Welcome Page (Page 1 of 45) Learning Methodology (Page 2 of 45) Objectives (Page 3 of 45) Target Group (Page 4 of 45)

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1 Page 1 (11) Welcome Page (Page 1 of 45) Welcome to this OnDemand course in tactical and operational planning. The tactical and operational planning module offers a powerful toolbox for managing the planning, scheduling and fulfillment of the extended supply chain. Using tactical and operational planning increases visibility and improves material flow throughout the supply chain. At the same time, it frees up capital tied up in inventories and increases resource utilization, resulting in optimized service levels and maximum profitability. This course will focus on how to balance the supply and demand in Lawson M3. To enable the best result, we recommend that you practice the scenarios in a live environment at the same time as you take this OnDemand course. We estimate it will take you a total of four hours to complete this course. However, if you only need an overview of the subject you can skip the live practicing. Then you will need to devote about two hours to the topic. Please note that this course uses sound. If you prefer, you can print and read the course by clicking on the sound manuscript link. When you are ready, click Next Page to begin. Learning Methodology (Page 2 of 45) The Four-Step Structure promotes effective learning of the Lawson solution. The underlying principle is that you learn best when you first see the whole picture before focusing on the details. Click the Next Page button to continue. Objectives (Page 3 of 45) By the end of this course you will be able to create a rough-cut resource; create a resource requirement profile; generate and display rough-cut load; and adjust capacity to meet demand arising from the production plan. Target Group (Page 4 of 45) This course is designed for users who will be working with the tactical and operational planning process. To fully benefit from this course, we recommend that you have a basic understanding of Lawson M3 and how to navigate using Lawson Smart Office; a working knowledge of basic MRP concepts and applications; practical experience working with planning processes; and successfully completed a Learning Camp. System Prerequisites (Page 5 of 45) To run this course smoothly you should have access to the Lawson M3 education environment, or a local copy of that environment.

2 Page 2 (11) Agenda (Page 6 of 45) The topics covered in this course are listed on this page. Printouts (Page 7 of 45) The documents used in this lesson are zipped together and published on the printouts link. Select the link to download the zip file. Different Planning Dimensions (Page 8 of 45) Planning can be divided into four dimensions: demand, time, resources, and level. Resources can be further divided into material and capacity. Strategic and tactical planning are often referred to as master planning. Operational planning is seen as material and capacity requirements planning. What is Tactical and Operational Planning? (Page 9 of 45) There are three main levels of planning in a business environment: strategic, tactical, and operational planning. Material planning, with different level of details, are performed on each planning level. The material planning must also be tested against the available resources and capacity of the manufacturing system. Strategic Planning: This planning level focuses on the development of the strategic plans that define the direction of the entire enterprise. This plan, in turn, drives the organization s manufacturing, sales, marketing, engineering, and human resources plans. Strategic planning takes a long-range view. The prime tool for charting the performance of the strategic plan is sales and operations reporting. Details about the strategic planning process are covered in another course. Tactical Planning: This planning level focuses on manufacturing s portion of the strategic plan. Planning at this level is driven by the production plan, which focuses on long range planning of the company s product families, and is broken down into master production scheduling, which is concerned with the medium range management of the firm s end items. Operational Planning: This planning level focuses on the development of the short range detail plan for the production and purchase of the products and components necessary to support the end item requirements specified in the master schedule. Execution: This is not a planning level but it is worth mentioning in connection to the planning levels. Production activity control and purchasing are concerned with the everyday planning and control of the work flow through the factory as well as the timely and cost-effective acquisition of component inventories.

3 Page 3 (11) Planning Levels and Processes (Page 10 of 45) The overall planning process is represented by these different sub-processes. The planning levels mentioned earlier that goes from aggregate, strategic planning, to detailed, operational planning, are shown to the right. The center column represents the material planning processes. At each level there is an applicable capacity planning process, shown in the column to the right. Please read the glossary from the APICS dictionary to get a deeper understanding for each sub-process in the overall process. Tactical Planning Definition (Page 11 of 45) In a manufacturing environment, each business unit is responsible for managing its portion of the overall strategic business plan. For manufacturing, tactical planning is concerned with the development of the production plan and the master production schedule. The overall objective of the tactical planning process is to determine the production rates and resources required to satisfy the shipment, inventory, and cost of sales objectives stated in the company s business and marketing plans. The primary planning tool for management, at this level, is the sales and operations planning, which seeks to reconcile the demands of sales with the capabilities of manufacturing. A key output, from the sales and operations planning, is the consensus forecast that will be used to calculate demand and replenishment plans. The production plan specifies the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family that extends out for a year or more into the future. The production plan determines the production rates and resources required to satisfy the shipment, inventory, and cost of sales objectives stated in the business plans. Once the production plan has been determined, it can then be communicated to the master scheduling. The master scheduling is the process of breaking down the production plan into requirements for individual end items, in each family, by date and quantity. Master scheduling is a medium-range planning tool that enables planners to develop realistic schedules of what the company can and will build to meet demand coming from sales. Tactical Planning Objectives (Page 12 of 45) The objectives of the tactical planning process are to provide a link between the strategic business plan and manufacturing; Identify the necessary resources of equipment, labor, and material needed in each period; Maintain the desired level of customer service by maintaining finished goods inventory levels or by scheduling to meet customer delivery requirements; Optimize material, labor, and equipment; Maintain inventory investment at the required levels; and keep demand priorities valid.

4 Page 4 (11) Tactical Planning Results (Page 13 of 45) There are several key results, or outputs, from the tactical planning process. Those results include a consensus forecast; a production plan; material and capacity requirements for end items; master plan versus consensus forecast; and measured impact on the master plan. Tactical Planning Business Benefits (Page 14 of 45) A company can realize the following benefits from the tactical planning process: Increased efficiency in planning and reduced lead times in the planning process. Quiz Question 1 (Page 15 of 45) Which planning results are related to the tactical planning? Select the correct results and then click the Check button. Quiz Question 2 (Page 16 of 45) When would you typically use the tactical planning process? Select the activities as they appear in time. Please note that the time intervals could differ, but they are always done in the same order. Operational Planning Definition (Page 17 of 45) The main purpose of operational planning is to organize all prerequisites to meet the master production schedule and to give feedback to management regarding the feasibility of the master production schedule. Operational planning uses the output of tactical planning to determine manufacturing and purchasing requirements in the short term. This is done through material requirements planning, capacity requirements planning, and reorder point functions. The operational planning provides management and operational departments with information; It helps management make the correct decisions and take the correct actions; It provides input for selecting more suitable planning methods and values; and it supports internal and external supply to use resources efficiently. Quiz Question 3 (Page 18 of 45) When do you perform operational planning? Select the correct answer and then click the Check button.

5 Page 5 (11) Quiz Question 4 (Page 19 of 45) Which planning results are related to operational planning? Select the correct results and then click the Check button. Quiz Question 5 (Page 20 of 45) What is considered during operational planning? Select the correct results and then click the Check button. Integration with Other Lawson M3 Modules (Page 21 of 45) Lawson M3 planning applications are integrated with most of the other modules in Lawson M3. The key modules are sales order management, distribution requirements planning, inventory management, plant maintenance, and the suite of advanced planning tools. Tactical Planning Process Flow (Page 22 of 45) First, a company must have a description of the planning environment, which is unique for each company. Detailed aggregate planning methods and suitable product structures for effective planning should also be established. An essential component is the establishment of a solid, functional, sales and operations planning process that provides a window into forecast, master production schedules, and inventory positions to effectively drive the Lawson M3 planning engine. The goal is the creation of a consensus forecast, a statement of supply and demand, that will guide the actual plans that will, in turn, guide sales, production and inventory management. Finally, there must be an effective master scheduling process that converts the supply and demand plans into the master production schedules. These will be used as basis for calculating the capacities and resources needed and act as a link between the tactical planning and the operational planning.

6 Page 6 (11) Operational Planning Process Flow (Page 23 of 45) The main input into operational planning is the master production schedule. The master production schedule is simply a statement of what end items are going to be built, in what quantities, and when. It drives the bill of material explosion that occurs in the operational planning area. Operational planning is performed on a detailed level, which means material planning is performed on item number level, both manufactured assemblies as well as purchased parts. The detailed capacity planning is also performed by matching the total load on each work center. Time buckets are expressed in days or hours, and planning is on a daily basis. The master production schedule drives material requirements planning. Output from material requirements planning includes: Quantities; due dates; open and planned orders; and time sequence. Order control represents the function of routing and dispatching work in the production facility and performing supplier control. Capacity requirements planning is the function of establishing, measuring and adjusting limits or level of capacity. The term refers to the process of determining in detail the amount of labor and machine resources required to accomplish the task of production. Even if the rough-cut capacity planning, on the tactical planning level, indicates that sufficient capacity exists to execute the master production schedule, the capacity requirements planning may show that capacity is insufficient during a specific time period. Input/output control is the process of measuring production output and comparing it with the capacity requirements plan. It determines if the variance exceeds preestablished limits and takes corrective action to get back on plan. The input/output control is also used to identify problems in a work center. Operation sequencing is another short-term planning technique. It sequences jobs to run in each work center based on capacity and priority. The output is a set of projected completion times for operations and simulated key levels. Operation planning is part of closed-loop MRP, which is a system built around materials requirements planning that includes the additional planning functions of production planning, master production scheduling and capacity requirements planning. Quiz Question 6 (Page 24 of 45) What are the differences between tactical and operational planning? Drag and drop the planning terms to the right spots, then click the Check button. Quiz Question 7 (Page 25 of 45) What terminology is missing? Fill in the missing words, then click the Check button.

7 Page 7 (11) Quiz Question 8 (Page 26 of 45) The development of the sales and operations plan involves which of the following departments? Select the correct departments and then click the Check button. Quiz Question 9 (Page 27 of 45) Which of the following statements best describes how the production plan is related to the resource plan? Select the correct alternative and then click the Check button. Quiz Question 10 (Page 28 of 45) Which of the following is a true statement about the sales and operations planning process? Select the correct alternative and then click the Check button. Production Plan vs. Resource Plan (Page 29 of 45) In Lawson M3, the resource plan is based on a production plan that represents the demand for an individual product or the demand for a group of products. Products can be grouped together by using a group technology identity. The basis for the production plan can either be a forecast, a master delivery schedule, or planned orders. You have to define the rough-cut resources and generate capacity for them. Note that the same functionality is used for the resource plan and the rough-cut capacity plan in Lawson M3 and that a resource in the resource plan most often is referred to as a rough-cut resource as well. The difference between a rough-cut resource, used for rough-cut capacity planning, and a rough-cut resource, used for the resource plan, is that the latter normally represents an aggregated resource, meaning that the resource could be machine groups, storage areas, assembly personnel, or even a whole plant. The ability of these aggregated resources to provide the necessary capacity to meet the production plan is calculated using Lawson M3 s rough-cut capacity planning tools. Next, the planner should verify the impact of the production plan on the company s resources. The resource usage, the load per resource and production plan unit, is defined as a resource requirement profile and the total load is calculated for the rough-cut resource. The result, the load/capacity relationship, is presented in a number of different ways for analysis. The whole purpose of the resource plan is to highlight periods with overload, or with free capacity. If such events occur the production plan has to be adjusted, or new sources of capacity identified, before the plan can be communicated to the master scheduling.

8 Page 8 (11) MPS vs. RCCP (Page 30 of 45) In addition, similar planning will be done at the master scheduling level when balancing the master production schedule, the so-called rough-cut capacity planning. This time the demand will be represented by key items, i.e. important end items or components. The capacity will also be more detailed, for example focusing on critical resources. As the information gets more detailed you will most likely face some resource issues even if the resource plan was balanced. For example, the total capacity for a longer period might be enough, but you will receive overload in some periods and have available capacity in others. Scenario 1 - Reference (Page 31 of 45) In Lawson M3, rough-cut resources are created in the same program as regular work centers. The type of resource, ie. if it is a regular work center or a rough-cut resource, is controlled by the resource type. Resource type 4 represents a roughcut resource based on one or more regular work centers. The load for the regular work centers will also be included in the type 4 resource. Capacity for this resource type can be entered manually or defaulted from the total capacity of the included work centers. The latter is done if the capacity field for the rough-cut resource is left blank. Resource type 5 represents a separate work center used for rough-cut capacity planning. These resources are not connected to other work centers and are used for warehouse space, personnel, suppliers, etc. Please review the M3 Companion references and the key tasks and programs listed on this page. Scenario 1 - Scenario (Page 32 of 45) In this scenario you will create a rough-cut resource and generate capacity for it. This resource will be used when creating a resource requirement profile. Use the attached links to review the scenario document and the simulations. Scenario 2 - Reference (Page 33 of 45) A resource requirement profile is used to connect the demand, either defined per product or a group technology class, with the respective rough-cut resources. You also need to define a resource usage per rough-cut resource defined in the profile. Please review the M3 Companion references and the key tasks and programs listed on this page.

9 Page 9 (11) Scenario 2 - Scenario (Page 34 of 45) In this scenario, when the rough-cut resource has been defined, you will create the resource requirement profile. Use a group technology class to connect products to the profile. Further, the required resource usage should be 2 hours per manufactured unit. Use the attached links to review the scenario document and the simulations. Scenario 3 - Reference (Page 35 of 45) This procedure is used to generate and display the load, in other words the resource requirements, based on the defined demand, the production plan, and the resource requirement profile. The demand could be based on forecasts or master demand schedules. The system also allows planned orders as input, but please remember, this functionality is also used for the master scheduling. Please review the M3 Companion references and the key tasks and programs listed on this page. Scenario 3 - Scenario (Page 36 of 45) You have created a resource requirement profile that defines the products from which the forecast should work as basis for your resource plan. In this scenario you will display the load impact this will have on your rough-cut resource. Use the attached links to review the scenario document and the simulations. Scenario 4 - Reference (Page 37 of 45) If the projected load exceeds the capacity in any rough-cut resource, the capacity or load must be changed. Be aware that the planning at this level most often is aggregated, i.e. aggregated product levels, aggregated resources, and/or aggregated time buckets. This means that even if the resource plan is balanced you need to analyze the capacity at lower planning levels again, i.e. for individual products, specific resources and/or shorter time buckets. This is done in two steps, first you will perform a capacity check during the master scheduling, that is the rough-cut capacity planning, and finally at the operational planning, which is the capacity requirements planning. Please review the M3 Companion references and the key tasks and programs listed on this page.

10 Page 10 (11) Scenario 4 - Scenario (Page 38 of 45) In this scenario the production manager and sales manager have realized that there are not enough hours available in the resource plan due to increased sales. There is also an overload due to a planned sales campaign. It has been determined that the plant will increase its capacity by adding another shift. To meet the demands for the campaign, the campaign will be rescheduled three months ahead and the production plan, until then, will be leveled to balance the demand and supply. Use the attached links to review the scenario document and the simulations. Summary (Page 39 of 45) By now you should be able to create a rough-cut resource; create a resource requirement profile; generate and display rough-cut load; and adjust capacity to meet demand arising from the production plan. This ends this course. We hope that you have enjoyed taking it. You can re-take the course whenever you feel necessary. As the last step of the review, please answer some review questions to check your understanding. Click the Next page button to answer the first question. Good luck! Quiz - Question 1 (Page 40 of 45) What are the key things you have learned in this course? Fill in the missing words and then click the Check button. Click the Next page button to go to the next question. Quiz Question 2 (Page 41 of 45) Why is the resource plan so important? Drag and drop the right wording to the right spot in the sentence, then click the Check button. Please note that all alternatives will not be used. Quiz Question 3 (Page 42 of 45) Once a resource is created, how would you adjust the capacity? Select the correct alternative and then click the Check button.

11 Page 11 (11) Quiz Question 4 (Page 43 of 45) Assume the settings in the image. When creating the resource plan, the resource requirements profile is based on which of the following? Select the correct alternative and then click the Check button. Quiz Question 5 (Page 44 of 45) The resource plan is typically stated in all of the following terms EXCEPT which one? Select the correct alternative and then click the Check button. Quiz Question 6 (Page 45 of 45) Which of the following problems can be identified and adjusted with help from the resource plan? Select the correct alternative and then click the Check button. You re done!