Target Buying

Limitations

• Fashion processes are not supported.
• Working with a buyer's planned orders is limited to only one user at a time.
• Planned orders for different product lines or different warehouses cannot be released into a single purchase order. The purchase planning screen must be filtered per buyer, supplier, product line, and warehouse when performing the release.
• The product value of existing planned purchase orders is not automatically updated when changing the value of the item or item/warehouse.
• The purchase order categories allowed when releasing planned purchase orders from (PPS191) are limited to 20-'Purchase order' and 25-'Consignment order'.

Before you start

1. Define product lines in 'Product Line. Open' (CRS099).

2. Define the product line level to be used for target buying in 'Settings-Purchasing' (CRS780/H).

3. Assign product lines to items on 'Item. Open' (MMS001/F) or 'Item. Connect Warehouse' (MMS002/F). Only items with a product line set on 'Item. Open' (MMS001/F) or 'Item. Connect Warehouse' (MMS002/F), depending on the value of product line level on (CRS780/H), are subject to the target buying process.

4. Set 'Planning level' to 1-'Prod line, whs' on 'Supplier. Define Purchase Financial' (CRS624/E) for each supplier that must be used for target buying.

5. Create settings in 'Purchase Planning Settings. Open' (PPS195) for each combination of supplier, product line, and warehouse that must be used for target buying. See the 'Settings descriptions' section. (PPS195) can be accessed from (CRS624) using related option 22.

6. Configure the planning parameters in 'Item. Connect Warehouse' (MMS002).

7. In 'Purchase Planning Priority Rules. Open' (PPS197), define a sequence of rules for displaying priorities in (PPS190), (PPS191), and (PPS192). When creating a new sequence, select a rule, specify a value (depending on the rule) and a planning priority number between 1 and 5.

   Note: You can define different rules that all lead to the same priority number. See the 'Priority rule example' for more details.

   Settings descriptions

   Program ID/Panel	Field heading	Description
   (CRS624/E)	Planning level	A supplier with this field set to 1-‘Product line, whs’ is used for target buying. Entries for this supplier are created in (PPS195).
   (CRS780/H)	55 Batch origin – purchase planning	This field defines the batch origin policy used when creating purchase orders in (PPS191).
   (CRS780/H)	64 Product line level	This field defines the product line level to be used for the target buying process.
   (MMS001/E)	Product line	This field defines in which product line the item number is included.
   (MMS001/F)	Gross weight	If target weight is used, a gross weight per basic U/M must be defined for each item.
   (MMS001/F)	Volume	If target volume is used, a volume per basic U/M must be defined for each item.
   (MMS015/B)	Alt U/M type, Alt U/M	If target quantity is used, the unit of measure entered on (PPS195/E) must be defined with type 1 for each item.
   (MMS002/E) (MMS002/F)	Lead time Order quantity Annual demand	If an order quantity is specified, it is used for the planned orders generated by the target fill-up. If no order quantity is specified, it is calculated as the daily demand (annual demand/work days per year) multiplied by the number of lead time days.
   (MMS002/F)	Product line	This field defines in which product line the item/warehouse is included.
   (MMS002/G)	Buyer	This field defines the buyer that is used as the default buyer for planned purchase orders. This buyer must match the buyer responsible for the product line on (PPS195/E).
   (PPS195/E)	Target type	These alternatives are valid: 1 - Weight 2 - Volume 3 - Cost 4 - Quantity This field determines the target value used by the purchase planning programs (PPS190) and (PPS191) and how the total or actual value is calculated.
   (PPS195/E)	Target weight Target volume Target cost Target quantity	Depending on the target type, this target value must be met. The target fill-up continues until the actual value of the planned orders exceeds the target value. See 'Fill-up logic'.
   (PPS195/E)	Maximum weight Maximum volume Maximum cost Maximum quantity	This field defines a limit for how large an order can be. The limit is often affected by physical nature. For example, a weight limit for a truck load. If several values are specified, all of them are checked. Maximum value equal 0 means that there is no limit.
   (PPS195/E)	Currency	This field defines the currency used for 'Target cost', 'Maximum cost', and the calculated total or actual cost in (PPS190) and (PPS191).
   (PPS195/E)	Unit of measure	This field defines the unit of measure used for 'Target quantity', 'Maximum quantity', and the calculated total or actual quantity in (PPS190) and (PPS191).
   (PPS195/E)	Buyer	This field defines the buyer for the product line for the supplier in the warehouse. This buyer is set as a default buyer for planned purchase orders in (MMS002). Note: Only items that are connected to this buyer in (MMS002) are included in the target fill-up.
   (PPS195/E)	Order type	This field defines the purchase order type that is proposed for the purchase orders released from (PPS191). If left blank, the released purchase orders get the order type of the planned purchase order. This action may result in the purchase order being split into several orders, one per order type.
   (PPS195/E)	Review cycle	This field defines the planned number of days between PO releases. By default, only planned POs with a release date within one review cycle are included in the (PPS191) selection.
   (PPS195/E)	Fill-up logic	This field determines when the target fill-up stops. These alternatives are valid: 1 - Below max The fill-up continues until the target value is reached (actual value ≥ target value) and stops before any maximum value is exceeded. 2 - Disregard max The fill-up continues until the target value is reached (actual value ≥ target value) but does not check maximum values. If a maximum value is exceeded, a warning message is displayed in (PPS191).
   (PPS195/E)	ABC type	This field is used to define the type of the ABC class range, which limits the items used by the target fill-up.
   (PPS195/E)	ABC class (from/to)	If specified, only planned purchase orders for items in this ABC class range are generated by the target fill-up.
   (PPS195/E)	Priority	This field defines the (PPS170) order priority (PRIP) assigned to planned orders generated by the target fill-up.
   (PPS195/E)	Auto fill-up	This field determines if planned POs are created in (PPS690) when the target level is not met. These alternatives are valid: 0 = No automatic fill-up Automatic target fill up is not performed. 1 = Fill up if over the threshold Automatic target fill-up is performed when the target threshold is exceeded. 2 = Fill up always Automatic fill-up is always performed.
   (PPS195/E)	Fill to next multiple	This field defines when to allow fill-up to a multiple of the target value. These alternatives are valid: 0 = Not used 1 = Yes, manually If the maximum value is exceeded, the system performs target fill-up to the next multiple of the target, when used by (PPS191). 2 = Yes, automatically This alternative is similar to alternative 1, but is also used by (PPS690). This parameter can be used, for example, when the current load does not fit in a single load carrier, but can fill two loads instead. Example: If the target value is 8, with a maximum of 10, the actual value is 11 (greater than maximum), and this setting is enabled, fill-up continues to the next multiple of the target value, 8 * 2 = 16, with a new maximum of 20. If this double maximum is exceeded, the next multiple is 3, and the target value 8 * 3 = 24, and so on.
   (PPS195/F)	Release below target	This field determines whether to release the planned purchase orders when the target value is not met. These alternatives are valid: 0 = Allow all Release of all planned purchase orders is allowed regardless of the target value fulfillment. 1 = Allow per item line Release of all planned purchase orders below the target value is not allowed, but release of purchase order per item line is always allowed. 2 = Do not allow No release of planned purchase orders below the target value is allowed.
   (PPS195/F)	Auto release	This field determines if (PPS690) may automatically release a purchase order. If set to 0, no purchase order is created. If greater than 0, it indicates which purchase planning priority the target buying must have to qualify for automatic release. For example, if 'Auto release' = '2-High priority', and at least one planned PO in the selection has priority 1 or 2, the priority is sufficient for automatic release. On the other hand, if the highest priority planned PO in the selection had priority 3, the target buying would not be a candidate for release. (PPS690) releases a purchase order if all of these conditions are met: Auto release > 0 and the target buying has sufficient priority. The target threshold is reached. See 'Target threshold'. The target is fulfilled. No maximum value is exceeded. If 'Fill to next multiple' = 2-'Yes, automatically', the target multiple is taken into consideration when checking the target and maximum.
   (PPS195/F)	Target threshold	This field defines a threshold as a percentage of the target value used to determine if automatic release is allowed. To pass, the current actual value for a portion of the included planned orders must exceed the target multiplied by this percentage. See 'From priority'. Valid values are from 0 through 100.
   (PPS195/F)	From priority	The field indicates which planned orders are included when the target threshold is checked. Example: With a target value of 80, a target threshold of 50 % and 'From priority' set to 3, the threshold is passed if the actual value of all planned orders of priority 1, 2, and 3 is equal to or greater than 40 (80 * 50 %). By setting this priority, low-priority planned orders (such as orders generated by target fill-up or suggested by MRP for deletion) can be excluded from the auto fill-up or release check. This function prevents the automatic release of a purchase order where only a small portion of the order quantity is required.

Priority rule example:

The priority assigned in (PPS197) is an internally used planning priority, which primarily signals to the buyer how important it is to take some action for the product line in (PPS191).

Rules are parsed in sequential order. When a matching rule with a priority number is found, no further rules are evaluated. If no matching rule is found, priority 5 (lowest) is automatically assigned.

If two or more sequences must both be evaluated as true to get a priority number, use the "AND" operator on the first sequence, and assign a priority number to the last sequence.

Assign priorities according to these recommendations:

• Set late planned orders (with action message A1) to planning priority 1-'High'.
• Set planned orders generated from a customer order, with a customer priority lower than or equal to 3 (that is, 1, 2, or 3) to planning priority 1-'High'.
• Set any other planned order with an order reference to planning priority 2-'Normal'.
• Set planned orders that are due for release, but not late (with action message A2) to priority 3-'Normal'.
• Set planned orders that MRP has suggested for deletion (action message B7) to priority 5-'Low'.
• Set everything else to priority 5-'Low'.

This table shows how to set it up in (PPS197):

Flowchart

Follow these steps

Use this process to work with target buying; that is aggregated purchase planning on a product line level.

1. Start (PPS190). The active user is set as the buyer by default. The program lists all product line/warehouse combinations that are connected to the buyer in 'Purchase Planning Settings. Open' (PPS195). Aggregated information about the planned purchase orders is displayed, such as target values, target fulfillment, priority, and number of planned orders. By default, in (PPS190), the lines are ordered by priority, with the highest on top.

   The information in (PPS190) provides a basis for deciding on a course of action. Examples:

   • The 'Planned release date' shows when the next line buy is planned according to the review cycle.
   • A fulfilled target may indicate that it is time to make a line buy.
   • If the 'Release date' is reached, at least one of the included planned orders must be released or it will be late.
   • Depending on the setup, the planning priority may also indicate that planned orders require urgent attention.

2. Select a product line in the list. Use alternative 11='Details' to access 'Purchase Planning Details' (PPS191). The item numbers included in the product line for the selected supplier and warehouse are displayed, along with aggregated information about the planned purchase orders per item number.

   Planned purchase orders with a planned release date earlier than one review cycle from the current date are included in the selection by default.

   (PPS191) also has a number of related options to use included planned orders, display on-hand inventory information, review planning setting in 'Item. Connect Warehouse' (MMS002), perform MRP calculations, display forecasts and statistics, and so on.

3. If planned orders are late or risk becoming late, decide whether to perform an early line buy or an emergency buy:

   • A line buy is appropriate if the current planned orders have reached the purchasing targets, or are so close that the extra carrying costs for ordering more than needed are lower than the extra ordering costs for an emergency buy. Go to step 4.
   • An emergency buy is appropriate if the current planned orders are far from the purchasing targets (for example, if early in the review cycle or there is plenty of stock left of the other items in the product line) and the carrying costs for a full line buy ahead of schedule are higher than the extra ordering costs associated with buying a single item. Go to step 6.

4. Perform a line buy.

   If the target value is not reached, use F15='Create planned orders' to perform a target fill-up. The planned orders are created in (PPS191) until the selected target value is exceeded. Use the fields 'Target type' and 'Target value' to control the target fill-up.

   In 'Purchase Planning Settings. Open' (PPS195), you can define maximum values for purchasing cost, weight, or volume. If such a value is exceeded, decide if a line buy must be made below purchasing targets (respecting the maximum value) or if the maximum value can be ignored in favor of meeting the purchasing target.

   The field 'Fill-up logic' controls whether the fill-up stops before it exceeds any maximum (1), or continues until the target is reached regardless of limits (2).

   The action F18='Delete planned orders' deletes all planned orders that have been generated by the target fill-up.

   Item numbers can be excluded from the line buy by deleting the corresponding line in (PPS191). This does not affect any existing planned orders.

5. To perform a line buy, release the planned orders into a purchase order by selecting the action F19='Release all'.

6. Perform an emergency buy

   To perform an emergency buy, select the item to purchase and select alternative 19='Release one line' to create a purchase order.

7. Follow up

   Optionally, review the newly created purchase order by using alternative 12='History' in (PPS190). 'Purchase Release History. Open' (PPS194) is displayed, listing all released purchase orders for the product line and warehouse, with the most recent release on top. Alternative 11='Purchase order lines' starts 'Purchase Order. Display Lines' (PPS220).

8. Repeat the steps up to "Perform an emergency buy" until all purchase orders are created.

Target buying as a submitted job

'Purchase Planning. Generate' (PPS690) can be used to perform target buying automatically as a batch job. For each product line, it can be included in the selection:

1. Perform fill-ups to target level.

2. Create line buys (purchase orders based on the included planned POs).

These actions depend on the settings in 'Purchase Planning Settings. Open' (PPS195). In addition to these settings, (PPS690) can only create purchase orders if:

• The target level is reached.
• No maximum value is exceeded.

The outcome of (PPS690) is equivalent to performing the corresponding actions in (PPS191).

Selection of included planned POs

The selection fields in (PPS690) control which product lines and planned POs are included in the job selection. (PPS690) can perform target fill-up and release for a product line or warehouse only if at least one planned PO is included in the selection.

Outcome

• With every release, a record in 'Purchase Release History. Open' (PPS194) is created.
• With every release, a purchase order is created through the batch order entry, with one line per item number. Its status is visible in (PPS194).
• After a line buy release, if no more planned purchase orders remain, the product line/warehouse is set to priority 9-'No orders' in (PPS190).
• The target fill-up creates planned purchase orders with the generation reference 42.