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Tips & Tricks to Achieve Rough-Cut Capacity Planning for Optimal Supply Network Planning and Distribution

by The Tip Doctor

June 15, 2011

Tip Doctor, Insider Learning Network.

This tip comes from a presentation delivered by Dr. Suraj Mhatre, MySupplyChainGroup, at the Idea-to-Delivery Conference 2011 - Orlando, FL: SCM, PLM, MFG and Procurement.

How do you know if your business benefit from rough-cut capacity planning?

Planners from different industries often struggle in a similar way, to capture the right amount of data at the detail-level in order to avoid capacity overloads. Supply network planning (SNP) functionality from SAP Advanced Planning & Optimization (SAP APO) can be used to solve distribution and capacity issues at rough cut level, whether your business is supplying a global retail chain, managing distribution at a food packaging company, scheduling production at multiple oil refinement plants, or addressing fleet distribution loading for the Chemicals industry.

What if you are managing thousands of SKU’s? Together with SAP production planning and detailed scheduling (PP/DS) functionality — SNP enables you to first determine optimal sourcing, and then schedule production locations based upon short-term planning horizons.

When it is unnecessary (and infeasible) to plan at the detail level considering all the constraints of the entire business, rough-cut planning can be us ed to make high-level decisions, and can be used for:

  • S&OP planning
  • Large amount of master data
  • Complex distribution networks
  • Multiple constraints
  • Lack of information at the detail level
  • Lack of resources to analyze results at the detail level

While carrying out rough-cut planning, it’s very important to determine how to group certain master data for planning purposes.  Another important consideration is the integration between rough-cut planning and detail planning.

Do you need rough-cut capacity planning?

  • S&OP planning
    • For S&OP planning, detail-level planning is seldom required
  • Large amount of master data
    • Certain industries have large amount of master data including production locations, distribution locations, customers, vendors, finished goods, components and resources
    • Though advances have been made in computing power, it is sometimes infeasible to execute detail-level planning without an adverse affect on system performance
  • Complex distribution networks
    • Multiple manufacturing facilities, distribution centers, vendors and customers can create a complex distribution network, which can not be planned for at the detail level without affecting performance
  • Multiple constraints
    • Planning at detail level with multiple constraints such as production capacities, distribution capacities, storage capacities, handling capa cities, lot sizes, and setup sequences can become impossible
  • Lack of information at the detail level
    • Often times information such as detail-level capacities are not available or vary frequently; only information at the group level is available
  • Lack of resources to analyze results at the detail level
    • Even if planning can be carried out at the detail level, sometimes not enough resources are available to analyze planning results
    • In this case a quick analysis of planning results at the rough-cut level is the alternative

In summary: Rough-cut planning can be crucial to your business if you need to make some quick decisions in the absence of detailed information.

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