Supply Chain Planning of a CTO (configure-to-order) item is challenging due to different option classes and options attached to the Model Item, resulting in demand of variable nature. The consumption of the orders for the Configured product from the Model forecast to arrive at Net demand and plan for components, resources and supplier capacity based on attach rates adds to the complexity.
The process of CTO supply planning is supported in Oracle SCM Cloud that helps in breaking down the complex nature of CTO and attain higher customer service levels along with the reduction in inventory of finished goods and associated components.
The complete flow of CTO Supply Planning in Oracle Cloud is detailed as below:
For Illustration purpose let’s assume below structure defined in Product Information Management (PIM):
- Create the Model Item under ‘CTO Item Class’ in PIM as:
The Forecast Control attribute should be set to ‘Consume and Explode’. No forecast explosion takes place if this attribute is set to any other value.
Create the Option Class under ‘CTO Item Class’ in PIM as:
Create Options under ‘CTO Item Class’ in PIM as:
Associate the Option classes and Options with the Model Item under Primary Structure:
The item structure along with Model Shipments History and Options Shipments History is collected in Supply Chain Planning Cloud by running ‘Collect Planning Data’ request. Once the data is collected, Demand Plan is run in Demand Planning Cloud (DM Cloud) to generate the Shipments Forecast for Model and underlying Option Demand Forecast for Options.
Below is the snapshot of ‘Advanced Options’ setup in the Demand Plan definition:
The forecasting of CTO item is two level process: First, create the forecast for the model item and then derive the dependent forecast of the options based on planning percentages. Planning percentages can either be loaded manually using csv or calculated based on the history loaded.
We can select the ‘Planning Percent Type’ and any changes made to the forecast and planning percent are propagated throughout the BOM in real time.
The generated forecast is fed into ‘Supply Plan’ of Supply Planning Cloud:
Planned orders are generated for the required components:
Further to this, Supply Planning for CTO considers:
- Consumption of orders for the configured product from Model Forecasts.
- The resource requirements as per planning % defined on work definition.
- Supplier capacity requirements for the configured items
This process provides complete control on the planning of configure to order items using a robust planning engine.
About the Author
Prashul Agrawal is working in Solution Architect role at Trinamix Inc. He is a Supply Chain Management Professional with over 11 years of IT and Manufacturing experience working with cross-functional and cross-cultural teams. He has designed solutions for several industry verticals and business functions, with a focus on SCM and Manufacturing.