Cumulative order lead times and horizons

For every plan item you must define an order horizon and a planning horizon. The order horizon is the time span in which Enterprise Planning generates planned orders and explodes the dependent demand to all components included in the bill of material (BOM).

The planning horizon is the time span in which Enterprise Planning creates, plans, and explodes the dependent demand to all the components of the parent item that you defined in the bill of critical materials.

If the horizons are too long, this can lead to unnecessary performance problems. If horizons are too short, this can lead to problems in the explosion of material requirements. As a consequence, it is critical that the settings of the order horizon and the planning horizon are correct, because they directly affect the explosion of the dependent demand . This is why Enterprise Planning uses the concept of cumulative order lead times.

The COLT concept applies two different values:

The total cumulative order lead time (COLT) of an item is equal to the longest of the following lead times:

The item's purchase lead time.
The item's cumulative production lead time.

Refer to online manual topic Example: cumulative order lead time (COLT) for a detailed explanation about the COLT concept.

The noncritical cumulative order lead time (noncritical COLT) of an item is equal to the longest of the following lead times:

The item's purchase lead time.
The item's noncritical cumulative production lead time.

LN uses these COLT values to calculate the minimum length of the order horizon and the planning horizon:

The total cumulative order lead time (COLT) is used to update the planning horizon of an item.
The noncritical cumulative order lead time (noncritical COLT) is used to update an order horizon.

For each specific plan item you can see both the COLT and the noncritical COLT in the Items - Planning (cprpd1100m000) session. In this session you also find the Automate Update Horizons check box. If you select this check box, and select Check Horizons on the appropriate menu, you can zoom to the Check Horizons (cprpd1200m000) session. When you click the Update button in this session, Enterprise Planning computes each COLT value.

The following example explains why it can be necessary to compute a COLT and a noncritical COLT.

Example

End item A is composed of item B (lead time = two weeks). Item B is composed of item C (lead time = two weeks). Item C is purchased externally (lead time = one week). Only item C is a critical component for item A (lead time = four weeks).

Suppose Item A, B, and C have the following horizon settings:

	Item A	Item B	Item C
Order horizon	7 weeks	4 weeks	4 weeks
Planning horizon	10 weeks	4 weeks	4 weeks

Three sales orders, X, Y, and Z exist for item A:

Week	1	2	3	4	5	6	7	8	9	10
Item A						X	Y	Z
Item B				X
Item C		X		Z

As you can see, the dependent demand for sales order X in week six is exploded to component B in week four and to component C in week two. The dependent demand for sales order Y in week seven is not exploded at all, because the order horizon for component B stops at the end of week four. The dependent demand for sales order Z in week eight is exploded directly to component C in week four.

If you roll the scenario one week with the Initialize, Roll, and Update Scenario (cprpd4200m000) session, the dependent demand for component C, caused by sales order Z, which now occurs in week seven, disappears completely.

If you roll the scenario for another week, sales order Z occurs in week six, and the dependent demand reappears for components B and C. To avoid these unusual planning situations, LN uses the COLT concept. Based on this concept, LN can automatically update and correct the minimum values for the order horizon and the planning horizon, which is crucial for consistent order planning and master planning.

Enterprise Planning applies a set of basic rules when it uses the COLT values to set the minimum order horizon and the minimum planning horizon. These rules vary in accordance with the plan item details.

For items that are critical in master planning (see the Items - Ordering (tcibd2100m000) session) and that have an item master plan, the following rules apply:

The item's planning horizon must at least be equal to the item's total COLT.
The item's order horizon must at least be equal to the item's noncritical COLT.

For items that are critical in master planning, and that do not have an item master plan, Enterprise Planning applies the following rules:

The item's planning horizon must at least be equal to the item's total COLT.
The item's order horizon must at least be equal to the item's total COLT.

For items that are not critical in master planning, the following rules apply:

The item's order horizon must at least be equal to the item's total COLT.
The item's planning horizon must at least be equal to the item's order horizon.
The item's order horizon must at least be equal to the order horizon of the nearest critical parent item in the (multilevel) BOM structure.

In the Check Horizons (cprpd1200m000) session, you can select one of the three update options in the Update Method field to determine how Enterprise Planning must update the COLT values and the horizons. These update options are:

COLT: Enterprise Planning calculates the COLT, the noncritical COLT, and updates the values in the Minimum Order Horizon field and the Minimum Planning field in the Items - Planning (cprpd1100m000) session.
COLT + Horizons When Too Small Enterprise Planning calculates the COLT, the noncritical COLT, updates the values in the Minimum Order Horizon field and the Minimum Planning field, and the values in the Days field and the Days field in the Items - Planning (cprpd1100m000) session, if they are too small to correctly generate planned orders.
COLT + All Horizons: Enterprise Planning calculates the COLT, the noncritical COLT, updates the values in the Minimum Order Horizon field and the Minimum Planning field, and the values in the Days field and the Days field in the Items - Planning (cprpd1100m000) session.