| # Supply planning by supplier This topic contains an overview of how LN supports the situation where a supplier performs the supply planning for a customer. A company can outsource the supply planning for some purchased items. In this case, the company does not send the supplier orders to delivery-specific quantities on specific dates and times. Instead, the supply planning is delegated to the supplier who decides when to deliver what quantity. The customer and supplier have a terms and conditions agreement that specifies all relevant planning parameters. This terms and conditions agreement is linked to a valid sales contract or purchase contract. Vendor managed inventory Supply planning by the supplier is an aspect of vendor managed inventory (VMI). To give the supplier control over the inventory, the supplier defines the warehouse at the customer's site as warehouse in the supplier's LN system. The supply planning by supplier can be applied in three scenarios as shown in the following table:
Scenario | Owner of the supplied goods at the customer's site | Responsible for managing the warehouse at the customer's site | Responsible for the supply planning
Full VMI | Supplier | Supplier | Supplier
Planning by supplier | Customer | Customer | Supplier
Warehouse management by customer | Supplier | Customer | Supplier
For more information, refer to the Vendor managed inventory online manual topic or to User's Guide for Vendor Managed Inventory (U9501A US). Order-based planning and VMI The main difference between regular order-based planning and supply planning by supplier is the following: Regular order-based planning In general, if regular order-based planning is applied, Enterprise Planning generates planned purchase orders for the items that must be delivered by a supplier. Supply planning by supplier If the supplier of an item is a valid VMI supplier, Enterprise Planning does not generate purchase orders for the item. Instead, Enterprise Planning can generate a forecast that is sent to the supplier. The supplier performs the supply planning based on the forecast or the actual inventory levels at the customer. In general, the replenishment is accomplished by using warehouse transfers. Overview The following diagram shows the general information flow and the goods flow for the setup where the supplier takes care of the planning. Forecast In the general case, the customer sends the supplier a forecast of the demand for an item. The supplier can use that forecast as input for its order-based planning process. If the customer does not send a forecast for an item, the supplier can base the supply planning on the actual inventory levels. The customer aggregates the forecast to forecast periods. For example, the forecast can be defined by week. Enterprise Planning can generate the forecast, but the customer can manually modify the forecast before sending it to the supplier. For more information, refer to Forecast (VMI) Confirmed supply Depending on the setup, the supplier sends the customer a confirmed-supply message. Enterprise Planning can generate the confirmed supply, but the supplier can also use other methods to determine the confirmed supply. If Enterprise Planning generates the confirmed supply, the supplier can manually modify the confirmed supply before sending it to the customer. For more information, refer to Confirmed supply (VMI) Revisions Each forecast the customer sends to the supplier gets a revision number. The corresponding confirmed supply is identified with the same revision number. You can store past revisions for future reference. You can define the number of revisions LN retains in the EP Parameters (cprpd0100m000) session. For example, you can set up LN to store the 10 most recent revisions. Restrictions The forecast and confirmed supply do not include effectivity units. If an item is setup for unit effective supply, the item cannot be supplied by a VMI supplier. For VMI planned items, an item master plan is not available. Example The following diagram shows how the situation is represented in the supplier's system. In this example, the supplier defined the following entities: Cluster `CL`, that represents the customer's site. Warehouse `A`; this warehouse is located at the supplier's own site. Warehouse `B`, an external warehouse linked to cluster CL. Item `1500J`, an item manufactured by the supplier and sold to the customer. Plan item `1500J`, with default warehouse A. Note: the cluster segment of the item code is empty, or else it differs from CL. Plan item `CL - 1500J`, with default warehouse B. Note: the cluster segment of the item code is CL. The customer in this example regularly sends a forecast to the supplier. Based on this forecast, the supplier generates planned distribution orders to deliver plan item `CL - 1500J` to warehouse B (at the customer) and planned production orders for `1500J` and its components. The planned orders for plan item `CL - 1500J` can be translated to confirmed supply. The confirmed supply is the delivery quantity that the supplier commits to. Optionally, the supplier can change the confirmed supply, before sending the confirmed-supply data to the customer. Finally, the supplier replans the supply, based on the confirmed supply sent to the customer. Because the confirmed supply can deviate from the received forecast, this planning run creates planned orders which can differ from the planned orders that were based on the forecast. Procedures For instructions on how to set the system up and how to run the planning and replenishment, refer to the following topics: Supplier's side To perform the supply planning for your customer - Setup To perform the supply planning for your customer - Procedure Customer's side To let your supplier perform the supply planning - Setup To let your supplier perform the supply planning - Procedure Related topics Vendor managed inventory Order planning, an overview Forecast (VMI) Confirmed forecast and unconfirmed forecast Confirmed supply (VMI) Replenishment methods (VMI) Planning methods (VMI) To work with minimum and maximum inventory |