip limits on the Transit Times window by setting weight and volume trip limits for in the Shipment Limit area of this window. To access the Transit Times from the Navigator, the Transit Times form, select Setup > Transit Times.

When planning trips between organizations, distribution plans:

Only Maximum Trip Weight and Maximum Trip Volume can be edited and only when the Ship Method mode is TL Shipment limit fields cannot be edited for other Ship Methods. Distribution Planning uses the following rules when deciding what to ship and when, and how to consolidate shipments:

Trip Limit Constraints

When a Shipping Method is used on a Sourcing Rule, Bill or Distribution or Inventory Distribution Rule, the Shipping Method can be a constraint on the plan output. The following constraints are created by Shipping Methods:

Distribution Planning considers the minimum and maximum weight and volume limits for each Ship Method. You can specify new constraint plan options for the following trip limits for the distribution plan:

Distribution Planning uses the plan option utilization targets combined with the ship method maximum trip limits.

Distribution Planning uses the targets and minimums as follows:

Defining Sourcing Rules

Sourcing rules are defined the same as for MRP/MPS/MPP. Inter-organization sourcing relationships are defined and ship methods are selected. Multiple ship methods can be specified for the same supply source with differing percentages but the percentages are not necessarily respected for the same supply source with different ship methods.

If the sourcing rule is global, ship method is allowed but no transit time is specified as the shipping lane is not known.

If the sourcing rule is local, you can optionally specify a shipping method for a particular source organization. If no shipping method is specified, the default shipping method is used from the inter-organization relationships form. You can specify multiple ship methods for the same source organization on the sourcing rule or bill of distribution, giving each ship method a different rank.

You can specify multiple ship methods on the sourcing rule or bill of distribution, giving each ship method the same rank but different percentages. The requested inbound shipments for Rank 1 ship methods will respect the percentages by ship method if decision rules are not used. However, the final plan output might not respect the percentages because Distribution Planning will select the best ship method from among the Rank 1 ship methods. This means that you can specify two ship methods with differing costs, lead-times or maximum trip limits, and they are considered based on trip dates and sizes.

Please see the section Ship Method Selection for more details.

Multiple Inventory Policies

Distribution planning uses three values to create bands of inventory for items:

The inventory level varies among these values depending on the timing of economical trips that are moving on or before the date that is needed to keep the inventory level at the safety stock level.

Safety Stock

Distribution Planning uses the same profile options as Oracle Advanced Supply Chain Planning safety stock process. See Safety Stock

Even if safety stock smoothing is turned off, distribution planning uses the safety stock level of the last day of an allocation bucket as the safety level for the entire bucket. If the allocation buckets are weekly or larger, this gives the output a smoothed appearance. Even if no smoothing is selected, we display a constant safety stock level across the entire allocation bucket, since distribution planning allocation only considers the safety stock on the last day of an allocation bucket.

Smoothing occurs in two stages:

The planning engine uses profile option MSC: Safety stock change interval (Days) as follows:

The smoothing method within an allocation bucket considers the profile option MSC: Smoothing method to calculate safety stock within change interval:

The other profile options control safety stock smoothing behavior across allocation buckets:

To turn smoothing off across allocation buckets, set:

Distribution planning does not distinguish between transient and non-transient safety stock levels when creating planned orders. This concept is used in Oracle Advanced Supply Chain Planning for pegging but does not apply to distribution planning.

Entering Target and Maximum Inventory Levels

You enter target and maximum inventory level information in these places:

The defaulting hierarchy for target and maximum inventory levels, from first used to last used, is:

The planning engine smooths target inventory levels and maximum inventory levels in the same was as it smooths safety stock levels.

Calculating Target and Maximum Inventory Levels

For target inventory level:

For maximum inventory level:

Both inventory levels change on days where there is no demand since the planning engine calculates them for every day.

For both inventory levels, the day count starts with the current day. If the current day is not a workday, it starts with the next workday.

For weekly planning buckets, the planning engine adds up the demands in the buckets until it reaches Target Inventory Level Window or Maximum Inventory Level Window. For both levels, if it reaches the end of the window in the middle of a bucket, it prorates the demand in that bucket to calculate a smoother inventory level profile (that is not influenced by the position of the demands in the bucket).

For example:

Distribution Planning Using Multiple Inventory Policies

Distribution requirements plans consider the replenishment window as decisions are made about when an item is to be shipped. The maximum, target, and safety stock inventory levels give the plan the flexibility to accelerate or delay trips for the sake of economical trip sizes. They are applied to projected inventory on hand without regard to pegging relationships or inventory reservations.

The planning engine calculates supply and demand to the minute. While the safety stock and target levels are only calculated on a daily basis, the planning engine tries to keep the inventory balance always at the safety stock and target levels. For example, if a sales order is due to ship at 11:00 am, the planning engine creates a planned order due at 1100 am to maintain the safety stock or target inventory level after the sales order ships.

The maximum inventory level is an enforced constraint. If demand is greater than maximum, the planning engine plans to satisfy the maximum rather than the actual demand.

The planning engine uses the following rules to decide what to ship, when to ship, and how to consolidate shipments:

The planning engine uses these rules to break ties to fill an available trip:

Example 1

Safety stock levels are calculated by Oracle Inventory Optimization and the two percent of safety stock profile option values are 300% and 200%. This table shows sample maximum, target, and safety stock levels and projected available balance.

Entity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Maximum 15 15 15 15 15 21 21 21 21 21 30 30 30 30 30
Target 10 10 10 10 10 14 14 14 14 14 20 20 20 20 20
Safety stock 5 5 5 5 5 7 7 7 7 7 10 10 10 10 10
Projected available balance 10 10 10 15 15 14 14 14 14 7 10 10 20 20 30
Projected available balance +/- Target - - - 5 5 - - - - -7 -10 -10 - - 10
Projected available balance +/- safety stock 5 5 5 10 10 7 7 7 7 - - - 10 10 20

If the percentage for target is 150% of safety stock, then target inventory level is 10.5 [150% * 7]. The planning engine rounds the target and maximum inventory level values up if the item attribute enabling rounding control is selected.

If distribution planning does not have to consider optimum use of shipping capacity and there is sufficient supply, it maintains an inventory level equal to the target level. If there are opportunities to optimize the use of shipping capacity because of multiple shipment in a given time period moving into a facility, the actual on hand might fluctuate within the range of the maximum and safety stock and occasionally hitting the target level. Order modifiers can also cause inventory level fluctuations between safety stock and maximum. In the example:

Example 2

In this more complex example, safety stocks are actually very low relative to demand. From Example 1, there might be a demand for 100 units on Day 10. The 100 unit supply could never arrive even one day early using the profile options as specified. The user would have to set the profile options maximum percentage of safety stock to a much higher value.

In cases like this, it may be better of you select the item attributes method and set maximums that allow more flexibility so the planning engine can recommend shipment of supplies early.

In this example, the same safety stock levels are the same. You enter these values:

The demand on day 16 is also 400 units. The effect of the Maximum Inventory Level Days of Supply and Maximum Inventory Level Window values is that demands are allowed to arrive at the destination one day early.

Entity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Demand 70 70 80 80 100 100 100 150 100 200 200 200 200 200 400
Maximum 70 75 80 90 100 100 125 125 150 200 200 200 200 300 400
Target 10 10 10 10 10 14 14 14 14 14 20 20 20 20 20
Safety stock 5 5 5 5 5 7 7 7 7 7 10 10 10 10 10
Projected available balance 10 10 80 50 50 7 14 14 150 200 75 10 10 400 400
+/- safety stock - - 70 40 40 -7 - - 136 186 55 -10 -10 380 380

The maximum value for day 1 is 70, the average of day 1 and day 2 demands [(70 + 70) / 2].

The maximum inventory level bears little resemblance to the safety stock level. Instead, you have chosen to let the maximum inventory level fluctuate based on the average of the next two days supply. In other words, the amount of inventory that can arrive early in the warehouse is the average demand for two days.

Distribution Planning for Early Shipments

If there are supplies that are available early, the planing engine may decide to ship the supplies early.

Maximum inventory level in the destination organization places a limit on how early supplies can be shipped since inventory level cannot exceed the maximum. However, the maximum is sometimes violated in the destination organization if this organization is in the middle of a distribution network.

For Example:

The distribution planning engine determines how early a supply can be shipped based on the maximum inventory level. It then considers trip consolidation constraints and profile option MSC: Distribution Planning Ship Date to determine if the item should be shipped early.

There can be supplies available from two different sources and both are available early. If both cannot arrive at the destination organization early because of its maximum inventory level but one supply could arrive early:

Distribution Planning for Min-Max Simulation

Distribution planning replenishes to the target level. You might want to prevent the distribution engine from ordering small quantities when the projected available balance is close to the maximum, you can set a fixed order quantity as he minimum value for supply orders. For example:

The distribution planning engine does not create a supply order that violates the maximum. If projected available balance is 14, the projected available balance will be 18 (14 projected available balance + 4 fixed order quantity). It does not recommend a supply order.

The distribution planning engine does violate the maximum if projected available balance is below safety stock. For example:

If projected available balance is 9, it is below safety stock. The distribution planning engine recommends a supply order for 12. The projected available balance becomes 17 (9 projected available balance + 12 fixed order quantity).

Inventory Rebalancing

You use inventory rebalancing if you want distribution planning to resolve an expected shortage in one organization by planning to transfer inventory from a related organization and vice versa. For example, you have two regional distribution centers that are geographically close. If there is a shortage in either distribution center, the planning engine plans to use the other organization as a supply source. The planning engine does not create bidirectional transfers within the same bucket or across several close-in-time buckets to prevent inventory from continually circling back and forth between sites.

To specify your inventory balancing relationships, use the sourcing rules and bills of distribution of both of the organizations. To indicate an inventory balancing relation, you select Inventory Rebalance. You must use the sourcing rules and bills of distribution from the Distribution Planner responsibility. The sourcing rules and bills of distribution in Oracle Purchasing do not have the inventory rebalance fields.

This example shows rebalancing set up between an east organization (R1) and a central organization (R2). You must specify the inventory rebalance relationship between R1 and R2 on both the R1 local sourcing rule and on the R2 local sourcing rule for the inventory rebalancing relationship to be established. Both distribution centers normally source from the central distribution center D2.

This table shows the sourcing rules for organization R1 East.

Type
 Org Supplier Supplier Site Inventory Rebalance Allocation % Rank Shipping Method Intransit Time
Transfer from D2 - - Clear 100 1 Truck 2
Transfer from R2 - - Selected - <blank> Acme 2

This table shows the sourcing rules for organization R2 Central.

Type
 Org Supplier Supplier Site Inventory Rebalance Allocation % Rank Shipping Method Intransit Time
Transfer from D2 - - Clear 100 1 Truck 2
Transfer from R1 - - Selected - <blank> Ace 2

These are the rules that apply to specifying inventory rebalancing relationships:

This example shows rebalancing set up among an east organization (R1), a central organization (R2), and a west organization (R3). You must specify the inventory rebalance relationship among R1, R2, and R3 on the R1 local sourcing rule, on the R2 local sourcing rule, and on the R3 local sourcing rule for the inventory rebalancing relationship to be established. You need to mention each pair at least once.

This table shows the sourcing rules for organization R1 East.

Type
 Org Supplier Supplier Site Inventory Rebalance Allocation % Rank Rebalance Rank Shipping Method Intransit Time
Transfer from D2 - - Clear 100 1 <blank> Truck 2
Transfer from R2 - - Selected - <blank> 0 Acme 2
Transfer from R3 - - Selected - <blank> 1 Truck 2

This table shows the sourcing rules for organization R2 Central.

Type
 Org Supplier Supplier Site Inventory Rebalance Allocation % Rank Rebalance Rank Shipping Method Intransit Time
Transfer from D2 - - Clear 100 1 <blank> Truck 2
Transfer from R1 - - Selected - <blank> 0 Ace 2
Transfer from R3 - - Selected - <blank> 1 Truck 2

This table shows the sourcing rules for organization R3 West.

Type
 Org Supplier Supplier Site Inventory Rebalance Allocation % Rank Rebalance Rank Shipping Method Intransit Time
Transfer from D2 - - Clear 100 1 <blank> Truck 2
Transfer from R1 - - Selected - <blank> 0 Truck 2
Transfer from R2 - - Selected - <blank> 1 Truck 2

Inventory rebalancing relationships create a use up first relationship. That is, the supplies in the inventory rebalance relationship are used first before additional supplies are sourced from other locations. For example, distribution center DC1 has both an inventory rebalancing relationship with distribution center DC2 and a non-inventory rebalancing, transfer from relationship with manufacturing facility M1. The planning engine tries to resolve expected shortages at DC1 with expected inventory from DC2 before it tries to resolve expected shortages with inventory from M1.

Inventory rebalancing logic respects demand priority. If inventory rebalancing is specified between organization DC1 and organization DC2, the planning engine only plans to transfer the part of supply from DC2 to DC1 that is not needed to allocate to DC2 demands that are higher priority than the demand in DC1 that needs the supply. The planning engine does this by only considering the notion of a surplus projected available balance and a number of days that the surplus must exist.

The sources of supply that the planning engine considers for inventory rebalancing are:

Load consolidation is not done for inventory rebalancing relationships and trips are not created. The internal requisitions and internal sales orders are created and can be released.

Use plan option Inventory Rebalancing Surplus Days to specify the number of additional days that the surplus must exist before it can be used as a supply for a inventory rebalancing demand. This prevents the surplus from being used on one day when it might be needed for a demand tomorrow If it is zero, the surplus only has to exist at the end of each day. . For example, this table shows the inventory, supply, and demand position of an item, that uses inventory rebalancing:

Entity 1 2 3 4 5 6 7 8 9 10
Demand - - 3 5 - - - - 15 -
Supply - 1 - 4 7 - - 5 - 10
Projected available balance 16 17 14 13 20 20 20 25 10 20
Safety stock 10 10 10 10 10 10 10 10 10 10
Surplus 3 3 3 3 10 - - - - -

If inventory is planned to be shipped early because of trip consolidation and is firmed prior to the current plan run, the current plan run may create a surplus at the destination organization

Inventory rebalancing is designed to resolve short term inventory shortages; it is not intended to resolve ongoing supply shortages. Inventory rebalance sources are considered in the first planning bucket where there is demand. If the first demand is on Day 2 in organization A, inventory rebalance transfers may be recommended to meet the demand on Day 2. However, inventory rebalancing assumes that by day 3, the demands on day 2 have been met, and only considers the new demands on day 3. In other words, inventory rebalancing does not carry over unmet demands from one bucket to the next, and does not attempt to meet the total shortages over time.

Inventory rebalancing is considered in both the daily and weekly planning buckets. If the value of the inventory rebalancing surplus days calculated date falls on any day other than the end of the week in the source organization, the planning engine takes a conservative approach and extends it to the end of that weekly planning bucket. For example,

When evaluating inventory rebalancing results in weekly buckets, past due demands are not carried forward during the inventory rebalancing calculations, and so, inventory rebalancing may not be useful in the weekly buckets which are typically later in a plan horizon

Supply allocation rules:

The order modifiers are used for inventory rebalancing as defined on the Supply Allocation Rule, and if null then the item attribute order modifier Fixed Lot Multiplier is used. When defining a supply allocation rule for a inventory rebalancing relationship, only define the order modifiers as the demand priority override and fair share allocation selections are ignored by the planning engine.

Inventory rebalancing rules do not consider end item substitution relationships.

Setting Up Supply Allocation Rules

The Supply Allocation Rule form is used to define allocations for multiple destinations from a single shipping organization and determine how supply is allocated outwards from more central locations. Supply allocation rules are assigned to items and organizations within an existing assignment set, and are only assigned to organizations, not customer sites. They define:

To set up Supply Allocation Rules

  1. From the Navigator, select Distribution Planning > Sourcing > Supply Allocation Rules.

    The Supply Allocation Rule form appears.

  2. Enter the Name and Description for the supply allocation rule. To import this information from another supply allocation rule, click the Copy From button.

  3. In the Org fields, enter at least one organization. Organizations listed here are considered for both the Demand Priority Override and fair share allocation, even if no values are specified in either zone for that organization.

  4. Set the Fixed Lot Multiplier to be used by the supply allocation process by entering an integer greater than zero. The Fixed Lot Multiplier is used as the order modifier for assigned organization items.

    This step is optional and is only used for inter-organization transfers. If the Fixed Lot Multiplier is not defined by the supply allocation rule, Distribution Planning uses the destination organization Fixed Lot Multiplier for transfer order sizing.

  5. Set the Fair Share Allocation method to one of the following:.

    • Current Demand: Fair share of supplies is based on the ratio of demands in the allocation bucket. You can optionally enter a percent for one or more organizations. The percent overrides the safety stock ratio for that organization and the remaining organizations are apportioned the remaining percentages based on demand ratios.

    • Safety Stock Ratio: For an organization, fair share is calculated as follows:,

      Fair Share Percent = Organization Safety Stock / Total of All Organization Safety Stock Levels

      You can optionally enter a percent for one or more organizations. The percent overrides the safety stock ratio for that organization and the remaining organizations are apportioned the remaining percentages based on demand ratios.

    • Fixed Percent: Fixed percentages of supplies are allocated to each destination organization.

      The entered percents are used during the allocation process and define the minimum amount of the available supplies that an organization should receive. During allocation, the organization with the highest percent is considered first and is allocated up to that percent of the supply before the next organization is considered. After all organizations with defined percents are considered, any remaining supply is allocated on a first come first serve basis.

    • Order Size Method: Fair share is allocated by order size.

    • None: There is no fair share, supplies are allocated to demands on a first come first served basis.

      Fair Share Allocation methods are assigned in the assignments sets form.

    Please see the section Fair Share Allocation for more details.

  6. Enter required Percent values for the selected Fair Share Allocation method. The form validates Percent depending on the selected Fair Share Allocation method as follows:

    • Fixed Percent Method: Percent can be entered for each organization.

    • Safety Stock Ratio Method: Percent can be entered for each organization.

    • Current Demand Ratio Method: Percent can be entered for each organization.

    • Order Size Method: Percent is disabled.

    • None: Percent is disabled.

  7. Optionally, you can set the Demand Priority Override to establish priorities by organization by choosing Select Organization from the drop-down and specifying a priority for each destination organization.

  8. To specify how you want to planning engine to allocate external sales orders and internal sales orders, see profile option MSC: DPP allocates to existing ISO's before other demands with the same priority

Setting Up Assignment Sets

To set up assignment sets

  1. From the Navigator, select Distribution Planning > Sourcing > Assign Sourcing Rules

  2. Assign sourcing rules and bills of distribution.

  3. Assign supply allocation rules at the organization, organization category, or organization-item level.

Supply allocation rules are assigned to the shipping organization and specify how the shipping organization allocates when supply is short.

For supply allocation rules, the Assigned to list of values is:

Supply allocation rules cannot be assigned at the item or global levels. The context is always specific to the shipping or source organization. You must enter the organization which becomes the shipping organization context for the supply allocation rule.

Setting Up High Volume Distribution Planning

Use profile option MSC: Enable DPP Multitasking to enable high volume distribution planning.

System administrators set these profile options together for performance tuning depending on the plan structure and hardware available:

These profile options work together to affect performance. For example:

Order Modifiers

You can use these order modifiers with distribution plans:

See also Items > Order Modifiers.

You can set:

Order Modifiers and Transfer Orders

The planning engine does not use, approved supplier list order modifiers.

It first uses supply allocation rule order modifiers that are effective on the plan run date, regardless of the transfer due date

Otherwise, it uses the item-organization item attribute order modifiers from the destination organization.

When there are multiple order modifiers, it uses these procedures to decide on the order size.

Use supplier allocation rule order modifier Fixed Lot Multiplier, or item attribute order modifier Fixed Lot Multiplier. Set order size to the smallest multiple of the fixed lot multiplier that is more than the suggested order.

For example, demand quantity is 100, fixed lot multiplier is 30, order size is 120

Use supplier allocation rule order modifier Minimum Order Quantity, or item attribute order modifier Minimum Order Quantity. Set order size:

For example:

Use supplier allocation rule order modifier Maximum Order Quantity, or item attribute order modifier Maximum Order Quantity. Set order size:

For example:

If Maximum Order Quantity is the same or lower than Minimum Order Quantity, use Maximum Order Quantity as the order size and ignore Minimum Order Quantity.

If Maximum Order Quantity is lower than Fixed Lot Multiplier, use Maximum Order Quantity as the order size and ignore Fixed Lot Multiplier.

Round order quantities.

Order Modifiers and Buy Orders

The planning engine does not pay attention to supplier allocation rule order modifiers.

It first uses approved supplier list order modifiers

Otherwise, it uses the item-organization item attribute order modifiers from the destination organization.

When there are multiple order modifiers, it uses these procedures to decide on the order size

Use approved supplier list order modifier Fixed Lot Multiplier, or item attribute order modifier Fixed Lot Multiplier. Set order size to the smallest multiple of the fixed lot multiplier that is more than the suggested order.

For example, demand quantity is 100, fixed lot multiplier is 30, order size is 120

Use approved supplier list order modifier Minimum Order Quantity, or item attribute order modifier Minimum Order Quantity. Set order size:

For example:

Use item attribute order modifier Maximum Order Quantity. Set order size:

For example:

If Maximum Order Quantity is the same or lower than Minimum Order Quantity, use Maximum Order Quantity as the order size and ignore Minimum Order Quantity.

If Maximum Order Quantity is lower than Fixed Lot Multiplier, use Maximum Order Quantity as the order size and ignore Fixed Lot Multiplier.

Round order quantities.

Order Modifiers and Make Orders

The planning engine does not pay attention to supplier allocation rule or approved supplier list order modifiers.

It only uses the item-organization item attribute order modifiers from the destination organization.

When there are multiple order modifiers, it uses these procedures to decide on the order size.

Use item attribute order modifier Fixed Lot Multiplier. Set order size to the smallest multiple of the fixed lot multiplier that is more than the suggested order.

For example, demand quantity is 100, fixed lot multiplier is 30, order size is 120

Use item attribute order modifier Minimum Order Quantity. Set order size:

For example:

Use item attribute order modifier Maximum Order Quantity. Set order size:

For example:

If Maximum Order Quantity is the same or lower than Minimum Order Quantity, use Maximum Order Quantity as the order size and ignore Minimum Order Quantity.

If Maximum Order Quantity is lower than Fixed Lot Multiplier, use Maximum Order Quantity as the order size and ignore Fixed Lot Multiplier.

Round order quantities.

Order Modifiers and Partial Cancellations

When the planning engine recommends a quantity reduction to a scheduled receipt, it considers most modifiers. It does not consider order modifier Maximum Order Quantity; an order above the maximum order quantity can remain above the maximum order quantity.

It first checks for and uses the:

For example:

For example:

Order Modifiers and Inventory Rebalance Transfers

To override item-organization item attribute order modifiers, set up one supplier allocation rule for all inventory rebalance organizations and assign it to an organization.

The planning solver uses the supply allocation rule order modifiers for transfers from that assigned organization to any organization with an inventory rebalance relationship.

For example:

Distribution Requirements Planning

MRSL Fields in the DRP Workbench

Consideration of inventory rebalancing with MRSL

Any supply used for inventory rebalancing must have sufficient MRSL to meet the destination org demand MRSL value when the supply arrives at the destination org.

MRSL and Fair Share Logic

DRP performs supply allocation among competing demands when supply is short. Within a bucket, demands are grouped by priority, and supplies are allocated to the top level demand priority group.

Allocations are made using supplies which can satisfy the MRSL requirement of the demand. DRP selects supplies for which the (Shelf Life – MRSL) exceeds the Demand Date by a minimum amount.

If a supply cannot satisfy any MRSL demand requirement in the current allocation bucket and priority, it is not used in the current allocation process. The total supply to be allocated is reduced by the unusable supply. This supply will be considered for allocation to demands in lower priorities in case it can be used for those demands.

Within the demands, if there is any demand where no supply can satisfy the demand MRSL requirement, then the demand is not included. Other demand allocations are adjusted to use up the supply. The adjusted supply and demand quantities are then used for the allocation process.

MRSL Consideration of Kitting

If the model is setup for kitting then the first phase of allocation is to create the kit item supplies. At this point all kit components are processed and the constrained supplies picture for kit components is finalized. Regarding MRSL functionality, there are no special requirements that could affect DRP kitting logic.

Note: Lot expired supplies cannot be used for a kit supply after their lot expiration date.

The only addition in DRP kitting is to calculate the expiry date (shelf life date) for each new Make Planned Order. Shelf life date calculation logic for kit item is performed as follows:

MSC: Distribution Planning Respects Minimum Remaining Shelf Life

This profile option enables DRP to plan supplies with respect to the shelf life, including the minimum remaining shelf life days.

Value Description
No DRP plans supplies without enforcing minimum remaining shelf life days. This is the default value.
Yes DRP plans supplies with respect to minimum remaining shelf life days. This is the recommended setting.

Note: The profile option "MSC: Respect Minimum Remaining Shelf Life Days" is not used by DRP.

Minimum Remaining Shelf Life

For perishable items, the Distribution Plan can be configured to consider the Minimum Remaining Shelf Life (MRSL). (For information about incorporating MRSL when modeling the Supply Chain, see Setting Up Minimum Remaining Shelf Life in the chapter Supply Chain Plan Modeling).

Consideration of MRSL when Pegging In-transit Supplies

Shelf life is the time between a product's Creation Date and Expiration Date. The Minimum Remaining Shelf Life (MRSL) is the number of days of remaining shelf life as of the Arrival Date (when the product arrives at the final destination). The MRSL is typically a requirement of the Sales Order.

The Minimum Remaining Shelf Life Days can be specified in the Item Attributes Mass Maintenance window at the item/customer/customer site level, and also at the org/org level.

Note: The following 2 steps are prerequisites to populating the MRSL column in ODS:

  1. The user needs to enter the sales order line specific MRSL in a DFF in the source instance.

  2. The user needs to develop a load program that brings this sales order line specific MRSL to the planning server (ODS). This program should be added to a data collections request set.

Hierarchy

The following hierarchy is used to determine the MRSL value for each demand:

Maximum Time Offset

In order to prioritize moving items with near expiration dates, DRP selects supplies for which the Remaining Shelf Life (at the time of the planned delivery date), minus the MRSL, will equal the least number of days. In the example below, both items satisfy the MRSL requirement. Item A arrives with 6 days of remaining shelf life (10 - 4) and Item B arrives with 4 days of remaining shelf life (8 - 4). So in this situation, Item B would be selected, because 4 is less than 6.

Item Remaining Shelf Life (as of today) In-transit Days Remaining Shelf Life (as of Arrival Date) MRSL Requirement
A 10 4 6 3
B 8 4 4 3

The Max Time Offset is essentially the maximum allowable number of days for the product to reach the customer's site before expiring. It is calculated as (Expiration Date - Today) - MRSL.

For Item A above, since it starts with 10 days of remaining shelf life, it must reach the customer site no later than the 7th day. Any later and its shelf life would be less than the MRSL.

The Planning Engine enforces the Max Time Offset based on the item's remaining shelf life, the in-transit days, the customer's Demand Date, and the MRSL. It will not allow the item to reach the customer with less than the required MRSL.

Anchor Date

You can tell the planning engine to calculate remaining shelf life based on the Arrival Date or the Ship Date. This is accomplished by the profile option “MSC: Anchor date for calculating remaining shelf life”. The allowable values for this profile option are:

Value Description
Arrival Date The remaining shelf life is calculated based on the arrival date at customer site - This is the default value.
Ship Date The remaining shelf life is calculated based on the ship date.

Note: In both cases DRP considers the latest of Requested or Scheduled Dates to calculate the remaining shelf life.

Consideration of MRSL for Sourcing Decisions

For perishable items, the Distribution Plan can be configured to consider the Minimum Remaining Shelf Life (MRSL). (For information about incorporating MRSL when modeling the Supply Chain, see Setting Up Minimum Remaining Shelf Life in the chapter Supply Chain Plan Modeling).

Consideration of MRSL when Pegging In-transit Supplies

Shelf life is the time between a product's Creation Date and Expiration Date. The Minimum Remaining Shelf Life (MRSL) is the number of days of remaining shelf life as of the Arrival Date (when the product arrives at the final destination). The MRSL is typically a requirement of the Sales Order.

The Minimum Remaining Shelf Life Days can be specified in the Item Attributes Mass Maintenance window at the item/customer/customer site level, and also at the org/org level.

DRP also allows you to specify the MRSL at the sales order line level. The user accomplishes this by populating the column called “MINIMUM_REMAINING_SHELF_LIFE” in the “MSC_SALES_ORDERS” table in the planning server (ODS).

The following 2 steps are prerequisites to populating the MRSL column in ODS:

  1. The user needs to enter the sales order line specific MRSL in a DFF in the source instance.

  2. The user needs to develop a load program that brings this sales order line specific MRSL to the planning server (ODS). This program should be added to a data collections request set.

Hierarchy

The following hierarchy is used to determine the MRSL value for each demand:

Sales order line specific

Item-customer-customer site specific

Item-org specific

DRP overrides the item-customer-customer site specific MRSL defined in the Item Attributes Mass Maintenance window with the sales order line specific MRSL if the latter is not null

DRP overrides the item-org specific MRSL defined in the Item Attributes Mass Maintenance window with the item-customer-customer site specific MRSL if the latter is not null

Maximum Time Offset

In order to prioritize moving items with near expiration dates, DRP selects supplies for which the Remaining Shelf Life (at the time of the planned delivery date), minus the MRSL, will equal the least number of days. In the example below, both items satisfy the MRSL requirement. Item A arrives with 6 days of remaining shelf life (10 - 4) and Item B arrives with 4 days of remaining shelf life (8 - 4). So in this situation, Item B would be selected, because 4 is less than 6.

Item Remaining Shelf Life (as of today) In-transit Days Remaining Shelf Life (as of Arrival Date) MRSL Requirement
A 10 4 6 3
B 8 4 4 3

The Max Time Offset is essentially the maximum allowable number of days for the product to reach the customer's site before expiring. It is calculated as (Expiration Date - Today) - MRSL.

For Item A above, since it starts with 10 days of remaining shelf life, it must reach the customer site no later than the 7th day. Any later and its shelf life would be less than the MRSL.

The Planning Engine enforces the Max Time Offset based on the item's remaining shelf life, the in-transit days, the customer's Demand Date, and the MRSL. It will not allow the item to reach the customer with less than the required MRSL.

Anchor Date

You can tell the planning engine to calculate remaining shelf life based on the Arrival Date or the Ship Date. This is accomplished by the profile option “MSC: Anchor date for calculating remaining shelf life”. The allowable values for this profile option are:

Value Description
Arrival Date The remaining shelf life is calculated based on the arrival date at customer site - This is the default value.
Ship Date The remaining shelf life is calculated based on the ship date.

Note: In both cases DRP considers the latest of Requested or Scheduled Dates to calculate the remaining shelf life.

Consideration of MRSL for Sourcing Decisions

Oracle ASCP selects sources and their associated supplies such that MRSL constraints are satisfied.

DRP prioritizes shelf life above the following sourcing and end item decision factors (For example, if there are no rank 1 supplies with the required shelf life days, then DRP searches lower ranked sources to find a supply which meets the MRSL constraint):

  1. Source Rank

  2. Source Tier

    Tier represents the breadth vs. Rank which represents the depth.

    For example there are two sources, a Rank 1 source and a Rank 2 source. The Rank 1 source has 2 sources as well, A Rank 1 and a Rank 2:

    the picture is described in the document text

  3. Sourcing Split Percentage

  4. End Item Substitute Distance from Demanded Item

This means ASCP chooses supplies so that the maximum number of demands are satisfied with respect to shelf life requirements regardless of the above 4 decision factors. These decision factors are only used as tie breakers.

MRSL Support for Multi Echelon Supply Chain

DRP considers the expiration date of the on hand lot upon transfer to the destination organization with respect to in-transit time.

When transferring between organizations, DRP considers the shelf life days in the source org and does not reset shelf life days in the destination org.

Note: Oracle Inventory has a profile option in 12.2 “INV: Enable Global Attributes for Lot”. When set to yes, the inventory lot has the same expiration date in all organizations. If Yes, then collections can get the lot expiration date of the supplies in the shipment. Users should set this profile to Yes.

Example of Multi Echelon Support

Assumptions:

Product P is shipped from organization M2 to customer. This item is sourced from organization M1.

Item Shelf Life = 21 days

In-transit Time from M1 to M2 = 5 days

In-transit Time from M2 to Customer Site = 2 days

MRSL = 13 days

Demand = 100 units

Ship Date = January 26

Arrival Date = January 28

Arrival Date is selected as the MRSL Anchor Date.

There are two possible lots to fill this order:

Product P On hand Lot 1.1 = 100 units

Product P Lot 1.1 Remaining Days to Expire = 16 days

Product P On hand Lot 1.2 = 100 units

Product P Lot 1.2 Remaining Days to Expire = 21 days

The diagram below shows why Lot 1.1 will NOT be allowed to satisfy this order. The product has a 16 remaining days to expire from the time the order is received ("Today's Date"). However, it will take 7 days to reach the customer, and would arrive with 9 remaining days to expire, which is less than the MRSL requirement of 13 days.

Remaining Shelf Life – In-transit Times = 16 – 5 – 2 = 9

the picture is described in the document text

This next diagram shows why Lot 1.2 WILL satisfy this order. The product has a 21 remaining days to expire from the time the order is received ("Today's Date"). It takes 7 days to reach the customer, and will arrive with 14 remaining days to expire, which satisfies the MRSL requirement of 13 days.

Remaining Shelf Life – In-transit Time6 = 21 – 5 – 2 = 14

the picture is described in the document text

Consideration of MRSL for Calculation of Safety Stock

The attribute "Safety Stock MRSL" in the Item Attributes Mass Maintenance form configures the planning engine to consider MRSL when calculating safety stock. This attribute represents the minimum number of days of required shelf life for the safety stock when it is used for a customer demand. The value specified for this attribute is a judgment call by management based on all customer's MRSL for the item.

This attribute may be set to:

The following table illustrates ASCP behavior with regards to safety stock without shelf life and MRSL consideration:

the picture is described in the document text

Safety Stock MRSL

The attribute Safety Stock MRSL represents the minimum days of required shelf life for the safety stock when it is used for a customer demand. The value specified for this attribute is a judgment call by management based on all customers MRSL for the item.

Typically this attribute can be set to the maximum of the customer MRSL's that the safety stock needs to protect for, somewhat below the maximum (a more typical value), or above the maximum in order to minimize MRSL violations for demands that are satisfied with safety stock.

ASCP validates the remaining shelf life of transfer and on hand supplies against Safety Stock MRSL. ASCP creates additional new supplies for any transfer or on hand supply that does not respect the following constraint:

Remaining Shelf Life of Supply > or = Safety Stock MRSL

Example:

Item is shipped from organization M1 to customer.

Item is made at M1.

Item can also be sourced from organization M2 to organization M1 (Alternate Source).

On Hand Quantity (Lot 1.1) at M1: 20

Lot 1.1 Remaining Shelf Life: 9 Days (Expiry Date: D9)

On Hand Quantity (Lot 1.2) at M2: 20

Lot 1.2 Remaining Shelf Life: 10 Days (Expiry Date: D10)

On Hand Quantity (Lot 1.3) at M2: 20

Lot 1.3 Remaining Shelf Life: 9 Days (Expiry Date: D8)

In-transit Time from M2 to M1: 2 Days

Item Shelf Life at M1: 10 Days

Item MRSL at M1: 7 Days

Safety Stock MRSL at M1: 8 Days

On hand Lot 1.1 at M1 with can be used as a valid supply at M1 since its remaining shelf life of 9 days is greater than the required Safety Stock MRSL of 8 days.

On hand Lot 1.2 at M2 with the remaining shelf life of 10 days at M2 can be used as a valid supply at M1 since its remaining shelf life when it arrives at M1 is 8 days (Remaining Shelf Life – In-transit Time = 10 – 2 = 8) which is equal to the required Safety Stock MRSL.

On hand Lot 1.3 at M2 with the remaining shelf life of 8 days at M2 cannot be used as a valid supply at M1 since its remaining shelf life when it arrives at M1 is 7 days (Remaining Shelf Life – In-transit Time = 9 – 2 = 7) which less than the required Safety Stock MRSL of 8 days.

The following table displays the supply and demand picture at M1:

the picture is described in the document text

In the above scenario, the PAB drops below the Safety Stock Target Level on D3. Then ASCP creates a planned order to satisfy demand (20) in addition to the transfer order of 20 from M2. Similarly ASCP creates planned orders of 20 and 30 on D8 and D16 respectively.

Note: The arrows show the safety stock pegging.

Note: Satisfying safety stock levels and the MRSL for safety stock levels have a lower priority compared to satisfying end demands and the MRSL for end demands.