How Multiechelon Replenishment Planning Is Done

During multiechelon replenishment planning, two passes are performed through your supply chain. During the first, bottom-up pass, unconstrained planning is performed. During the second, top-down pass, constrained planning is done.

The following is the high-level process for multiechelon replenishment planning:

1. A low-level code is computed on the basis of the sourcing rules for each item-location combination in the supply chain.
2. Beginning with the item-location combinations at the bottom-most echelon, unconstrained demand is propagated up through the supply chain.

   Unconstrained planned orders are created at destination locations, and the corresponding unconstrained planned order demands are created at source locations. The lead-time constraints are adhered to during this step.

   If a substitution or supersession chain is defined at a location, then the substitute or supersession item's excess supply is first used, and only the remaining, unmet demand is propagated to the upstream location.

   Purchase orders, purchase requisitions, transfer orders, or movement requests that aren't firm might get rescheduled (preponed) for avoiding the creation of planned orders. However, the due dates for the rescheduled orders must be one day after the natural time fence.

   Sourcing ranks and sourcing allocation percentages, if defined, are used for propagating unconstrained demand to upstream source locations.

   This process is repeated at every echelon until the top-most echelon is reached.

3. At the top-most echelon, constrained planned orders (that is, planned orders) are created.

   The lead-time constraints are adhered to during this step.

4. Beginning with the item-location combinations at the top-most echelon, constrained supply is propagated down through the supply chain.

   For fulfilling every unconstrained planned order demand coming from destination locations, constrained planned orders are created at destination locations, and the corresponding constrained planned order demands are created at source locations. The lead-time constraints are adhered to during this step. The constrained demand is created at a source location only after all local demand for the source location is met.

   Constrained planned orders are created at a destination location only if the source location has the required supply (reflected in the Constrained Projected Available Balance measure) to completely meet the unconstrained planned order demand. Otherwise, the creation of constrained planned orders is delayed until there's enough supply for meeting the unconstrained planned order demand.

   The supply of the substitute or supersession item at a source location can be used for meeting the requirement for the demanded item at the destination location. A planned order is created for moving the substitute or supersession item from the source location to the destination location. At the destination location, substitute supply is created for the demanded item, and substitute demand is created for the substitute or supersession item. The item relationship at the destination location is respected. If the item relationship at the destination location isn't the same as that at the source location, then substitution or supersession isn't performed.

   This process is repeated at every echelon until the bottom-most echelon is reached.