Sourcing Allocation Splits

The planning process creates supplies based on the sourcing splits (rank one only). Supply planning uses split percentages that can be specified on sourcing rules.

You can rank the sources of supply that are named in the rules and bills, giving one priority over another when the planning process generates recommendations. You can also assign sourcing percentages to these sources, which lets you to allocate a portion of the total orders to each source. Sourcing allocation considers all supply sources: buy, make, and transfer.

If there are no order modifiers, then when supplies are required on a day, the planned orders for the day are split into as many planned orders as required to meet the rank one sourcing allocation splits. If there are item-attribute or supplier-order modifiers, the supply is created for the highest allocation split percent source (rank one) respecting the order modifiers. Then a supply is created for the next source, again respecting the order modifiers. The supply sources are used in allocation percent order. As each order is created, the next lower allocation percentage source is considered. If all rank one sources are used, then an order is created for the remaining top allocation percent source again and so forth through the top rank sources. This is repeated until enough supply is created.

The calculation attempts to balance supply sources over the plan horizon to meet the rank one allocation percents. If supplies don't respect the split due to existing purchase orders or order modifiers, then the planning process select sources each day to bring the plan horizon supplies into alignment with the sourcing splits. You have to create supply on the source that leads to the lowest deviation of the cumulative sourcing split from the split percentages specified in the sourcing rule. The planning process doesn't consider historical receipts when calculating sourcing splits. Only open purchase orders, transfer orders, and make orders are considered.

The following formula is used to calculate the sourcing split each day:

If Total Supply multiplied by Source A allocation percentage > Supply for Source A, then create a new planned order for Source A (respecting order modifiers) so that supply for Source A > or = Source A allocation percentage multiplied by Total Supply, until Total Supply > or = Total Demand.

Sourcing allocation and effective dates: If a sourcing rule becomes effective on a certain date, then the planning process respects the allocation percentages from the effective date and after. The planning process doesn't consider allocation that has happened before the effective date.

For example, a plan runs on March 1st and the sourcing rule is:

• Effective January 1st until May 31st: 40 % Acme, 60 % Business World

• Effective June 1st: 50 % Acme, 50 % Consolidated

Starting June 1st, the allocation process splits 50/50 between Acme and Consolidated. The allocation process ignores the history before the effective date. The allocation process doesn't consider whether Acme has 40% or 60% of the orders before June 1st.