Min-Max
Planning – Introduction:
Min-Max
Planning is an inventory replenishment method in Oracle Fusion Supply Chain
Management (SCM) that helps maintain optimal inventory levels by automatically
recommending replenishment when available inventory falls below a predefined
minimum threshold.
The planning
process is executed at the individual inventory organization level or at
specific subinventory level within a given inventory org.
This can be
run for all items or a selected set of items within the scope of planning level.
For each item, minimum and maximum inventory levels must be defined.
When the Min-Max
Planning Report is executed, Oracle Fusion evaluates the item's inventory
position by considering both on-hand quantity and eligible on-order supply
& demand. If the total available quantity is less than the defined minimum
level, the application automatically recommends replenishment to restore
inventory up to the specified maximum level.
Depending on
the item's replenishment source and supply configuration, the process generates
one of the following replenishment documents:
· Purchase Requisition for externally sourced items.
· Transfer Order for inventory sourced from another
inventory organization.
· Movement Request for replenishment within the same
inventory organization (for example, between subinventories).
Min-Max
Planning provides a simple and efficient replenishment mechanism that helps
maintain inventory availability, reduce stock shortages, and minimize excess
inventory by ordering only the quantity required to replenish stock up to the
defined maximum level.
This
planning method helps ensure adequate inventory availability while minimizing
the risk of stock shortages and excess inventory.
While the
Min-Max Planning process is straightforward to execute, it is important to
understand the underlying replenishment logic, including how Oracle Fusion
determines when to trigger replenishment and how it calculates the quantity to
replenish.
The
objective of this blog is to explain the decision-making logic behind the
Min-Max Planning process and the significance of the key parameters available
when running the Min-Max Planning Report. Understanding these parameters
enables organizations to configure the process effectively and generate
replenishment recommendations that align with their inventory planning policies
The Basics: How the Logic Works?
The formula
calculates replenishment based on a very straightforward logic:
- Total Available = (Quantity on Hand + Supply) –
Demand
- Trigger -> When to order?
If Total Available < Minimum
Quantity, an order is suggested.
- How much to Order?
Order Quantity = Maximum Quantity - Total Available
Significance of input parameters:
The Min-Max
Planning Report provides several parameters that influence how the planning
process evaluates inventory and generates replenishment recommendations. Each
parameter plays a specific role in determining the planning scope, inventory
calculations, and replenishment logic.
Understanding
the purpose and impact of these parameters is essential for configuring the
planning process to meet an organization's inventory management requirements.
The following sections explain some of the key parameters and their
significance in the Min-Max Planning process.
· Restock
1.
This
is a required parameters with the default value as No.
2.
This
parameter controls the generation of new supply for the planning recommended
quantities.
3.
The
value entered should be No if the user wants to execute the report just
for the sake of understanding the recommended supply quantities by the planning
process without creating the actual supply orders.
4.
When this option is selected as No,
system will not create supply.
·
Item Selection
1.
All
min-max planned items
The planning process will be executed for all
the items which are setup for Min-Max planning in the given inventory
organization / subinventory as per the planning level selected for the report
execution.
2.
Items over
maximum quantity
The planning process will be executed only for
those items which are setup for Min-Max planning in the given inventory
organization / subinventory and the available quantity is
over the
maximum quantity.
3.
Items
under minimum quantity
The planning process will be executed only for
those items which are setup for Min-Max planning in the given inventory
organization / subinventory and the available quantity is
under the
minimum quantity.
Significance
of Item Selection Options:
The Items
Under Minimum Quantity and Items Over Maximum Quantity options serve
as valuable inventory exception reports by identifying items whose inventory
levels are outside the configured Min-Max thresholds.
- Items reported under Items Under Minimum
Quantity indicate that the available inventory has dropped below the
minimum threshold. Under normal operating conditions, regular execution of
the Min-Max Planning process should generate replenishment recommendations
to restore inventory to the configured maximum level. If the same items
continue to appear in this report over an extended period, it may indicate
that the Min-Max Planning process has not been executed regularly or that
the recommended replenishment documents were not created or fulfilled.
- Items reported under Items Over Maximum
Quantity indicate that the available inventory exceeds the configured
maximum threshold. This situation may occur due to excess receipts, manual
inventory adjustments, unexpected demand fluctuations, or other
business-specific scenarios. Such items should be reviewed to determine
the cause of overstocking and to assess whether inventory parameters or
replenishment practices require adjustment.
These
options enable inventory planners to proactively monitor inventory exceptions,
validate the effectiveness of the Min-Max Planning process, and ensure that
inventory levels remain within the organization's defined planning thresholds.
· Demand Cutoff Date / Demand Cutoff Date Offset / Supply Cutoff Date / Supply Cutoff Date Offset
1.
A Supply Cutoff Date
Offset is a critical parameter (although optional) which extends the
timeframe for considering open supply orders (such as purchase orders or work
orders) by adding a specific number of days to the current date or a base
cutoff date.
2.
System doesn’t create a
duplicate supply for the item if we execute the Min-Max planning program with
correct parameters to include the existing POs with future delivery date as
open supply.
3.
But if this program is
executed with no values mentioned in either Supply Cutoff Date or the Supply
Cutoff Date Offset parameters as shown in the screenshot below then the future
dated open POs would not be considered as available supply, and system will
trigger new Requisition-> PO to meet the Min-Max quantities.
4.
A
Demand Cutoff Date Offset is a critical parameter (although optional)
which extends the timeframe for considering open supply orders (such as
purchase orders or work orders) by adding a specific number of days to the
current date or a base cutoff date.
5.
The
Cut-Off Date and Offset Days work in conjunction to derive the Final
Cut-Off Date for Demand/Supply.
6.
If
we enter both the parameters, then the offset will be done on top of the
Cut-Off Date entered.
7.
If
we enter only the Cut-Off Date and leave the Off-set days blank, then the
offset will not be done.
8.
If
we enter only the Off-Set Days and leave the Cut-Off Date blank, then
the offset will be done on top of the SYSDATE (Report Date).
Here is the
table illustrating the behaviour for better understanding.
|
Report Date |
Demand/Supply Cut-Off Date
Entered |
Demand Cutoff Date Offset
(Number of days) |
Final Demand/Supply Cut-Off Date
Calculated by the System |
|
21-Sep-22 |
26-Sep-22 |
2 |
28-Sep-22 |
|
21-Sep-22 |
26-Sep-22 |
4 |
30-Sep-22 |
|
21-Sep-22 |
- |
4 |
25-Sep-22 |
|
21-Sep-22 |
15-Sep-22 |
2 |
17-Sep-22 |
|
21-Sep-22 |
26-Sep-22 |
- |
26-Sep-22 |
·
Include Interface Supply
Enter Yes or No to indicate whether to include
interface supply in the open supply quantities.
o
It
is common for valid supply transactions to remain temporarily in interface
tables, such as the Purchase Requisition Interface or Work Order Interface,
while awaiting processing into the corresponding application base tables.
During this period, the supply has been initiated but is not yet reflected as
an available supply transaction in Oracle Fusion.
o
In
such scenarios, the Include Interface Supply parameter plays a
significant role. When enabled, the Min-Max Planning process considers these
pending interface records as existing supply while calculating the available
inventory position. This prevents the generation of duplicate replenishment
recommendations for the same demand, thereby avoiding unnecessary purchase
requisitions, transfer orders, or work orders.
o
Enabling
this parameter is particularly beneficial in environments where interface
processing occurs asynchronously or where a processing delay exists between the
creation of interface records and their successful import into the application
base tables.
Process Steps
Summarised:
1.
Run “Print Min-Max Planning Report”
2.
Run “Process Supply Chain Orchestration Interface”
3.
Review the supply order for the item in “Manage Supply Lines” in Supply
Chain Orchestration work area
4.
Note the supply document created as per the source and process it
o
If it is a Purchase Requisition -> Convert it into PO or if BPA exists
PO gets auto created. Receive the PO to get the supply.
o If it is Work Order -> Note down
the WO# and complete the same to get the supply.
o If it is a Transfer Order -> Note
the TO# and complete the transfer from Source Org to Destination Org to get the
supply
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