Forecast planning, Master planning, & inventory replenishment

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Posted on by C_McD

Traditional wholesale distribution inventory replenishment uses dynamic safety stocks, dynamic lead times, reorder points, economic order quantities, etc., I am trying to turn the corner to figure out how D365 MRP can be used for pure distribution with no production. At a high level, I understand the MRP application in manufacturing to created planned production orders, but the concept of many individual planned purchase orders at the same time for the same item for the same warehouse is kinda foreign to wholesale distribution. To add to my learning curve challenges, I now understand that planned PO's from Forecast Planning are created separately than planned PO's from MRP. I have read every piece of documentation I can find on this topic and still have many questions. ANY insight would be greatly appreciated!!!!

Is there a single, consolidated view that shows a Buyer the totality of all the suggested purchases for an item/warehouse? (preferably a single, quantity combined, planned PO for an item/warehouse, but would settle for just a single view of many planned PO's for a single item/warehouse from both forecast planning and MRP).
Is there a way to run MRP where it would incorporate the statistical forecast into it's creation of planned PO's - or can this only be accomplished via running "Forecast Planning" and MRP" independently resulting in two different list of planned PO's?
Can planned PO's be created based on other types of forecasts (demand forecasts, supply forecasts, inventory forecasts)? What is the purpose (use cases) of all these different forecasts and how does MRP use them?

Please don't roast me for asking fundamental questions... I'm just trying to figure out how to do wholesale distribution inventory replenishment using manufacturing centric tools.

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S padhy on at

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Hi,

I am going through these details and get back you on this.

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Guy Terry 28,924 Moderator on at

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Hi

Don't get too hung up on "MRP" being for Manufacturing. For starters, Dynamics 365 Supply Chain Management doesn't have anything it calls MRP; it's called Master scheduling, and you can find it in the Master Planning module. Even though it's commonly called MRP, it's just as useful for planning the supply of purchased items as it is for planning the supply of manufactured items.

It has some of the concepts which you mention, and although it may not calculate when to re-order in the same way as every other system, many thousands of organisations use it to do so successfully.

[quote user="C_McD"]I now understand that planned PO's from Forecast Planning are created separately than planned PO's from MRP.[/quote]
Yes, each plan that you maintain has its own planned orders. Typically, you would use only one plan for the planned puchase orders which you expect to convert in to real purchase orders. This would come from Master scheduling, and would be your Master Plan. You do not need to run Forecast scheduling separately...if you have configured a Forecast to use, then Master scheduling will consider that automatically.
[quote user="C_McD"]Is there a single, consolidated view that shows a Buyer the totality of all the suggested purchases for an item/warehouse? (preferably a single, quantity combined, planned PO for an item/warehouse, but would settle for just a single view of many planned PO's for a single item/warehouse from both forecast planning and MRP).[/quote]
There's the Planned purchase orders list, which can be filtered by Item and Warehouse. You need to select which plan's Planned orders you wish to see.

[quote user="C_McD"]Is there a way to run MRP where it would incorporate the statistical forecast into it's creation of planned PO's - or can this only be accomplished via running "Forecast Planning" and MRP" independently resulting in two different list of planned PO's? [/quote]
Master scheduling will automatically consider the forecast if you enable it on the Master plan (Forecast model and Include demand forecast).

[quote user="C_McD"]Can planned PO's be created based on other types of forecasts (demand forecasts, supply forecasts, inventory forecasts)? What is the purpose (use cases) of all these different forecasts and how does MRP use them?[/quote]
Planned POs can be created from Demand Forecasts (and other types of demand, like Sales orders, or Transfers to another warehouse). I have never used a Supply Forecast, but I believe they will actually reduce the Planned POs (i.e. if you have a Supply Forecast which covers all of your demand, then SCM will see no need to create Planned POs). The Inventory forecast is mostly an internal forecast used by planning calculations. You can ignore it. It contains the net result of the Demand + Supply forecast.

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C_McD 10 on at

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Hello Guy;

Thank you very much for taking the time to really consider my questions and respond. Greatly appreciated. I further researched these points after reading your response so as not to pester you with questions, but would you mind fielding a couple follow up questions?

1.) The documentation that I have found seems to revolve around Master Planning > Run > Master Planning - not Master Scheduling? I see previous versions have Master Scheduling under Periodic in Master planning, but I cannot find it and a menu search doesn't find it in D365. Can you please distinguish between the two?

2.) This response is promising for me: "Master scheduling will automatically consider the forecast if you enable it on the Master plan (Forecast model and Include demand forecast)." Are you saying that if I run Master Scheduling/Planning using a plan that specifies a forecast model and checks "include Demand Forecast", then the result will consist of a SINGLE list of planned PO's that contains all planned PO's generated from master planning (Sales Orders, Xfr orders, journals, etc.) PLUS planned PO's from Forecast Planning PLUS planned PO's from the manually entered "Demand forecast"?

3.) This is a clear response that I couldn't find anywhere: " {Inventory forecast} contains the net result of the Demand + Supply forecast.". I will gladly set aside thinking about "supply forecasts" and "inventory forecasts" just to reduce the noise in my thoughts!

4.) If there are any other recommendations you might have for a pure purchase, sell, and transfer environment, I'd be very interested in your thoughts.

Thank you very much.

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Guy Terry 28,924 Moderator on at

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1. Sorry, they changed the name of it and I didn't even notice. Master scheduling is the old name. Master planning is the new name. It's just a name change.
2. Yes, that is what I am saying. And you do not need to run Forecast planning. If your Demand forecast is in the Forecast model which you set on the Master plan, there is no need to also run Forecast planning. SCM will take all the demand (Sales orders, Demand forecast, Transfer orders, Stock journals, Safety stock, etc.), maybe bunch it together depending on your Coverage settings, and create Planned Purchase orders to meet all that demand.

4. If you're learning, keep it simple to start, and then change a parameter at a time to see the effect. Maybe just play with one item to begin with, until you have a feel for getting the results you like.

When building scenarios, I tend to just use a Demand forecast to represent any type of demand. For the most part, where the demand comes from is not important, and it's easier to create Demand forecast lines than it is to create several Sales orders, for example.

If you're just starting to implement Master planning, consider going straight in with the new Planning optimisation feature. It will replace the existing planning engine, which will begin to be deprecated next year.

docs.microsoft.com/.../planning-optimization-overview

It does not currently support all the functionality that the existing planning engine has (and mostly it is production scenarios that are not handled), but that will change.

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C_McD 10 on at

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Hello Guy;

Forgive me the delay in this response. I am continuing to work on this.

Thank you very much for clean concise answers to my specific questions. I've been able to incorporate a forecast plan in a master planning run and saw the additional planned PO's that were not generated when I did not incorporate the forecast. That's a MAJOR point for me so your guidance was incredibly helpful.

I am familiar with the rollout of the Planning Optimization feature and have been following it closely. It is going to be very valuable in my efforts for wholesale distribution as they will want to run planning multiple times per throughout the work day as inventory positions are constantly changing.

Last question and I'll leave you alone. :-) : You mentioned "...maybe bunch it together depending on your Coverage settings, and create Planned Purchase orders to meet all that demand". I'm sure my coverages are going to need to be by Period. Do you have any advice for structuring coverage groups and/or item coverage and/or master planning parameters to accomplish the goal of having more consolidated planned PO's instead of a separate planned for each and ever individual demand? In a perfect world, I could do this in such a way that when master planning is run, the result would be a single planned PO per item per warehouse where the item quantity represented the sum of all the individual demands (actual + forecast).

thanks again.

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Guy Terry 28,924 Moderator on at

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[quote user="C_McD"]In a perfect world, I could do this in such a way that when master planning is run, the result would be a single planned PO per item per warehouse where the item quantity represented the sum of all the individual demands (actual + forecast).[/quote]
Are you sure that is true. Consider an example where you have demand forecast for the next 24 months. Would you really want to hold all of the stock that you need to cover 24 months demand, just so you can reduce the number of POs that you have to raise?

In most cases, I think the answer would be no, but perhaps there are exceptions.

To get a single Planned PO, you would use the Coverage code = Period, and set Positive days and Coverage period to the same number as you have set for Coverage time fence. So in the 24 months example, your Coverage time fence would be set to 730 days, and indicates how far out MRP should look. Setting the Coverage period to 730 tells MRP to group all of the demand within that 730 day period, and try to meet it with a single supply. Positive days set to 730 allows demand which falls towards the end of the coverage period to use a supply order which will be received at the beginning of the coverage period.

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C_McD 10 on at

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Hi Guy. As usual, I appreciate the insight and willingness to share your knowledge. Although new to master planning, I am not new to inventory management, forecasting, and replenishment (25 years). Just different tools & methods.

Wholesale distribution sales orders come in and ship out all day long every day - in my case by the thousands - and the items sold are like a box of chocolates... :-) It is not the norm for someone to order something for delivery in a month so you can plan to get it in just in time.

In this Use Case, covering by Period using a statistical forecast would self-adjust more as demand moves up and down than the static values of Min/Max. So my read is that is my only choice. Of course, I wouldn't try to cover 24 month periods. :-)

I am excited to create a setup like you described and evaluate the results. Then I'll move on to spoke warehouse inventory transfer replenishment in a hub and spoke system... Please feel free to weigh in on that (or anything else). I will gladly accept the coaching.

Many thanks. Your help has been invaluable - I'll buy the next round!!!

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C_McD 10 on at

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Hello Guy; Could you stand one more question in this area? I would greatly appreciate it... should be easy...(?)

It appears that an item in the Demand Forecast table is allowed more than once with the exact same dimensions including time period. For example could I have a record for item X for this month in warehouse A that has a quantity of 10, and separately, a different row in the table for item X for this month in warehouse A for 75.

My master plan includes using the demand forecast. How will master planning view and replenish this item - as a single demand of 85 total for the period? Or as two separate demands in the same period for 10 and 75? Or just the first record it finds?

Grateful...

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