Elements of The Disaggregation Step in Procurement Process
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53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
Elements of The Disaggregation Step in Procurement Process
DISAGGREGATION
The SOP step creates sales and production plans at the product group level. After this step has been completed, the plans must be translated into plans for the finished goods in the product group hierarchy. This process step is called disaggregation. (We introduced disaggregation in our discussion of product groups.) The elements of the disaggregation step are diagrammed in Figure 8-14. Disaggregation is triggered when a new production plan is crated. Organizational data (e.g., plant) and master data (e.g., product groups) from the production plan are used to calculate requirements for the materials in the product group. These requirements are then transferred to the demand management step for further planning.
Figure 8-14: Elements of the disaggregation step
Data
The data used in the disaggregation step include product group data, the pro- duction plan from SOP, and user input (Figure 8-15). The system uses the pro- portion factors from the product group to compute the disaggregated values for each member of the product group. Recall that product group members are other product groups or, at the lowest level, materials. The user provides parameters that determine how the plan is disaggregated.
Tasks
The essential task in this step is to translate the plans generated in the SOP step for product groups into plans for the materials contained in those groups. Disaggregation can be completed for the entire product group hierarchy or for one or more levels of the hierarchy. Further, either the production plan or the sales plan can be disaggregated. Thus, a variety of options are available at this step.
- Disaggregate the production plan to one or more levels or down to the material level.
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292 CHAPTER 8 The Material Planning Process
- Disaggregate the sales plan down to the next level in the product group. The disaggregated plan is the sales plan for the next level and is used to calculate a production plan, as explained in the SOP step. Then, continue to the material level.
- Disaggregate the sales plan down to the material level, and calcu- late the production plan for each material.
One option for GBI is to disaggregate the sales plan for the bicycles prod- uct group to the touring bike and off-road bike product groups and then use SOP to create production plans for these product groups. Alternatively, GBI can choose to disaggregate the production plan for the bicycles product group all the way to the fi nished goods at the bottom of the product group hierarchy.
In our example GBI selects the second option. Recall from the exam- ple in the SOP step that the production plan for the fi rst month is 1,100 units for the bicycles product group. The disaggregation step translates this value throughout the product group hierarchy, as illustrated in Figure 8-16.
The 1,100 bicycles are translated into 660 touring bikes and 440 off-road bikes using the proportion factors of 60% and 40%, respectively. The 660 tour- ing bikes are further translated into 462 deluxe touring bikes and 198 pro- fessional touring bikes (70% and 30%). Finally, the deluxe touring bikes are translated into 184 black deluxe touring bikes and 139 each of the silver and red deluxe touring bikes. These production plan values are the PIRs for the three deluxe touring bikes for the fi rst month. GBI completes a similar disag- gregation for all members of the product group hierarchy and for all months.
Outcomes
The outcome of the disaggregation step is to calculate the PIRs for each plan- ning period (e.g., week or month). These requirements are then transferred to demand management, as illustrated in Figure 8-17. The fi gure indicates that the plan for the product group deluxe touring bikes is disaggregated to the three materials in the group as material-plant specifi c PIRs. These data are then transferred to demand management.
Figure 8-15: Data in the disaggregation step
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Process 293
Figure 8-16: GBI disaggregation example
Figure 8-17: Transfer PIRs to demand management
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294 CHAPTER 8 The Material Planning Process
As in the SOP step, no FI, CO, or material documents are created because disaggregation has no fi nancial consequences and does not involve any mate- rial movements.
Demo 8.4: Disaggregate production plan and transfer to demand management
DEMAND MANAGEMENT
Demand management calculates revised PIRs for the materials using the PIRs from SOP (after disaggregation), actual customer orders (CIRs) from the fulfi llment process, and data from the material master regarding planning strategies. Figure 8-18 illustrates the specifi c elements of the demand manage- ment step.
Figure 8-18: Elements of the demand management step
Data
Demand management (Figure 8-19) uses requirements data from SOP (PIRs) and the fulfi llment process (CIRs). It also uses the planning strategy defi ned by the strategy group in the material master.
Figure 8-19: Data in the demand management step
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Process 295
Tasks
The primary task in demand management is to create revised PIRs for materi- als. Which procedure a company uses to calculate these requirements depends on the production planning strategy defi ned by the strategy group in the mate- rial master. As previously discussed, the production planning strategy deter- mines whether production is triggered by planned independent requirements (MTS) or customer requirements (MTO), or if the interaction of these two types of requirements affects the planning process through consumption.
The demand management step is carried out automatically by the ERP system. However, the MRP controller monitors the results using a variety of reports and makes adjustments as needed. For example, if the process uses a planning strategy with consumption, then scheduling changes may be required when new customer requirements are created. With an MTO planning strategy, the MRP controller must monitor the inventories of subassemblies carefully because customer orders appear at unpredictable intervals.
Outcomes
The outcomes from demand management are PIRs for each material included in planning. These PIRs represent requirements for the materials for specifi c quantities and specifi c dates. They are then used by the MRP step. There are no fi nancial implications and no material movements associated with demand management, so no FI, CO, or material documents are created.
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