Overview of Multiechelon Replenishment Planning

Multiechelon replenishment planning balances demand and supply at each echelon of your network. The demand at each level is propagated to the immediate upstream level. The supply at each level fulfills demand at the immediate lower level.

Two passes are performed through your supply network during multiechelon replenishment planning. First, a bottom-up pass is performed for propagating unconstrained demand from downstream locations to upstream locations. Unconstrained planned orders are created at destination locations, and the corresponding unconstrained planned order demands are created at source locations. The unconstrained planned orders are governed by policies. This process is repeated at every echelon till the top-most echelon is reached. Then, a top-down pass is performed for fulfilling the demands coming from the lower echelons. For fulfilling every unconstrained planned order demand from a destination location, constrained planned orders (that is, planned orders) are created at destination locations, and the corresponding constrained planned order demands are created at source locations. This process starts at the top-most echelon and is repeated at every echelon.

Multiechelon replenishment networks are common in the retail and service parts industries, among other industries. Most enterprises in such industries prefer to plan their supply networks by considering constraints at all echelons of the networks.

Benefits of Multiechelon Replenishment Planning

A multiechelon replenishment plan provides you with these benefits:

• You can enhance your planning process by taking a holistic view of your entire supply network and considering supply constraints.

  You can work with a replenishment plan that acts as the single source of truth for demands and supplies across your supply chain.

• You can improve customer satisfaction by balancing demands and supplies at each echelon of your network.
• Forecasting is done at the lowest echelon of your network, and this forecast drives demand fulfillment across your supply chain.
• Constrained planned orders are created at a destination location only if the source location has the 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 supply for meeting the unconstrained planned order demand.

Additional Points About Multiechelon Replenishment Planning

Note these points about multiechelon replenishment planning:

• A multiechelon replenishment plan can have the daily or an aggregate planning time level.

  In a plan with an aggregate time level, the logic for calculating and releasing planned orders is the same whether the functionality for multiechelon replenishment planning is used or not.

• You can use multiechelon replenishment planning along with the feature for end item substitution and supersession.

  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.

• You can use multiechelon replenishment planning along with the feature for inventory rebalancing.

  Inventory rebalancing is first done for the entire supply chain before multiechelon replenishment planning is done.

  If the unit of measurement (UOM) for your policy parameters is days, then the Reserved Safety Stock measure is calculated on the basis of the safety stock that doesn't include the unconstrained planned order demand.

• During simulation for a multiechelon replenishment plan, if you make a change for an item, it's replanned at all echelons.

  If you simulate a change to an item that's part of a substitution or supersession chain, the entire chain is replanned at all echelons.

• In a multiechelon replenishment plan that's enabled for incremental planning, if the demand or supply of an item is changed, it's replanned at all echelons.

  If you change the supply or demand for an item that's part of a substitution or supersession chain, the entire chain is replanned at all echelons.

• Hold dates and expiration dates are respected in a multiechelon replenishment plan.

  The unconstrained planned order demand is included in the computation of the Total Demand measure. Therefore, when the lot expiration date for an echelon is determined on the basis of the Total Demand measure, the unconstrained planned order demand is considered indirectly.

• For policy computation at all the echelons, the total forecast is required, which is the sum of the dependent and independent forecast.

  For replenishment calculation at all the echelons, only the independent forecast is required. The dependent demand is propagated from the lower echelons.

• At the upper echelons of your supply network, only sales orders are used for consumption against independent demand.

  Transfer orders or movement requests from lower echelons aren't used for consumption of independent demand.

• During multiechelon replenishment planning, 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, lead-time and supply constraints at the source locations might prevent such rescheduling.

• You can use sourcing ranks and sourcing allocation percentages to model your multiechelon supply network and determine how demand should be propagated to upstream source locations.

  All order modifiers are supported along with sourcing ranks and sourcing allocation percentages.

• Constrained planned supply and constrained planned demand are represented by the order types called planned order and planned order demand respectively in the Supplies and Demands table. You can release orders of the planned order type.

  Unconstrained planned supply and unconstrained planned demand are represented by the order types called unconstrained planned order and unconstrained planned order demand respectively in the Supplies and Demands table. You can't release orders of these types, and you can use these orders for only analysis.

• In a multiechelon replenishment plan, the only supply constraints that are recognized at an echelon are because of the lead time, calendar, or supply constraints at the upper echelon.