Selecting External Suppliers

Order-based purchase planning in Enterprise Planning handles the generation and planning of purchase orders.

Purchase planning chooses between alternative suppliers and distributes volumes over these suppliers on the basis of constraints and rules.

You can specify these constraints and rules in the following sessions:

  • Items - Purchase Business Partner (tdipu0110m000) (in Common).
  • Supply Strategy (cprpd7120m000) (in Enterprise Planning).

Purchase planning uses supply strategies with supply type Purchase.

During order-based supply planning, the following steps are carried out for each required plan item:

  1. Determine the requirements.
  2. Determine the source of supply (production, purchase, or distribution).
  3. Arrange the suppliers in order of preference ( LN takes into account the value set in the Priority field).
  4. Determine the volume by supplier by the value set in the Allocation Rule field in the Supply Strategy (cprpd7120m000) session, and determine the lot size restrictions, and capacity restrictions.
  5. Determine the delivery date and order date by supplier.
Step 1. Determine the requirements

The master planning engine or the order planning engine determines the required volume and the requirements date.

Step 2. Determine the source of supply

LN determines how much of a requirement is covered by purchase on the basis of either a valid sourcing strategy or the plan item's default source. See Sources of supply: production, purchase, or distribution.

Step 3. Put the suppliers in order of preference

LN orders the suppliers in accordance with the priority rule that is effective on the requirement date. You define the priority rule in the Supply Strategy (cprpd7120m000) session.

Step 4. Determine the delivery date and order date by supplier

LN uses various calendars to determine the finish date (delivery date) and the start date (order date). See To compute supply lead-times.

Step 5. Determine the volume by supplier

LN distributes the required volume over the suppliers in the order calculated in step 3.

For more details, see To compute purchase order quantities.

Note

If a plan item has no valid supply strategy, LN uses the following values by default:

This process is carried out in multiple phases. If, after a phase, all the requirements have not been covered, LN proceeds with the next phase. In each phase, LN plans the volume based on the allocation rule.

  • Unit effectivity

    When LN searches for suppliers, LN takes into account the exceptions that you link to buy-from business partners and sourcing strategies. With these exceptions, you can influence the way in which LN selects supply sources in two ways:

    For more information about unit effectivity, refer to Unit effectivity in Enterprise Planning.

  • If supplier cannot deliver

    If LN cannot find a valid supplier for a requirement at a certain moment, it creates a purchase order for an empty supplier and generates a signal. If you specified a supplier as single source supplier, and this supplier cannot deliver the demand at a certain moment, LN does not generate a purchase order, but tries to fulfill the demand with the supply source distribution or purchase following the sourcing strategy that you defined. If you did not specify a sourcing strategy for the item, LN does not create orders, but generates a signal.