The Sense of Checking Horizon

[Former Member]

Hi,

Assume a firm that makes and sells soaps and detergents that are

- Shipped to customer within 12 to 48 hours of receipt of order (from inventory- make to stock scenario with a flavour of produce to demand - last few steps of manufacturing delayed)

- The lead time for completing the last steps of manufacturing is say 12-24 hours at max.

- The ext. procurment longest lead time of one of the raw material that goes into say one of the brands of soap is say 35 days

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- Also assume the industry is competitive

- Customer requested delivery date is sacrosanct and firm dare say no to that.

Assume this firm wants to implement GATP and wants to find a "decent" number for for the checking horizon.. how should this proceed.

I still dont see any "advice" on the maintenance of checking horizon considering its doing a reallly serious thing of confirming an order at the end of such date if stocks /receipts arent available and that means a lot without proper rationale.

Now retaining a definition of checking horizon = time after which supply is ALMOST certain. then this thing varies by source and period of year. ? 40% from loc L1, 60% from location L2 with lead times of 24 hrs and 72 hours respectively ..for a given location product could be very much the case.. during Xmas i source everything from location L1.. ??

So could someone list out all possible decision criteria (a list of questions that I should attempt) for maintaining a "resonably good" checking horizon to make good the utility value of GATP. For sure we are not going to change checking horizon now and then and there is only one checking horizon.

Regards,

Loknath

[Former Member · Accepted solution]

Hi Loknath Rao,

As the checking horizon is the time period in which GATP checks and matches the availability date Vs the requirement date, the following list of criteria can be applied for effective checking horizon value in material master.

1) The checking horizon should be as minimum as possible.

2) It should be more or less equal or slightly greater than the lead time of manufacturing of the product

3) If delivery is planned based on subcontractor manufacturing, then the transportation lead time can be considered as checking horizon value

4) This can also been derived based on the statistical past history of availability of products on daily basis based on lot size, ie For eg., if lot size of product is 100 and if 100 pieces are getting ready every 5th day, then you can keep checking horizon as 4 days.(one day reduced just for safety measure in order for the item not to get missed out).

Regards

R. Senthil Mareeswaran.

[Former Member · Accepted solution]

Thanks Senthil for the reassurance.....The checking horizon should be as minimum as possible.+

This is where my thoughts started.

The other thought was to borrow from history.

On the same lines as 3) I can take the transportation lead time from the producing plant to the warehouse plant + GR processing time as checking horizon at the receiving plant.

The idea is I keep that to the minimum. ..right ?./

Now of the Order to shipping time is less then the transportation lead time, what should drive the decision of checking horizon. The latter number would confirm all the orders in any case as the diff between RDD and order date is barely say 24 to 48 hrs and transporation lead time is say 48 hrs or more. If i were to add a GR processing time (to include QI stock in the scope of check) with QI time on hold. this would make the total time of replishment "into the stock" as 48-72 hours (quoting from actual example).. .only a portion of the QI stock is included in QI thru a development

calendars will do their job in any case. ATP check is still controlled at a day bucket only

Thanks Senthil for the prompt response. Would like to have alternative opinions/rules of thumb/best practices etc on this.

Regards,

Loknath

[Former Member]

Hi Loknath,

To add to it, few best practices/thumbrules are

1) Do not specify a checking horizon in the Checking horizon for missing parts at goods receipts field

2) You can also plan checking horizon for your safety stocks in system if you have any so that there are chances that system checks will always gives positve results. (taking into consideration of safey stock lead time, procurement lead time etc.,)

3) If you have not defined the total replenishment lead time for a product produced in-house in the ERP system, the system reads the in-house production time and - if it exists - the incoming orders processing time. The system interprets the total of both times as the replenishment lead time for the availability check. After being transferred to SAP APO, the total of both times is mapped as the checking horizon in the location-specific product master data.

4) The system does not take account of the total replenishment lead time for materials procured externally. For external procurement, for the availability check with replenishment lead time, the system always interprets the total processing time for purchasing, planned delivery time, and goods receipt as the replenishment lead time. After being transferred to SAP APO, the total of these times is mapped as the checking horizon in the location-specific product master data.

Please confirm whether your query is resolved.

Regards

R. Senthil Mareeswaran.

[Former Member]

Hi Senthil,

Thanks for the answers. Howver I am personally not convinced of the checking horizon being set for lack of better value.judgement as equal to total replen lead time/plnd dely time etc. I am concerned by the very nature of the business, where orders need to be delivred the same day i.e RDD and MBDAT difference in most cases is a day and some cases 2 days. Given this and given the scope elements in check, it seems very counter-productive to me to have replen lead time of say 5 days as checking horizon as possibly there are more than one source to GET the stocks from in real time.. production in more than one place, procurement, transfers from other plants etc. so the range to react shortages is say 1 day to 6 days. whereas replen lead time in mat-loc is set to 5 days. I would not care, if some schedule lines are created in day 1, some in day 2, some on day 4 and rest at end of checking horizon. This does not solve the principle requirement to ship all the order to the best possible at once.. to meet RDD. While I am aware of interpretations in calc. profile and delivery correlation, I am unable to arrive at a common strategy for checking horizon

Do i sound consistent. I need some more words of wisdom to address my apprehensions.

Regards,

Loknath