Attach Rate Planning in IBP

[kunalroy]

Attach rate planning is typically done to find component (or a secondary product's) demand based on header (primary product's) demand. While in some cases, you have a static BOM (Bill of Material) relation between the header and component, there could be Configurable Materials (KMATs) which do not have a static BOM. In those cases, you have to generate a BOM based on historical sales/production data.

Note: Just to clarify, by static BOM here, I mean that the ratio of input to output components is fixed.

Below I am going to describe a specific case for a client that I worked for. This is not the most complicated case and does not cover all aspects of possible requirements around attach rate planning but will give you a flavor of a possible solution around it.

Requirement: To find the gross requirement for components which are secondaries for several type of primary products, such as-

1. MTS/MTO Items which have a static BOM relation with the components.
2. Configurable materials which did not have a static BOM (so, for these materials, the BOM would vary from one sales order to another).

Another point to consider was that these configurable materials were not forecasted at individual level, but at an aggregated level. Fictional Materials (called HBOMs) were created to aggregate shipment history from configurable materials (falling withing the same Product Hierarchy and Brand- which were both product attributes) and then forecast/demand was generated at the HBOM level.

Attach Rate Calculation

To calculate attach rates & gross demand for component we needed two things-

1. Demand for the fictional HBOM Material and that was available from the demand planning module of IBP (demand planning was a straightforward process where the history data for all configurable materials within a HBOM was aggregated and then statistical models were run to generate statistical forecast for the HBOM material).
2. The BOM relation between HBOM and components: Since, there was no fixed relation between the configurable materials and components, we had to calculate that relation (or the attach rate) somehow as this was not available as Master data in source (ECC).

For the second point, we had to perform the below steps to generate the BOM between the HBOM and the corresponding components:

• Read all production orders for all the configurable materials which fall under a particular HBOM. Aggregate all good receipts- (say movement type 101, 102) in a month for all configurable materials that were produced (of course UOM conversions have to be accounted for) and thus get the aggregated Production quantity for the HBOM in that month.
• Get all components issued against those production orders, read the good issue quantity (say movement type 261, 262), and thus for every HBOM, get a consumption history of the components.

• Apart from getting the Production quantity for HBOM and consumption quantity for corresponding components, we used the above to also create Production Source Header and Production Source Item Master data. Any component which was issued even once to any of the configurable materials under the HBOM gets added to the PSI for the corresponding HBOM. We do not update any static component coefficient in the Production Source Item Master data as that gets updated in a time varying way using attach rates.

• Current month’s attach rates for every component are then calculated dividing the Sum of consumption history for the last 6 months for the component by Sum of production history for the last 6 months for the HBOM.

• Once the attach rates are calculated (and finalized), copy it to the standard Component Coefficient Key Figure. Now, we have both: the demand coming for the HBOM (copied to the standard Independent Demand key figure) and the component coefficient created for the BOM items.

• Run SOP Heuristics (infinite Heuristics) to propagate the demand from the header to the component. If these components are also a part of MTS/MTO (which have a static BOM), that gets aggregated in the Gross demand.

Note: We also considered doing this using Demand Planning module (DP BOM kind of functionality using Attribute transformations), but this approach of using S&OP Heuristics ended up being the simplest in our case.

There are other functionalities that you can use with SOP Heuristics- Validities, substitution etc. which we are using as well however they are easy to understand and use standard functionalities.

Hope this was helpful! Thanks.