This component provides support for long-term production planning and for carrying out simulations in short and mid-term planning.
To carry out an annual planning or a rolling quarterly planning run you require information on the future stock and requirements situation. This means you need to know how sales and operations planning influence resources. That is, whether the results of sales planning can actually be produced with capacity on hand. If such information is available it is possible to decide at an early date whether extra work centers will be required to cope with bottlenecks, or whether additional machinery will have to be purchased to reach the sales target.
In long-term planning you can also plan materials that usually require very little planning in operative planning, such as, materials planned using reorder point planning, bulk material, and materials planned using KANBAN. In long-term planning, you can plan these materials as you would MRP materials. This provides you with an overview of how these materials influence the demand program.
The purchasing department can also use the results of long-term planning. They use the information on the future requirements quantities to estimate future orders. This provides them with a basis for negotiating delivery schedules and contracts with vendors. Vendors also gain from long-term planning as they are sent a preview of future purchase orders.
You can transfer the planning results from external procurement to the Purchasing Information System where you can carry out further evaluations.
You can transfer the requirements and receipts calculated in long-term planning to Inventory Controlling.
You can transfer activity requirements data calculated in long-term planning to Cost Center Accounting as planned figures.
Simulations with Different Versions of the Demand Program
In long-term planning, you can create your own versions of the demand program, which are only used for simulative planning. This means you can calculate and compare the effects of various versions of the demand program in simulative mode in Material Requirements Planning (MRP) and in Capacity Planning. For each version of the demand program, the system calculates the capacity requirements, the activity category requirements of the cost centers and the purchased parts requirements.
After evaluating the results of simulative planning, you may decide to leave the current demand program as it stands or you can replace it with the preferred long-term planning version.
Simulation of Short and Mid-term Planning
To simulate short and mid-term planning, you require a realistic representation of the current planning situation. Therefore, within a defined period of time you can transfer the fixed receipts, the firm planned orders and purchase requisitions as well as the sales orders from operative planning to long-term planning. Since many functions from operative planning (for example, changing and firming planned orders) are also available in long-term planning, you should not carry out long-term planning and operative planning at the same time for the same planning period to avoid any inconsistencies in the planning result.