Before you assign the Demand Driven order policy to any items, make sure that all Manufactured (M) items have Job Days allocations and all Purchased (P) items have Lead Days allocations. These allocations are required for proper inventory levels and accurate target dates throughout the system.
DBA requires the “Big 3” lead time settings
Whether you run MRP or not, the DBA workflow requires the “Big 3” lead time settings – a realistic Lead Days target for each P item, a realistic Job Days target for each M item, and the correct item Order Policy.
Two lead time settings are auto-calculated
Items assigned to the To Order policy contribute lead time to two dynamically calculated settings -- the pre-job Lead Days for each Manufactured item (which is equal to the longest Lead Days + Job Days among its To Order policy components) and the Time to Shipment for each top-level Manufactured item (which is equal to the item’s pre job Lead Days + Job Days). These two dynamic settings are a unique DBA innovation for determining when jobs can be started and when make to order items can be shipped.
Job Days and Purchased Item Lead Days affect inventory levels
The job days allocations for M items and lead days for your P items that you enter affect the auto-calculated replenishment times for your items. The goal of the demand driven system is to trigger a new job or purchase order with enough time to replenish the stock before you run out. If you enter inflated or padded M Item Job Days or P Item Lead Days this will inflate your replenishment time and lead to inflated inventory levels. Make sure you do not introduce fictional values in your MRP settings.
MRP Settings
(MRP - MRP Settings)
Item allocations and Order Policy selection are entered in the MRP Settings screen.
1. Maintain a realistic Job Days allocation and Run Size against all Manufactured items
A Job Days allocation, along with a Run Size that represents a typical large-size job quantity, must be maintained against all your M (manufactured) items.
Establishing the Run Size quantity
The Run Size represents a typical large-size job quantity and provides a referential basis for the Job Days allocation. Because MRP allocates a fixed number of Job Days, no matter what the actual demand may be, the Run Size amount should be sufficient to cover the larger job quantities that are likely to be required. You can click the Production tab to get a listing of past job quantities to help you determine this setting.
Establishing the Job Days allocation
The Job Days is the number of shop days allocated by MRP for manufacturing the Run Size. For guidance on making this allocation, click the icon to the right of the Job Days field to launch the Job Days Inquiry, which provides a Calculated Job Days amount derived from current routing and work center settings.
NOTE: If the Calculated Job Days is not a plausible amount, check the item’s BOM for faulty or incomplete routing settings. Also make sure that work center capacity settings are correctly established, especially the Buffer Days amount, which accounts for expected queue time that often exceeds actual production time. For details, see the Work Center Capacity Settings chapter within the Shop Control Guide.
WARNING: Do not artificially inflate item Job Days allocations because all dates are inter-connected. Inflated allocations will push out other dates in a cascading fashion that corrupts the master schedule.
2. Maintain a realistic Lead Days allocation against all Purchased items
A Lead Days allocation must be maintained against all your P (purchased) items. The Lead Days is the number of calendar days allocated by MRP for procuring the item.
Bear in mind that the Lead Days is an “allocation” and is not the literal time it takes to receive the item from the default supplier. The allocation should take into account procurement time, receipt processing time, and extra time that may be needed to cover potential delays.
Also be aware that the allocation length may affect planned start dates for jobs that use the item. A shorter allocation may enable earlier planned start dates, but increases the risk of job delays from late POs. A longer allocation reduces the risk of job delays, but may contribute to later planned start dates.
WARNING: Do not artificially inflate item Lead Days allocations because all dates are inter-connected. Inflated allocations will push out other dates in a cascading fashion that corrupts the master schedule.
Strive for uniformity within supplier
Among items assigned to the same default supplier, apply consistent allocations to achieve uniform due dates on multi-line POs. The MRP Settings screen can be filtered by default supplier, which enables you to focus on sets of items by supplier.
Delivery Inquiry
To get a listing of actual delivery days associated with past PO receipts, you can click the Delivery tab at the top of the grid.
3. Choose a consistent Order Policy
(MRP - MRP Settings - Order Policy Screen)
A standard Order Policy for each item is an integral element of Demand Driven MRP and is a required setting that cannot be ignored or conflict with your actual planning behavior. Without exception a clear and consistent Order Policy must be assigned to each and every P and M item. Three Order Policy selection options are available in the Order Policy Screen.
Demand Driven
Assign the Demand Driven order policy when you intend to maintain stock on hand sufficient to cover a high probability of your potential demand scenarios. You will enter a Monthly Potential Demand value and a Supply Days target and the system will dynamically calculate the Reorder Point and Min Order quantity that are used to generate demand-driven jobs or purchase orders. Because your planning intent is to have stock on hand readily available, these items are not lead day contributors in the jobs and SOs where they are used.
To Order
Only assign the To Order policy when a component item is always ordered before parent jobs can be started or when a sell item is always made for each sales order. These items are always lead day contributors where they are used.
NOTE: It is important that To Order policy items remain strictly To Order. If you intend to sometimes carry extra stock or if you want a minimum quantity for price break reasons, the Demand Driven order policy is recommended. You can go to the MRP > Order Policy Review screen to audit your To Order items.
Manual Reorder Point (not recommended)
This setting is for manual planners that do not use MRP for generation of jobs or purchase orders. The planning assumption the software makes is that you intend to have stock on hand for all demand scenarios. Because your planning intent is to have stock on hand readily available, these items are not lead day contributors in the jobs and SOs where they are used.
The item Order Policy is for lead time planning
The item Order Policy is for lead time planning and determines whether the item is a lead time contributor or not.
Any item with a To Order policy is a lead time contributor
A job that uses a component item with a To Order policy must wait until the item is procured or manufactured before the job can be started. When several To Order policy components exist, the one with the longest lead time determines the parent item's pre-job Lead Days allocation. Therefore any P item or lower level M item with a To Order policy is a lead time contributor to higher-level items.
Any top level item with a To Order policy is planned to be made to order, in which case the item's standard Lead Days and Job Days contribute to the item's Time to Shipment target. Therefore any top level M item is a lead time contributor to its own time to shipment.
Any item with a Demand Driven or Manual Reorder Point order policy does not contribute to lead time
Any component item with a Demand Driven or Manual Reorder Point order policy will not delay the start of any jobs because the item is planned for immediate availability from stock. Therefore the lead time of any P item or lower level M item with a Demand Driven or Manual Reorder Point order policy does not contribute to higher-level item lead times. Changing an item's order policy from To Order to Demand Driven removes the item from higher-level item lead time calculations.
Any top level M item with a Demand Driven order policy is planned for immediate shipment from stock and therefore its lead time does not contribute to its own Time to Shipment target.
The item Order Policy is a binary choice
The item Order Policy is a binary choice, meaning that the item is either planned to order or for stocking, but not both. It is an "either or" decision.
▪If you plan the item with a To Order policy, all lead time calculations are based on the item always being purchased or made to order and not having stock on hand.
▪If you plan the item with a stocking (Demand Driven or Manual Reorder Point) order policy, all lead time calculations are based on the item always being available from stock on hand.
Avoid CTO job linking with standard items
When a top level M item is flagged for CTO job linking it is assigned a To Order policy and jobs are linked to and generated directly from sales order lines for the exact quantity ordered. CTO linking is ideally suited for one-off, custom items that are made to order and never stocked. For standard items, however, CTO linking is counter-productive and should be avoided because such items are interchangeable from order to order and subject to stocking. There is no ability to adjust CTO jobs to account for stock on hand or to consolidate demand into more efficient job sizes. Furthermore, CTO linking forces items to be made to order, even in cases where items with frequent orders could be planned with a Demand Driven order policy to enable immediate shipment from stock.
