Priority-Based Planning
Topic: - Introduction to Priority-based planning in
Dynamics 365 F&O.
Pre-requisites: -
1. Before
you install the Planning Optimization Add-in, the following prerequisites must
be in place:
·
You must be running Supply Chain
Management on an LCS-enabled high-availability environment, tier 2 or higher
(not a OneBox environment), with Dynamics 365 Supply Chain Management version
10.0.7 or later. If you try to install the add-in on a OneBox environment, the
installation will not complete, and you will need to cancel the installation.
·
Your system must be set up for
Power Platform integration.
2.
Enable the Planning Optimization
license
3.
Install the Planning Optimization Add-in
4.
Integrate Planning Optimization
with your system
5.
Connection status
6.
The Use Planning Optimization
option
7.
Integration with the setup
Agenda: -
1.
What
is Priority-based planning?
2. Benefits
of priority-based planning
3.
With
priority-based planning, organizations gain the capability to
4.
Where
and how planning priorities are assigned
5.
Types
of priority calculation methods
6.
Pre-requisite
7.
Business
scenarios
1.
What is priority-based planning?
Priority-based planning can help businesses optimize their
supply chain while increasing service levels and reducing inventory levels. Priority-based
planning enables Planning Optimization to generate planned orders that are
driven by planning priorities instead of requirement dates.
2.
Benefits of priority-based planning:
-
· This
feature adds support for demand-driven planning, which is one of the five steps
related to demand-driven material requirements planning (DDMRP). With
priority-based planning, the optimization of supply to cover demand is based on
priorities, not requirement dates, which are used in classic material
requirements planning (MRP).
·
Priority-based planning lets you prioritize
replenishment orders to ensure that urgent demand is prioritized over less
important demand. For example, a stockout replenishment order will be
prioritized over a standard refill replenishment order. The system can
automatically split larger orders into separate smaller orders where order
lines are grouped by priority. It can then process all high-priority orders
first.
·
On top of this, the system can automatically
split large refill orders into separate, smaller orders, with different
priorities assigned to each order. This approach provides coverage of the
critical portion of an inventory refill, instead of simply refilling warehouses
to the maximum with a single supply. This minimizes the risk of stockout by
optimizing the use of available supply.
·
Another benefit of priority-based planning is
that priority can be used to compare the importance of relevant orders across
products and locations during execution planning.
3.
With priority-based planning,
organizations gain the capability to: -
· Calculate,
manually edit, or default on planning priorities.
· Control
replenishment by setting reorder point parameters.
· Split
and optimize distribution orders using planning ranges.
· Group
planned orders at firming.
· Utilize
customizable planning priority ranges.
· Apply
planning priority capabilities to intercompany orders.
4.
Where and how planning priorities are
assigned?
Planning priority information about supply and
demand is the backbone of priority-based planning. Planning priority defines
the importance of a demand or supply line. Planning optimization uses it when
the coverage code field is set to priority.
The planning priority is usually a number between 0
(zero) and 100, where 0 represents the highest importance. It is shown and set
in the Planning priority field. You can find this field on the
following pages
a)
Demand forecast lines
b)
Sales order details
c)
Purchase order details
d)
Transfer order details
e)
Planned order details
When
the coverage code field for the relevant item or coverage group is
set to Priority, planning optimization balances supply with demand by
using a demand-driven approach as it calculates the planning priority and, for
each released product, considers the values that are set for the minimum, reorder
point, and maximum fields on the item coverage page.
5.
Types of priority calculation methods
Each planning priority model has a priority
calculation method setting that controls how master planning applies
priority to planned orders. The available values are Percent of maximum
inventory quantity and Priority ranges. Priority ranges represent
a more advanced version of the Percent of maximum inventory
quantity method.
· Percent of maximum
inventory quantity: -
In the percent of maximum inventory
quantity calculation method, the supply priority calculation finds the
current total available inventory (net flow) as a percentage of the maximum
inventory quantity value that is set for an item. A single planned order
is then created per item and vendor (unless the maximum order quantity is used
to force a split). The planning priority of the order is calculated as a
percentage of the maximum.
The following formula is used:
Percentage of maximum = (Net flow
position × 100) ÷ Maximum inventory quantity value from the item
coverage
In this formula, the net flow position is
calculated in the following way:
Net flow
position = On-hand + On-order – Qualified demand
On-order is the expected supply.
Qualified demand represents the net requirements
that have the requirement date within the planning time fence.
During the master planning run, new planned orders are
created when the net flow position is less than the reorder point quantity for
an item. The planned order quantity is the difference between the maximum
inventory quantity value that is set at the item level and the net flow
position. The planned order priority is calculated as a net flow
position percentage of the maximum inventory quantity value.
· Priority ranges: -
The priority ranges calculation method is
more advanced than the percent of maximum inventory quantity method
and is configured at the level of the planning priority model. Several new
planned supply orders can be created to fulfil the demand per item. The
priorities of the planned supply follow the values that are defined in
the planning priority ranges grid on the Planning priority
models page.
The following additional rules become effective when
the priority calculation method field is set to Priority ranges:
§
If the considered demand priority option for the
planned priority model is set to Yes, a priority that is set on each demand
line will limit the priority range bucket. The priority of any new planned
order for supply will be no lower than the demand's priority. The range's upper
value is considered a threshold that the demand's priority value compared. If
the demand's priority is exactly in the middle between the upper threshold
values of two ranges, the range that has the highest priority (that is, the
lowest priority value) will be selected.
§
If the planned order creation field for the
planned priority model is set to a Single supply with the most important
priority, only one supply will be created to fulfil up to the maximum. The
priority will be set to the priority of the first range that will trigger a
supply.
§
If there is no on-hand inventory, no supply, and
no demand, the line in the Planning priority ranges grid, where the from
quantity field is set to Zero, will be used.
§
If there is demand, but there is no on-hand
inventory or expected supply, the line in the Planning priority ranges grid,
where the from quantity field is set to Zero or less, will be used.
§
When the range that the demand is part of is
evaluated, the setting of the Consider demand priority option will still have
an effect.
6.
Pre-requisites: -
· We
need to enable the “Planning Optimization” functionality within the feature
management.
· In
Feature management, turn on “(Preview) Priority driven MRP support for Planning
Optimization.”
· Set up your first
planning priority model: -
Planning priority models are assigned to
coverage groups and control the planning priority for planned orders. They
define the logic that determines how the planning priority value is calculated
for each planned order, and how priority is assigned to planned orders, supply
lines, and demand lines.
To work with the planning priority models, go
to Master planning > Setup > Planning priority models. As was
previously discussed, one of a model's most important settings is the priority
calculation method value. This setting controls the calculation used when
master planning assigns a priority value to planned orders.
· Coverage Group: -Set
up a coverage group that includes your planning priority model.
·
Item Coverage: -Set up item coverage
for items with the newly created coverage groups as needed to drive the
minimum/maximum values and new reorder point values to trigger the planned
order during the Master Plan run. The reorder point creates an opportunity to
use the minimum value as a true safety stock value to ensure less opportunity
for stock out in future business.
When sales orders, transfers,
purchase orders, and demand forecasts are created, the planning priority field
will generate automatically per the defaults set in the planning priority
model. These default values can be overridden within the order line details.
Master planning will generate new planned purchase orders, demand forecasts,
and transfer order suggestions when the projected on-hand value falls below the
reorder point. The value and number of planned orders will be determined by the
planning priority model and item coverage of the released product. In standard
D365 operation, net requirements will update once master planning has been run
again. Within net requirements, the planner can see a new column with the
calculated planning priority. The planning priority value provides the planner
with an additional data point when allocating current inventory, and existing
or future supply-to-demand orders.
Run master planning and try out
the planning priority model setup to see the impact of the calculated planning
priority on planned orders.
7.
Business scenarios: -
·
Scenario 1 for the maximum priority
percentage: -
For
the item, Mouse11 warehouse W001 is the main central warehouse, and it has W002,
and W003 two local warehouses replenished by central warehouses (W001). W001 the
minimum quantity of 10 (safety stock) is then added to get a reorder point of 50
and the maximum quantity is 100. When this setup is used, supply will be
suggested when the projected on-hand level is below 50. The order priority will
be based on the planning priority setup.
The
maximum inventory level for an item in local warehouse W002 is 80 pieces, the
minimum inventory qty is 10 pieces and the reorder point is 35. the projected
on-hand inventory is 50 and therefore gets assigned a priority of (20/80)
*100=25. In another local warehouse, W003 is 70 pieces, and the reorder point
is 30, the projected on-hand inventory is 15 and therefore gets assigned a
priority of (15/70) *100=21.43. The warehouse W003 is considered at a higher
risk of stock-out and gets replenished before the warehouse in W002.
Item coverage group table
|
Warehouse |
Minimum |
Reorder Point |
Maximum |
On hand |
|
W001 |
10 |
50 |
100 |
100 |
|
W002 |
10 |
35 |
80 |
20 |
|
W003 |
10 |
30 |
70 |
15 |
According
to the above table, W002 requires 60 pieces and W003 55 pieces from the central
warehouse W001. Warehouse W001 has 100 pieces in the warehouse but to
fulfilling the local warehouses and their own need central warehouse will
create planned purchase order of 115 pieces.
Net requirement
table
|
Warehouse |
Planned order type |
Required Qty |
Planning priority Percentages |
|
W001 |
Purchase |
115 |
0 % |
|
W003 |
Transfer |
55 |
21.43% |
|
W002 |
Transfer |
60 |
25% |
Planning
priority percentages are calculated based on a project on hand qty.
·
Scenario 2 for the priority ranges
for single planned order creation type:
For
the item, Mouse12 warehouse W001 is the main central warehouse, and it has
W002, and W003 two local warehouses replenished by central warehouses (W001).
W001 the minimum value of 10 (safety stock) is then added to get a reorder
point of 50 and the maximum quantity is 100. When priority ranges setup is
used, supply will be suggested when the projected on-hand level is in between
priority ranges. The order priority will be based on the planning priority
setup.
The
maximum inventory level for an item in local warehouse W002 is 80 pieces, the
minimum inventory qty is 10 pieces and the reorder point is 35 pieces. the
projected on-hand inventory is 20 pieces according to the priority ranges set
up the project on-hand qty is between minimum inventory qty to reorder point
qty and therefore it gets assigned a priority of 50 %.
In another local warehouse,
W003 is a maximum inventory level of 70 pieces, a minimum is 10 pieces, and a
reorder point is 25, the projected on-hand inventory is 0 according to the
priority ranges set up for the project on hand qty between zero qty to minimum
order qty and therefore it gets assigned a priority of 30 %. The warehouse W003
is considered at a higher risk of stock-out and gets replenished before the
warehouse in W002.
Item coverage group
table
|
Warehouse |
Minimum |
Reorder Point |
Maximum |
On hand |
|
W001 |
10 |
50 |
100 |
100 |
|
W002 |
10 |
35 |
80 |
20 |
|
W003 |
10 |
25 |
70 |
0 |
According
to the above table, W002 requires 60 qty and W003 70 qty from the central
warehouse W001. Warehouse W001 has 100 qty in the warehouse but to fulfilling
the local warehouses and his own need central warehouse will create planned
purchase order of 130 qty
In the
central warehouse, W001 is a maximum level inventory of 100 pieces, and the
reorder point is 50, the projected on-hand inventory is below 0 according to
the priority ranges set up for the project on hand qty is between from zero qty
to zero or less qty and therefore it gets assigned a priority of 10 %.
Net requirement
table
|
Warehouse |
Planned order type |
Required Qty |
Planning priority Percentages |
|
W001 |
Purchase |
130 |
10 % |
|
W003 |
Transfer |
70 |
30% |
|
W002 |
Transfer |
60 |
50% |
·
Scenario 3 for the priority ranges
for split planned order creation type:
For
the item, Mouse13 warehouse W001 is the main central warehouse, and it has
W002, and W003 two local warehouses replenished by central warehouses (W001).
W001 the minimum value of 10 (safety stock) is then added to get a reorder
point of 50 and the maximum quantity is 100. When priority ranges setup is
used, supply will be suggested when the projected on-hand level is in between
priority ranges. The order priority will be based on the planning priority
setup.
The maximum inventory
level for an item in local warehouse W002 is 80 pieces, the minimum inventory
qty is 10 pieces and the reorder point is 35 pieces. the projected on-hand
inventory is 20 pieces it requires 15 pieces to match the reorder point
according to the priority ranges set up the project on hand qty is between from
minimum inventory qty to reorder point qty and therefore it gets assigned a
priority of 50 %. The match the maximum inventory of 80 pieces we require 45
pieces qty which is between, from reorder to maximum inventory priority range therefore
it gets assigned a priority of 70 %
In another local warehouse,
W003 is a maximum inventory level of 70 pieces, a minimum is 10 pieces, and a
reorder point is 25, the projected on-hand inventory is 0 pieces it requires 10
pieces to match the minimum inventory according to the priority ranges set up
the project on hand qty is between from zero qty to minimum qty and therefore
it gets assigned a priority of 30 %. To match the reorder point of 25 pieces we
require 15 pieces qty which is between, from minimum to reorder priority range therefore
it gets assigned a priority of 50 %. To match the maximum of 70 pieces we
require 45 pieces qty which is between, from reorder point to the maximum
inventory level priority range therefore it gets assigned a priority of 70 %
Item coverage group table
|
Warehouse |
Minimum |
Reorder Point |
Maximum |
On hand |
|
W001 |
10 |
50 |
100 |
100 |
|
W002 |
10 |
35 |
80 |
20 |
|
W003 |
10 |
25 |
70 |
0 |
According
to the above table, W002 requires 60 qty and W003 70 qty from the central
warehouse W001. Warehouse W001 has 100 qty in the warehouse but to fulfilling
the local warehouses and his own need central warehouse will create planned
purchase order of 130 qty
In the
central warehouse, W001 is a maximum level inventory of 100 pieces, and the
reorder point is 50.
·
To match the maximum qty 100 it will go in the first
range from reorder to max the max is 100 pieces and reorder point is 50 pieces (100-50=50)
the projected on-hand qty is 50 pieces, therefore it gets assigned a priority
of 70%.
·
The reorder point is 50. To match the reorder
point qty 50 it will go in the second range from minimum to reorder the reorder
is 50 pieces and the minimum is 10 pieces (50-10=40) the projected on-hand qty
is 40 pieces, therefore it gets assigned a priority of 50%.
·
To match the minimum qty 10 it will go in the third
range from zero to minimum the minimum is 10 pieces (10-0=10) the projected
on-hand qty is 40 pieces, therefore it gets assigned a priority of 30%.
·
The rest qty 30 pieces will go in the fourth
range from zero or less to zero the projected on-hand qty is 0 pieces,
therefore it gets assigned a priority of 10%.
Net requirement table
|
Warehouse |
Planned order type |
Required Qty |
Planning priority percentages |
|
W001 |
Purchase |
50 |
70 % |
|
|
Purchase |
40 |
50
% |
|
|
Purchase |
10 |
30 % |
|
|
Purchase |
30 |
10
% |
|
|
|
|
|
|
W002 |
Transfer |
15 |
50
% |
|
|
Transfer |
45 |
70 % |
|
|
|
|
|
|
W003 |
Transfer |
10 |
30% |
|
|
Transfer |
15 |
50% |
|
|
Transfer |
45 |
70 % |
