To synchronize order horizons between BOM levels

In situations where multilevel BOM and BCM structures are used, it is important that the order horizons and planning horizons at the various levels are properly synchronized.

Without such synchronization, strange planning situations can occur. This is illustrated in the following example.

Example

Item A is manufactured using subassembly B. B is manufactured using component C. C is purchased from a business partner. A and C are critical items; B is not critical. This results in the following BOM and BCM structures.

ABC
Planning horizon10 weeks4 weeks4 weeks
Order horizon7 weeks4 weeks4 weeks

 

The effective lead times are as follows:

  • The production of 100 piece of item A takes 2 weeks (according to the routing of A).
  • The production of 100 piece of item B takes 2 weeks (according to the routing of B).
  • According to the Bill of Critical Materials of the lead time for the critical component C is 4 weeks.

Consider the following planning situation, in which there are three requirements for item A, labeled X, Y, and Z. In principle, each requirement is passed on to the next BOM or BCM level, shifted in time on the basis of either routing data or BCM data.

  • Requirement X, falling within item A's order horizon, is passed on from A to B, and from B to C.
  • Requirement Z, falling within item A's master-planning horizon, is passed on directly from A to C.
  • Requirement Y falls within item A's order horizon. However, when it is passed on to item B, it falls outside B's order horizon. Consequently, this requirement is not considered in the planning of B, and is not passed on to C.

This results in a strange planning situation for item C when the scenario is rolled forward (at weekly intervals). If a requirement for 100 piece of A is present in week 18, the following will occur:

  • When you generate the item plan in week 10, the requirement for A (in week 18) results in a dependent demand for C in week 14 (4 weeks from present week).
  • A week later, in week 11, you update the item plan. Now, this requirement for C disappears: it does not show up in week 14 (three weeks from now).
  • Another week later, week 12, this same requirement for C reappears in week 14 (two weeks from now).

In other words, a gap occurs in the planning of item C. This is due to the fact that requirements that fall just inside A's order horizon fall outside B's order horizon (and planning horizon). In this situation, B's order horizon should be at least one week longer.

Rule

To avoid situations like the one described here, LN applies the following rule to noncritical items when checking horizons (in the Check Horizons (cprpd1200m000) session):

  • 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 above example, LN will indicate that the order horizon of item B must be extended to 7 weeks (the same as item A).

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