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IBP-S&OP – TS Based Supply Heuristics – Use case

The blog provides an use case which demonstrates how the TS Based Supply Heuristics provides you the supply plan in your supply chain network.

A) Business scenario assumption:

  • Products are externally procured from vendor
  • Statistical forecast based on shipments leaving the central distribution center and regional distribution center
  • Customers are assumed as field offices provide services who receives the shipments from regional distribution centers, so technically speaking customer facing nodes are regional distribution centers
  • IBP Inventory optimization output has been reviewed by the planners and released(copy operator) to run TS Based Supply Heuristics
  • Historic shipments from central DC to regional DC has been ignored (during statistical forecasting) since the propagated demand at central DC will already take that into account during inventory optimization. So central DC forecast just reflects the direct shipments either field offices or end customers(drop shipments)

 

B) Supply chain Network:

C) Input key figures:

  • INVENTORYTARGET (Copied from TARGETINVENTORYPOSITION using copy operator)
  • INDEPENDENTDEMAND (Copied from IOFORECAST using copy operator)
  • INITIALINVENTORY
  • INVENTORYCORRECTION
  • TLEADTIME

D) Output key figures:

  • PROJECTEDINVENTORY
  • DEPENDENTDEMAND
  • NETDEMAND
  • TOTALRECEIPT (RECEIPT/TRANSPORT based on the node of supply chain)
  • SUPPLY
  • IOTARGETONHANDSTOCK

E) S&OP Heuristics operator configuration:

F) Schedule Application Jobs:

G) Supply Plan – Excel Add-in review after TS Based Supply Heuristics run:

Central DC:

DEPENDENTDEMAND = Offset(backward) by TLEADTIME at each supply location

NETDEMAND = INVENTORYTARGET – INITIALINVENTORY(if current week else PROJECTEDINVENTORY of previous week) – INVENTORYCORRECTION(In transit PO’s or STO’s) + INDEPENDENTDEMAND + DEPENDENTDEMAND

TOTALRECEIPT = NETDEMAND

 

Regional DC:

H) Summary:

Above use case demonstrates how to visualize the supply plan in your supply chain network after you run the TS Based Supply Heuristics algorithm. This will serve as an accelerator to start planning using IBP S&OP module with real life example. Please consider carefully your supply chain network and business model to utilize TS Based Supply Heuristics effectively

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