FIFO Procedure 

Use

For the FIFO procedure (FIFO = first in first out) the standard net requirements calculation has requirements consume stocks and fixed receipts in chronological order. Therefore, the earliest requirement consumes the earliest stock and fixed receipts first, irrespective of whether the requirements date/time is before or after the availability dates/times. Then the next requirement consumes the next stock and receipts, and so on.

Supply Network Planning (SNP) receipts that lie after the PP/DS horizon have a special role to play. In the FIFO procedure, the system only has those receipts that are also fixed for Production Planning and Detailed Scheduling (PP/DS) consumed by requirements that lie after the PP/DS horizon.

The FIFO procedure corresponds to the net requirements calculation in material requirements planning in SAP R/3.

Prerequisites

To be able to use the FIFO procedure effectively, your planning scenario should fulfill the following prerequisites:

·        Fixed receipts should not be before unfixed receipts.

Fixed receipts are usually receipts that are close to being executed (for example, orders in the planning time fence) or that are already being executed (for example, released manufacturing orders). Therefore, these receipts should be consumed first. The net requirements calculation thus takes them into account first.

·        Receipts should be fixed without gaps over a specific period (for example, through the planning time fence), starting from the time of planning.

This means that the receipt-requirement assignments are generally retained in the short-term area even if changes are made to the plan. The planning is therefore relatively stable.

This example describes what happens if you do not adhere to these recommendations. At date t1 there is a requirement B1 and at a later date t2 there is a requirement B2. You are planning with lot-for-lot order quantities. Procurement planning has already created a suitable timely receipt (Z1 and Z2) for each requirement. Now you fix receipt Z2. For the next planning run, the standard net requirements calculation has the requirement B1 consume fixed receipt Z2. Since the receipt Z1 is not fixed, the net requirements calculation does not take account of the receipt. The requirement B2 is therefore not covered and the heuristic has to create a new receipt Z3. As a result, there are two receipt elements, Z1 and Z3, at date/time t2, and requirement B1 is covered by the delayed receipt Z2. The system determines the surplus and the delay using pegging and creates the relevant alerts.