Microsoft Dynamics AX Technical ConferenceFebruary 3–5, 2014Bellevue, WA

Managing Capable-to-promise and Build-to-order scenarios in Microsoft Dynamics AX 2012

Conrad VolkmannSenior Program Management Lead

IntroductionWe are excited to share Microsoft Dynamics AX 2012 R3 with you…• This presentation contains Microsoft confidential information• Dynamics AX 2012 R3 is pre-release software and subject to change• Microsoft provides no license, express or implied, in this presentation• Please review and respect the disclaimer included in all printed

and electronically distributed materials

AgendaUsing the delivery date controlConcept and configurationSales lead time

ATP (Available to Promise)Build to stock

CTP (Capable to Promise)Build to orderPlan configuration

Planning fencesFuturesAlerts

CTP with Kanbans (Lean)Fixed quantity Kanbans vs. Safety stock

Using the delivery date control

Delivery date controlMechanism that allows the sales order operators to make accurate and precise order and delivery promises

Delivery date control

Includes Sales lead

time

Uses on-hand and planned

supply

Triggers explosion

Creates orders or kanbans

Fixed administrative

time

None

Sales lead time X

ATP X

ATP + Issue margin

X X

CTP X X X X

Configuration of Delivery Date ControlDefault setting: Accounts receivable -> Setup -> Accounts receivable parameters -> Shipments

Product specific setting: Product -> Default order settings -> Sales orderProduct -> Site specific order settings -> Sales order

Sales order specific Delivery Date ControlDuring creation of sales order

Sales order header

Sales order line

Delivery Date Control HierarchyFor itemsAccount receivable parametersDefault order settingsSite-specific order settings

On sales order header:Account receivable parameters

On sales order line:Item setting for specific dimension combinationSales order header

Delivery Date Control UsageSales order entryUses ”Sales” settings

Transfer order entryUses ”Inventory” settings for itemCTP not available

Basic scheduling of the Delivery Date ControlOrder entry deadline (Start today or tomorrow)Coverage calendar Transport time (days)Warehouse and Transport calendar for shippingCustomer receipt calendar for delivery

• Order entry deadline

Now• Coverage

calendar

Coverage lead time(+margin

)

• Warehouse calendar

• Transport calendar

• Customer calendar

Transport

time

Attributes of the sales order line impacting the ship and receipt date:Mode of Delivery This value may impact the transport times. If this value is changed, delivery date control is performed.

Dimensions These values may impact item availability as well as lead times. If any of these values are changed, delivery date control is performed.

Delivery address This value may impact the transport times. If this value is changed, delivery date control is performed.

Delivery Control This value may impact the ship and receipt dates. If changed, delivery date control according to new setting is performed.

Ship date or receipt date Delivery date control is performed immediately. If the dates are not allowed, the “Available ship and receipt dates” dialog opens with info about the problem.

Quantity This value may impact the availability. If this value is changed, delivery date control is performed.

NoneWith Delivery Date Control = None:Available dates only subject to calendarsTransport time impacts receipt date

Sales lead timeAvailable ship date = Today + sales lead time (days)Available receipt date = Available ship date + Transport days

Example:Today = Oct 10Sales lead time 7 daysTransport days: 1 dayAvailable ship date = 10+7 = Oct 17Available receipt date = 17+1 = Oct 18

Calendar impactToday Oct 10Sales lead time 8 daysTransport days: 1 day

Available ship date = 10+8 = Oct 18 (displayed as Oct 20, due to the weekend)Available receipt date = 18+1+weekend = Oct 21

Saturday and Sunday are closed in the calendar

Setup the transport calendarSales and marketing > Settings > Modes of delivery > Transport calendar

Tip: To define a default transport calendar, create an entry with Warehouse blank. This association is valid for all warehouses that do not have a specific transport calendar associated.

ATP – Available to promise / Build to stock

Build to stockPlanning principles:Forecast or minimum stock trigger planned ordersPlanned orders are firmed based on firming fencesFixed quantity kanban’s or scheduled can be used

ATP allocates sales orders againstAvailable On-handExisting planned ordersNo creation of additional planned orders

Consequence: Planned order horizon must cover the sales horizon to work effectively

ATP (Available to Promise)

Uses existing supply only – no new supply createdThe earliest possible date is defined by the earliest date when the ATP quantity >= the requirement quantityDone for the specific dimension combinationOptional to include existing planned ordersBeyond the ATP time fence, supply is considered infiniteIf there is no availability within the ATP time fence, the first (calendar) day after the time fence is the suggested day

Not looking at sales lead timePast due demand and supply handled

ATP Setup - handling delayed orders

Today

ATP time fence

ATP backward demand time fenceDe

man

d sy

stem

dat

eATP delayed demand offset time

Dem

and

cons

ider

ed d

ate

ATP backward supply time fence ATP delayed supply offset time

Supp

ly

cons

ider

ed d

ate

Supp

ly

syst

em d

ate

ATP Setup – handling delayed orders

ATP + Issue marginSame as ATP, plus issue margin is added in order to allow for ”administrative time”

The issue margin valid for the item at the actual dimension combination is usedCoverage groupMaster planMaster plan parameters

Introduced in AX2012

Setting the scene for the ATP demo • Item: D0009 using ATP• On-hand 5 pcs• Production order October 25th for 10 pcs• Issue margin 3 days• ATP time fence 30 days

ATP - ensuring proper delivery commitment

CTP – Capable to promise / Build to order

Build to OrderPlanning principlesForecast can trigger planned orders, but only for capacity and material planningCustomer order decoupling point: Level of components that can/need to be replenished by build to stock in order to accommodate the needed sales or production lead times.Firmed orders are created based on actual demand

Firming fences when using a plan that does not include any forecast demandPegged supplyEvent kanbans

CTP allocates sales orders againstAvailable On-handExisting planned ordersCreation of additional planned orders

Consequences Lead times must be accurate Bottleneck resources should be run on

finite capacity

CTPPlans the needed supply in order to meet the demandBased on Master scheduling/ExplosionUses the Dynamic planFutures dates must be configuredFences are important

Creates planned orders if necessary, based on supply policies for the item and coverage dimensionsNote: Sales lead time will still be applied to determine the default requested date.

Master plan setup for CTPDon’t use the same plan for Static and DynamicCTP will update the dynamic plan and using the same plan for static and dynamic plan can result in Actions, caused by Net change calculating a different futures date.

The dynamic plan must includeOn-hand inventoryInventory transactions

Optional to ensure available capacityFinite capacityFinite capacity time fence

Time Fences setup for CTPFutures date are the foundation for CTPFutures messages must be selectedFutures fence must be defined (CTP will end when the futures fence end)

Firming fence Should cover the lead time plus some administration or security time Should always be longer than the Freeze fenceFirming fence setup for Lean - create min two coverage rules

1) For products with Scheduled Kanbans: Firming fence must be set for the period where you want the work cell capacity to influence the CTP result

2) For products with Event and Fixed quantity Kanbans: Firming fence should be set to 0, because event handling is independent of firming fences in AX 2012 R3

Time Fences setup for CTP

Cov-erage

Ex-plo-sion

Capacity

Action

Futures

Freeze

FirmingAutomatic firming of planned orders(Create Production- and Purchase orders)

Existing planned orders are not changed when running a new master schedule - they are frozen

Futures setting for detecting and reporting delays and scheduling possible (delayed) delivery dates

Action setting to optimize inventory carrying cost by proposing changes to existing Production and Purchase orders

Capacity evaluation and planning using production route (outside the time fence Inventory lead time is used)

Explosion of BOM items to detect derived demands (both material and capacity)

Scheduling period

Demo

CTP – With production

Enters order

line for a

produced produc

t with CTP

Get CTP warning:

Requested

ship date

can not be meet

Earlist

posible ship date calculate

d based on capacity and

material

availabilit

y

Deliver after production completes

Lean scheduling basicsSchedule from date on the kanban schedule boardCapability to move planned kanban jobs to a later dateDefault will postpone the kanban if there is a capacity shortageYou can change the capacity shortage reaction

Lean scheduling basicsSchedule from date on the kanban schedule boardNote that jobs will always be added at the end of the planning periodsSchedule forward from date is not limited by the planning fence defined in the production flow model

Lean scheduling: activity constraintsConfigure an End to Start constraintDefines the time needed between the end of the predecessor and the start of the successor

CTP scenario with KanbansFebruary 1st

Susan crates a sales order for

Product A

Customer wants a receipt date of February 5th

CTP process starts by creating

the Event Kanbans

Explosion is started and creates Kanban for B and Purchase

order for C

Safety Stock vs. Fixed KanbansMake sales orders take priority over safety stockModel your safety stock with fixed quantity Kanbans instead of minimum stock

Problem:Receipts that are pegged to issues of type Security Stock in the dynamic plan are not available to cover new sales demand in CTP.Consequences:

New planned orders are created and eventually firmedActual lead times and fences are appliedConfirmed date is later than expected

Safety Stock vs. Fixed KanbansMake sales orders take priority over safety stockModel your safety stock with fixed quantity Kanbans instead of minimum stock

Solution:Fixed quantity kanbans represent the security stockMaster scheduling does not create issues to replenish security stockKanbans create receipts that can be pegged against new sales ordersUse a Freeze fence that is at least as long as the Kanban lead time for planned order creation

If demand cannot be covered by the actual onhand or the actual planned kanbans, new planned orders are created outside of the freeze fence

Use Empty Kanban scanning to report empty kanbans in security stock

Fixed quantity Kanban

Kanban for 5 pcs

Activity (Idle)

Kanban for 5 pcs

Customer8

7 pcs

Kanban for 5 pcs

Empty

Safety Stock vs. Fixed Kanbans

Inventory

Safety Stock(Minimum of 80 pcs)

Fixed Kanbans(4 Kanbans of 20 pcs each)

Don’t require MRP

Min = 80

20

40

60

80

Quantity Quantity

Time Time

Supply

Demand

Build to order with event Kanbans

Demo

CTP with Event Kanbans

Summery – CTP and KanbansCTP and event kanban can be combinedGreat for build to order

As the event kanban are instantly adjusted to the order this helps to:Deliver what the customer needs, when he needs it Minimize inventory

CTP with firming fence leads to some manually clean-up when changes and cancelations occursKeeping an eye on the actions is needed in this configuration

ResourcesMicrosoft Dynamics AX Manufacturing and Planning bloghttp://blogs.msdn.com/b/axmfg/

InformationSourcehttps://informationsource.dynamics.com

Whitepaper: "Lean manufacturing - Capable to promise and Kanban job scheduling" Customersource  - Partnersource

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Microsoft Dynamics AX 2012 R3 is pre-release software under development. All dates, features, and descriptions specified are preliminary, are based on current expectations, and are subject to change at any time without notice.

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