co-product and by-product planning
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Copyright © 2010 Kinaxis Inc. All Rights Reserved. 1
Copyright © 2010 Kinaxis Inc. All Rights Reserved.
Bob May
senior product manager
Co-product and By-product Planning
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 3
Agenda
• What is co-product/by-product planning?• Co-product definitions and planning assumptions• Configuring co-product relationships• Examples• Wrap-up
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 4
What is Co-product and By-product Planning?
• Parts that are produced together in the same production process but have different physical or performance characteristics– Product grading (“binning”)
• Co-product– Real production parts– Have real demand
• By-product– Cannot be produced alone– Can be seen as “scrap with value”– Can have negative value
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 5
Supported Co-product Configurations
• Making supply of one part produces supply for one or more other parts
• The relationship can be one-way or two-way– One-way
• Making H, produces H, M and L• Making M, produces M, L• Making L, only produces L
H
Components
M L
20% 50% 30%
L
Components
M
70% 30%
– Two-way• Making H, produces H, M and L• Making M, produces H, M, L• Making L, produces M, L
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 6
Primary Part Definition
• Part that has demand and triggers new production– Making H, produces H, M and L; H is primary product– Making M, also produces L; M is the primary product
• The primary part– Explodes demand to components– Determines the order lot size rules– Determines the assembly yield– Consumes resources (“constraints”)– Considers sourcing rules
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 7
Characteristics of Co/By-product Supply
• Supply created on co/by-products– Pegs to the planned orders or current supply on the primary part– Does not explode– Does not consume any constraint or generate CRP load– Availability is dependent on the primary product’s availability
• Co-product supply life cycle– Planned orders: co-product supply always created– Current primary part supply
• Optionally create co-product supply• Optionally explode demand to components• Optionally consider assembly yield• Optionally consume constraint
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 8
Configuring Co-product Relationships
• Leverage BillOfMaterial table– Primary part is the assembly; co-product or by-product is the
component– BOMType field indicates co-product/by-product relationship– Primary part’s ratio is modeled on the PartSource record,
co/by-product ratios are modeled as negative QuantityPer values
AssemblyPart
BillOfMaterial
Component Part
BOMType
H
Components
M L50% 20%
by-product
10%20%
H
Components
M
L
- 2.5
- 1
by-product
- 0.5
QtyPer
CoProductYield = 0.2
PartSource
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 9
Configuration Example – One-way
H
Components
M
L
- 2.5
- 1.0
by-product
- 0.5
QtyPer
Assembly Component Type QuantityPer Formula
H C1 Normal QtyPer
H M CoProduct -2.5 - 0.5 / 0.2 = -2.5
H L CoProduct -1.0 - 0.2 / 0.2 = -1.0
H By-product ByProduct -0.5 - 0.1 / 0.2 = -0.5
M
Components
L- 1.0
QtyPer
M C1 Normal QtyPer
M L CoProduct -1.0 -0.5 / 0.5 = -1.0
Calculation example:• Need 12,000 H• Order quantity H = 12,000/0.2 = 60,000• M supply = 12,000 x 2.5 = 30,000• L supply = 12,000 x 1.0 = 12,000• By-product = 12,000 x 0.5 = 6,000
Distribution:• H:20%• M:50%• L:20%• ByProduct:10%
Distribution:• M:50%• L:50%
PartSource.CoProductYield = 0.2 PartSource.CoProductYield = 0.5
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 10
Configuration Example – Two-way
H
Components
M
L
- 2.5
- 1.5QtyPer
Assembly Component Type QuantityPer Formula
H C1 Normal 1
H M CoProduct -2.5 - 0.5 / 0.2 = -2.5
H L CoProduct -1.5 - 0.3 / 0.2 = -1.5
M
Components L
- 0.6QtyPer
M C1 Normal 1
M H CoProduct -0.4 - 0.2 / 0.5 = -0.4
M L CoProduct -0.6 - 0.3 / 0.5 = -0.6
Distribution:• H: 20%• M:50%• L:30%
Distribution:M: 50%H:20%L:30%
H- 0.4
PartSource.CoProductYield = 0.2 PartSource.CoProductYield = 0.5
Demo
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 11
Multiple Sourcing Example
• One primary part can have more than one co-product relationship
• Example: There may be more than one way to way to make the primary product. Using different components may yield different proportions of primary and co-products
• Use multiple sourcing with alternate BOMs to achieve this
H
Component set 1
M L
.20% 50% 30%
H
Component set 2
L
.20% 45%
M35%
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 12
Reducing Excess - Substitution Example
• Planning inputs– Demand of 100 for L– No current supply on L or M– Process yields 80% L, 20% M– M can be substituted for L
• Planning result– L and M are planned as a group– Plan will produce 80 units of L and 20 units of co-product
supply on M to satisfy remaining demand on L– Without co-product knowledge of substitution, there would
be 25 “excess” units of M
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 13
Reducing Excess – Managing Priorities
• Two-way relationship– A produces B (A-20%, B-80%), B produces A (B-80%, A-20%)
A
B
H
30
30
120
M
80
20
80
Excess = 20 units
Excess = 120 units
– Netting by priority results in 140 units of excess
30
10
40
Excess = 0 units
Excess = 40 units
– Netting by date results in 40 units of excess
DemandPrimary SupplyCo-product Supply
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 14
Reducing Excess – Planning Interval
• One way relationship– A produces B (A-20%, B-80%)
A
B
30
30
120
80
80 Excess = 120 units
– Netting with no planning interval results in 120 units of excess– Netting with planning interval results in 40 units of excess
DemandPrimary SupplyCo-product Supply
Excess = 40 units
30
120
Planning Interval
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 15
Unsupported Configurations• Real product structure between two associated co-products
• Substitution between co-product and common components
• Blow-through acting as a primary part
• Co-product is also a component of its primary part
H
M
L
Components
H
L
Components
L
H
L
Component 1
Component 1 L
H
L
Components
Co-productStandard BOM
Blow-through
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 16
Wrap-up
• RapidResponse 10.0 supports configurable co-product and by-product planning
• One- and two-way configurations are supported• Co/by-product relationships are modeled in a way that is
consistent with large ERP systems• Compatible with all other RapidResponse analytics
including CTP, full-level-pegging, multi-sourcing, part substitution and supply expiry
Copyright © 2010 Kinaxis Inc. All Rights Reserved. 17
Thank You!
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