Sink of CTP with Allocation

[Former Member]

Hi Experts

I have following queries about the CTP Process in PPDS:

1) Whether CTP can be used in MTS Scenario?

If yes Can you give me any scenario where CTP is used in Make to Stock Process.

2)How to sink CTP with Product Allocation ?

example:

1) Product Allocation for Customer A = 200

Order Quantity = 200

If ATP Quantity > 100

RTL is used.

If we use Basic Availbility methods such as First step as Allocation and Sencond step as ATP Check.

When we create sales orders in ERP System, sytem will check allocation to the Customer and if there is enough ATP Quantity, Sales Order gets confirmed .

2) Product Allocation for Customer A = 200

Order Quantity = 200

If ATP Quantity > 0

RLT is used.

SO gets confirmed based on RLT Time.

3)roduct Allocation for Customer A = 200

Order Quantity = 200

If ATP Quantity > 0

RLT is used.

If we use CTP and we have Allocation , how CTP sinks with the Allocation.

Since CTP Confirms the SO based on the Production time.

Thanks

RK

[frank_horlacher · Accepted solution]

Hi,

I try to answer the questions without commenting on the other posts.

1) Whether CTP can be used in MTS Scenario?

CTP can be used in a MTS scenario. There are companies that do that. In fact they use the settings for MTS in the system but from a business point of view they only produce based on a sales order which would be MTO. The advantage of having the MTS setting is that you can redistribute the receipts to other customers more easily.

2)How to sink CTP with Product Allocation ?

I tested this scenario a lot with both settings: 1.step Allocation and 2. step CTP and vice versa 1. step CTP and 2. step Allocation.

I found out that the best way is to check first CTP to get the confirmation date based on your ability to produce and then check the allocation for exactly the date from CTP.

If you do it the other way round the system starts with the allocation and then calls into CTP. But after the scheduling in PP/DS during CTP the confirmation date could slip out of the bucket which ATP allocation had started with and you get a wrong confirmation.

BR Frank

[Former Member · Accepted solution]

Hi Dogboy/Rishi/ Frank

I am sorry to give delay reply.

First of all thank you for giving me such a detailed scenarios.

1) Whether CTP can be used in MTS Scenario?

Dogboy>>>1) Absolutely. It is well suited to MTS.

2) Not necessarily. Companies have many reasons for selecting MTS over MTO. It is not required to use a FGs forecast in order to run MTS! I recently finished an assignment where an entire company used MTS from top to bottom - using no forecasts, and using safety stock on a limited subset of materials. MTS supports this, while at the same time giving the greater replanning flexibility enjoyed by MTS.

>>> I agree with you based on the scenario which explained.i don't find relevance of the forecasting in your scenario.

Rishi >>>

1) In a MTS scenario, rarely will a customer wait for you to make the product. Most of the time they want it yesterday ! If you dont have the product on the shelf or in the pipeline (Production Orders, Stock Transport Orders), customers will walk away.

2) In an MTS scenario, committing to Lead TIme is usually an option of last resort. Ideally, you want to have sufficient stock or something in the pipeline. If there isin't enough, the problem may lie elsewhere (inaccurate forecasts, long lead times, etc). Might be more worthwhile to fix those issues than to work around that with CTP.

>>> Much relevant to Forecasting.

Frank>>>

CTP can be used in a MTS scenario. There are companies that do that. In fact they use the settings for MTS in the system but from a business point of view they only produce based on a sales order which would be MTO. The advantage of having the MTS setting is that you can redistribute the receipts to other customers more easily.

>>> No relevance for forecasting in your scenario because "Only Produce based on a sales Orders"

Based on the different views, i have a scenario:

Ours process is Pure MTS , we forecast for 52 weeks and we produce based on the forecast.Our Finished product Make span time is 5 Mins.

Multiple Products are produced in Multiple production lines and Single Product can be produced in Multiple production Lines and Multiple Products can produce in Single Production Lines.

We have capacity problems.

We have nearly 150 Production Lines .We have nearly 600 FG Materials.

Does CTP suits for Forecast Driven Producton?

regards

RK

Edited by: krk_99 on Jan 22, 2012 3:56 PM

[Former Member · Accepted solution]

RK,

You say

we forecast for 52 weeks and we produce based on the forecast.Our Finished product Make span time is 5 Mins. 

You have supplied insufficient information. You don't mention at which level you forecast and produce.

If you are forecasting and building to FGs, then there is little benefit to CTP. You will generally be confirming your FGs Sales orders against either stock, or existing supply elements. The better the quality of your forecast, the more SD confirmation 'hits' you will get out of newly created FGs stock.

CTP is best used when the sales order initiates the production. If you were forecasting and building to a SFG or RM part number, CTP might be a benefit.

Capacity problems in a MTS environment are usually a result of a FGs forecast that does not match with the marketplace reality. CTP won't help much here. Your effort would be better spent in improving the quality of your forecast. Or, perhaps, select a different level of your BOM to forecast, where you can be more accurate.

Best Regards,

DB49

[Former Member · Accepted solution]

RK,

Appreciate for the Quick and Spontaneous reply

You say
we forecast for 52 weeks and we produce based on the forecast.Our Finished product Make span time is 5 Mins.

We are forecasting on FG level.

If you are forecasting and building to FGs, then there is little benefit to CTP. You will generally be confirming your FGs Sales orders against either stock, or existing supply elements. The better the quality of your forecast, the more SD confirmation 'hits' you will get out of newly created FGs stock.

Can you elaborate the scenario of Little benefit of using CTP when Forecast Driven Production at FG level?

Regards

RK

Edited by: krk_99 on Jan 22, 2012 8:06 PM

[Former Member · Accepted solution]

RK,

I hope you didn't misunderstand my statement. In this context, 'Little' means 'Negligible'. There is nothing more to elaborate. Why would a business want to go to the effort of setting up and maintaining CTP, if their sales orders are already confirming to stock? CTP would seldom if ever actually be called.

Below quoted from SAP Online help

CTP is a function in Global ATP. CTP means calling Production Planning and Detailed Scheduling (PP/DS) during an ATP check. The time of the call can be configured in such a way that PP/DS is called when the requested product is not completely available, in order to produce the remaining quantity or to procure it externally.

Best Regards,

DB49

[Former Member]

RK

I must respectfully disagree with Dogboy49 on this one. While CTP can be used in a MTS scenario, I just dont see the business benefits vis-a-vis the cost/ complexity of using CTP.

Here is why -

1. ATP is based on what you sell - In an MTS scenario, its the physical product, but in an MTO/ ETO scenario its more fundamentally capacity.

2. How accurate do you need your ATP to be ? - Nearly accurate is usually good enough. Aiming for 100% accuracy is a waste of resources. And impossible. Even with more advanced methods like CTP - because you are introducing more variables like resource capacities/ routings/ etc that could in turn be inaccurate.

3. In a MTS scenario, rarely will a customer wait for you to make the product. Most of the time they want it yesterday ! If you dont have the product on the shelf or in the pipeline (Production Orders, Stock Transport Orders), customers will walk away.

4. In an MTS scenario, committing to Lead TIme is usually an option of last resort. Ideally, you want to have sufficient stock or something in the pipeline. If there isin't enough, the problem may lie elsewhere (inaccurate forecasts, long lead times, etc). Might be more worthwhile to fix those issues than to work around that with CTP.

Of course there are always exceptions, and in reality, there are gray areas between MTS/ MTO scenarios. So you still might be able to justify using CTP.

Rishi Menon

[Former Member]

All,

I would like to add a bit to Rishi's comments.

1. ATP is based on what you sell

Absolutely!

 In an MTS scenario, its the physical product, but in an MTO/ ETO scenario its more fundamentally capacity.

Not necessarily. Companies have many reasons for selecting MTS over MTO. It is not required to use a FGs forecast in order to run MTS! I recently finished an assignment where an entire company used MTS from top to bottom - using no forecasts, and using safety stock on a limited subset of materials. MTS supports this, while at the same time giving the greater replanning flexibility enjoyed by MTS.

2. How accurate do you need your ATP to be ? - Nearly accurate is usually good enough. Aiming for 100% accuracy is a waste of resources. And impossible. Even with more advanced methods like CTP - because you are introducing more variables like resource capacities/ routings/ etc that could in turn be inaccurate.

Well, yes, ATP will never be 100% accurate, and it is dumb to attempt to do so. And, yes, production planning and execution in general is complex. If you don't already fully understand how to plan and control your production line in SAP, then don't even think about CTP. Implementation of CTP by itself does not have to be complex.

3. In a MTS scenario, rarely will a customer wait for you to make the product. Most of the time they want it yesterday ! If you don't have the product on the shelf or in the pipeline (Production Orders, Stock Transport Orders), customers will walk away. 

I think Rishi is actually referring to building FGs to a forecast, and not to generic 'MTS scenario'. This decision (to build FGs to a forecast) depends upon the marketplace. Most customers will live with long lead times if the competition is quoting similar lead times. The main reason for forecasting is to deal with the situation when the supply chain is longer than your competition's FGs lead times.

Best Regards,

DB49

[Former Member]

RK,

1) Whether CTP can be used in MTS Scenario?

Absolutely. It is well suited to MTS.

If yes Can you give me any scenario where CTP is used in Make to Stock Process.

??? Any MTS scenario where you wish to confirm orders based upon Production planning. The most common requirement is confirming sales orders in consideration of detailed scheduling of operations and detailed consumption of production capacities. I guess a better question would be "can you think of any scenario where CTP is not suitable"? I guess the answer would be 'only where the benefit gained by implementing CTP would not justify the effort required to implement the PP/DS and CTP/ATP'. Perhaps a stable, non-critical, simple product line, with no capacity problems, would not be a good fit for CTP.

2)How to sink CTP with Product Allocation ?

I don't know what that means. CTP is a separate ATP check from Allocation. You generally perform one check and then the other check. Usually, if either of the checks fails, the order is left unconfirmed.

I don't think you have really thought out your final questions. Can you tell me what possible business requirement you have that you intend to solve by implementing CTP and RLT?

Confirming orders based on lead time is an old method of performing confirmations, which was the only method available in early ATP checks. CTP changed that, in that it offers the advantage that you no longer are required to confirm sales orders based upon an artificial construct (lead time). You can confirm based upon the actual reality of manufacturing, in as much detail as you care to implement. Lead time then is only necessary for purchased materials, where you have no visibility of the vendor's manufacturing process. Or, for the aforementioned non-critical manufactured products in your own factories.

Best Regards,

DB49

[Former Member]

Dogboy,

Thanks for the quick reply and detailed explanation..

1) Whether CTP can be used in MTS Scenario?

Absolutely. It is well suited to MTS.

In MTS we dont wait till SO comes and then produce.We produce based on the forecast and Sales Ord consumes the forecast .So how do CTP suits in MTS.

what is the importance of Forecast when we Opt CTP?

2)How to sink CTP with Product Allocation ?

I don't know what that means. CTP is a separate ATP check from Allocation. You generally perform one check and then the other check. Usually, if either of the checks fails, the order is left unconfirmed. 
I don't think you have really thought out your final questions. Can you tell me what possible business requirement you have that you intend to solve by implementing CTP and RLT?

Its not a requirement, i was bit confused with CTP and Product Allocation functionality in this regard to remove ambiguity i posted this query.

A customer 1 has been allocated with 100 Quantity with Product A for each WK1, WK2 and WK3.Assuming there is ATP of 300 Units.There is no Product allocation for WK4 onwards.

When you create sales order for 900 Qty for Customer1, it confirms 100Units in wk1 ,wk2 and wk3 since you have allocation till wk3.

what about Remaining 600 units? Will it confirm to the customer1 based up on real production capacity for wk4 ?

regards

RK

[Former Member]

RK,

what is the importance of Forecast when we Opt CTP?

Basically, none. CTP is an availability checking tool. Like any 'product check' based ATP, it is irrelevant if you are forecasting or not.

Will it confirm to the customer1 based up on real production capacity for wk4 ?

You have no allocation from WK 4 onwards, so the allocation check would fail. Read my previous post, where I answered that exact question.

You really should spend a few minutes in a sandbox. Such 'ambiguities' would be cleared up immediately.

Best Regards,

DB49

[Former Member]

Dogboy,

Appreciate for your suggestion.

Basically, none. CTP is an availability checking tool. Like any 'product check' based ATP, it is irrelevant if you are forecasting or not.

As you mentioned in the above statement that CTP is an availability checking tool ...But CTP also schedules.

In MTS Scenario:

Please correct me if my understanding is wrong.

It means that we can use Heuristics/Optimizer and CTP simultaneously in PPDS.

Heuristics Plans with Forecast and creates Planned Orders & Prod Orders and CTP only schedules when there is shortage (If there are No Incoming receipts and Stock )

Regards

RK

[Former Member]

RK,

As you mentioned in the above statement that CTP is an availability checking tool ...But CTP also schedules.

Yes. So what?

It means that we can use Heuristics/Optimizer and CTP simultaneously in PPDS.

You can. However, you have to be careful in your designs. CTP works real time, and will not produce an optimized solution. Optimizer runs in batch, and will produce an optimized plan, but the planning logic must be designed not to conflict with your ATP business requirements. Without proper design, Optimizer might change your CTP generated supply elements adversely. LIkewise Heuristics. I always include a Heuristic planning run and scheduling run with CTP, to ensure that any unforseen 'holes' are filled. However, this planning must be carefully designed and tested against every known business process.

Best Regards,

DB49