Projects:Push Planning/Functional Specification
This document holds the functional Requirements for the Push Planning functionality.
Retail Allocation is the functionality to pre-assign, from a central DC (distribution center) perspective, specific quantities per product and store/outlet/warehouse. In some sense it is comparable with a blanket/call-off order to your supplier: A definition of a (multiple) product(s), ordered for a specified quantity over a specified period of time but without detailing which exact quantities will be called-off on which exact dates.
At Openbravo we consider this too static in an environment where assortment is changing quickly and product life-cycles are getting shorter. Instead of Retail Allocation we envision a dynamic and continuous calculation of allocated quantity per product and store/outlet/warehouse based on actual performance rather then planned performance of a SKU in a specific store/outlet/warehouse, and during a -configurable- number of days.
The rationale is that "allocation" is only necesary, or better put applicable, when the consolidated demand is higher than the availability of the product, because: ¿Why should we allocate a product that is abundant like -in most parts of the world- water or air? So, only when the (consolidated) demand exceeds the availbility there is a need to fair-share the available quantity. In the Openbravo Push-planning, this consolidated demand is continuously calculated by a central level that subsequently and pro-actively assigns quanties to each of the stores in function of their actual performance.
As with all calculation results, the planner (or allocator) can review and adjust quantities prior to executing them.
Group of Inventory- and Supply Chain Management functionalities
The Push planning functionality is an important part of a set of functionalities that all together bring first class inventory and supply chain capabilities. The complete set is:
- Enhancements in the Supply Chain concerning PLANNING & EXECUTION of INCOMING INVENTORY:
- Enhancements in the Supply Chain concerning MANAGEMENT of IN-HOUSE INVENTORY:
- Enhancements in the Supply Chain concerning PLANNING & EXECUTION of OUTGOING INVENTORY:
- Distribution Orders
- Vehicle and Transport management
Push Planning is, as the name indicates, a form of planning. It is very much an opposite way of planning compared to MRP: An MRP system calculates requirements per time-bucket based on stock levels, ROP (reorder point), historical consumption or sales, resulting in requisitions. With the calculated requirements it then 'pulls' the stock from the supplier, either by converting the requisitions into purchase orders, distribution orders or work orders. So the MRP calculates in the downstream organization and requests stock from the upstream organization.
In contrast, A 'push' planning system does not look from the demanding side to a theoretical unlimited supply, but looks from the supplying side with limited available stock (supplies) and determines how best to distribute this, resulting in propositions. So it is not the downstream organization that initiates the replenishment process with a requisition or order, but the upstream organization that initiates the replenishment process with a proposition. It still needs to use a source to determine who-gets-what and if possible this source is the historical sales from the downstream organizations. Instead of Material Requirement Planning or MRP we can speak of a Material Proposition Planning or MPP.
Applicable business situations
An advantage of MPP is that it requires less master data to be maintained: No safety stock or ROP levels or other planning parameters are needed in the outlets and even inventory -management is not stricktly required or less important. An MPP planning approach is typically interesting for the following situations:
- where assortment quickly changes and master-data maintenance in the outlets is a burden,
- where obsolete assortment has little or no value at all or when the costs to return are higher than the value of the goods,
- where the mother-company determines which assortment is to be sold in which outlet.
Typical examples of this are the last-mile distribution in the (fast-)fashion and bijouteria sectors.
In the push-model (MPP), the inventory levels of the central DC and of the outlets are evaluated with the objective to pro-actively propose supply (or re-distribution) of inventory to the outlets. Here the central DC determines the replenishment for all outlets. Potentially the push-process also proposes and creates promotions in these outlets in order to push excess inventory.
The functionality called Fair Share consist of a restricted distribution of available goods to the outlets, based on a manually fixed percentages per time-bucket. If this is initiated from the demanding side, it could be seen as a variant to the MRP process, but if it is initiated from the supplying side it can be seen as a variant of the MPP process.
In the example below, the available stock level is determined every 1st of the month and each Business Partner in the (manually maintained) list is assigned the resulting quantity (Available quantity * %) per product category. Then during the month, the orders 'consume' the quantity that was assigned to that business partner and will issue a warning or error when an order comes in that would over-consume the assigned share.
|Central||SuperMarket East||Beverages||21%||1st of Month|
|Central||SuperMarket West||Beverages||17%||1st of Month|
|Central||SuperMarket South||Beverages||43%||1st of Month|
|Central||SuperMarket North||Beverages||19%||1st of Month|