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Projects:Push Planning/Functional Specification

Contents

Push Planning and FairShare - Functional Specifications

This document holds the functional Requirements for the Push Planning functionality.

Introduction

Fair Share is the functionality that allocates product quantities in a fair -reasonable- way to the requesting stores. This functionality is particulary interesting in two business scenarios:

  1. New products (Push Planning): In this scenario the product is new and the stores did not express a demand for it. However, the central DC wants to push the available quantity to the stores. To determine which quantity should be send to which store, the central DC needs an example product -or product category- that is expected to have had similar sales quantities.
  2. Existing products (Fair Share): In this scenario the consolidated demand is higher than the available product: In this scenario, each store should be receiving an equal percentage of the requested quantity to prevent that the lasts outlets/stores will not receive any quantity at all.

Retail Allocation is the functionality to pre-assign, from a central DC (distribution center) perspective, specific quantities per product and store/outlet/warehouse.

Group of Inventory- and Supply Chain Management functionalities

The Push Planning and Fair Share 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:

Overview

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.


PUSH and PULL4.jpg

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:

Typical examples of this are the last-mile distribution in the (fast-)fashion and bijouteria sectors.

Scope

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.

Fair Share

The functionality called Fair Share consist of a restricted distribution of available goods to the stores, based on (automatic) a percentage of the requested quantity or based on (manual) fixed percentages per store and time-bucket.

Automatic determined percentages: Each store will receive a same percentage of their calculated needs. This percentage is calculated as (Quantity Available) / (Consolidated Demand).

Manual determined percentages: 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.

Fair Share
Organization BPartner Product Category Percentage Evaluation
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

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