Integrated Distribution

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Integrated Distribution Production
Planning(DP/PP) (Review) EIN 5346 Logistics
Engineering Fall, 2016
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Integrated Distribution Planning
Production Planning (DP/PP) Theories
Concepts
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SCM Overview
SCM aims at managing and optimizing the
information flow and the material flow through a
network of suppliers, manufacturers,
distributors, and customers.
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SCM Overview
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SCM Overview

• Traditionally, distribution planning and
  production planning are carried out, independent
  of each other. Each seeks its own local optimum.
• In SCM, distribution planning and production
  planning decisions should be integrated to
  promote global optimum.
• This integrated distribution and production
  planning aims at
• Reducing costs for sourcing products and raw
  materials,
• Improving customer service,
• Dramatically reducing on-hand stocks, and
• Making better use of company resources.

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Capable-to-Match (CTM)

• Capable-to-match (CTM) is an APO tool to perform
  DP/PP interactively. CTM is a heuristic
  approach it does not optimize.
• CTM planning is a first-come, first-serve
  heuristic as a result, shortages may occur to
  late comers.
• CTM approach usually applies when demand
  priorities (e.g. demand type, customer
  priorities, product priorities) exists
• There is no re-planning for the created orders
  for other demands.

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Capable-to-Match (CTM)

• CTM Procedure
• Prioritize demands and orders, and categorize
  supplies (production and/or stocks), according to
  the planning mode and the search strategy
• Load the master data and the transaction data
  (demands and orders) into CTM engine
• Run CTM to match demands with supplies in a
  location-by-location procedure.
• All supply categories and the production are
  taken into account for each location, according
  to the search strategy.

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CTM Categorisation and Search Strategy
The search strategy defines the sequence for
supplies to match with demands. The sequence of
the locations is determined by the priorities
(see Figure 10.12), where the location SOURCE1
has a higher priority than SOURCE2, so first all
the planning steps are performed for the location
SOURCE1. Production is only able to cover one
demand.
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Supply and Demand Matching Search Strategy
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Supply and Demand Matching Search Strategy
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CTM Planning
CTM takes into account, transportation lane
priority, location priority, and product
priority and uses them to make decisions as
shown in Figure 10.14. The transportation lane
priority is used for sourcing decisions. The
location and product priorities become
significant when shortage occurs (in which the
demand with the highest priority is considered
first).
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Priorities for CTM
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Planned Stock Transfers
CTM considers the duration for goods issue,
transport, and goods receipt to schedule stock
transfer orders. Goods issue and goods receipt
are maintained in the product master in days
(unit of measurement used), and transport
duration is maintained in the transportation lane
in hours (unit of measurement used). Figure
11.3 shows the scheduling for stock transfer
orders.