Tuesday, July 24, 2012

Fix the Date or forever be separated...

Have you ever heard about mis-communication between the production scheduler and the sales department? The availability check with its rules and conditions is the link. I am mainly talking about order entry here, but, of course, the forecast and setup of MTO vs. MTS are two more areas of friction between sales and production - unnecessary if the right strategies and configuration to support those are in place (an educated user who can execute the functions well, must be the most important part of the whole).

Now when you enter a sales order into your SAP system, it represents a demand for a sellable product. The sales order is looking to get product from somewhere, so as to fulfill a customers desire to increase your revenue. The sales representative can not possibly understand why the company s/he works for would not deliver the product right away or wouldn't do anything to fulfill the request asap. But there are other goals: a supply chain that is as waste-less as possible, low finished goods inventory, high production utilization, low production cost and a smooth, undisturbed production program. Unfortunately these goals - and the Sales Reps mission - are usually not in line.

In SAP the availability check is using a rule and may be different depending on the business transaction you perform. In other words: a Sales Order may check differently than a Production Order. The rule by which the check is performed can be assigned in the material master and therefore can differ from one product to another. This rule, together with the fact that you create a Sales Order, form the framework within which delivery dates with the customer are agreed upon.

As an example: if a customer wants 50 pieces but there are only 30 in inventory, the availability check finds out for you when the company is able to deliver the goods. In its simplest sense the additional 20 may be delivered after the time it takes to bring them back or at the date when we receive the next batch from production. This is the difference between checking with or without replenishment lead time.

In the checking rule you can identify what stocks - safety, blocked, restricted - are to be included in the check. It is also possible to specify whether planned orders (firmed or all), production orders, requisitions and/or purchase orders are used to determine the availability date.

As you can see the choice is ours what we let SAP automatically determine as the date we tell our customer, when they can expect the goods. But there seems to be a problem. At least I see that quirk everywhere I look: the sales rep is on the phone with the customer entering an order and the availability screen says "you can have 30 pieces today and 20 pieces next week Tuesday." "Great" the customer says and the sales rep saves the order without fixing the date.

Not fixing the date has no meaning for the sales rep but in MD04 the entire order of 50 pieces stands with a requirements date of today. That means a red light and a signal to the production scheduler to make 20 pieces... NOW ! And tomorrow it means Now! And the day thereafter too. And the customer does not expect the 20 pieces before next Tuesday and is quite happy with that (in the end he won't get them before next Tuesday anyway).

Would the sales rep have checked on the fixing, we would have seen a delivery for today and another one for Tuesday in MD04 and production would have executed that order, which the availability check saw. The customer would have received what they were promised and the world would have been a little bit better place to live.

It is incomprehensible to me why companies don't have a policy in place that supports better practices when it's so easy to do. Instead people fight you to the end to not fix the date. I have no clue why but I have customers with whom I have been discussing this issue for years and they still don't do it or only with much reluctance. "What if I have it available earlier ?" they ask. So you really want to have hundreds (if not thousands) of false delivery days per week disturbing your production program, in exchange for that one time chance to deliver on Monday instead of Tuesday? And even then... it's an exception... and those are meant to be handled manually - not the rule.

Of course, if your availability check produces false results because your basic data setup is incorrect or you mix up MTS with MTO, then you have to do something else and can't fix the date. However, in that case we have to take a couple of steps back and are not ready yet to have production and sales sing to the same song...