2006_0227_wp for spares mgnt planning 11i10 (1)

8/7/2019 2006_0227_WP for Spares Mgnt Planning 11i10 (1)

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Spares Management Business Processes

OVERVIEW

The purpose of this white paper is to describe the inventory planning process inSpares Management 11.5.10.

Spares Management is positioned in the Field Service solution as a productproviding both the logistics and planning functionality needed to manage aservice parts inventory. The product uses core ERP foundationfunctionality from Oracle Inventory, Order Management, Purchasing andATP extending those products where necessary with additionalfunctionality to satisfy unique field service business requirements. Theproduct also has extensive integration with Oracle Field Service including the Dispatch Center, Scheduler, Field Service Debrief and Field ServiceMobile products.

From a supply chain perspective, Spares Management covers all of theessential business processes required to operate the field service supply chain.

Field Service Supply Chain

CentralWarehouse

UsableInventory

IntermediateWarehouse

UsableInventory

FieldTechnicians

UsableInventory

ServiceCustomer

FieldTechnicians

DefectiveInventory


DefectiveInventory

CentralWarehouse

UsableInventory

RepairSupplier

Replenishment Flow

Excess Returns

Defective Returns

Business Processes

• Plan technician Inventory• Plan Warehouse Inventory• Replenish technician inventory• Replenish warehouse inventory

• Process excess returns• Priority orders for the technician• Recover and consolidate defectives• Repair defective returns

New-buySupplier

Spares Management Business Processes 1



This white paper will describe the planning for both technician and warehouseinventory. The logistics processes will be covered in another white paper.

INTRODUCTION TO PLANNING

With the potential for a large number of field technicians and/or warehouses to plan, an automated process to create stocking level recommendations is very important . Stocking levels also need to be updated frequently to include the latestusage trends and supersession activity.

The planning functionality in Spares Management will automatically recommend optimum stocking levels for the field service technician orwarehouse. These stocking levels are produced from usage history, planning parameters and a planning method. The installed base population and failurerates can also be used depending on the planning method employed by theuser.

The functionality includes features to handle planning scenarios unique to the

field service operation:• New technicians who would not have any usage history • Transferred technicians with usage history from the old assignment that

is not applicable to the new assignment• Technicians who have been temporarily involved in activities other than

normal field service work.• New product introductions or changes to product populations

The Spares Management planning also incorporates advanced supersessionfunctionality to minimize obsolete inventories caused by supersession activity.This functionality coordinates min-max levels and supply chain inventories toinsure maximum utilization of inventory on superseded parts.

Supersessions occur when one part has been replaced by another. Inmanufacturing, a supersession can usually be fully implemented in a few days orweeks at most. In a field service scenario that same supersession can often takeyears to work completely through the installed base.

Business rules are also available to automate the planning process. The rulescan be used to analyze the change between current and recommended stocking levels. The rules can be used to automate the routine changes.




Modeling Technicians and Warehouses

Technicians and warehouses that require planning need to be added to the Treein the Planners Desktop can accommodate sub-inventories, inventory orgnsand whatever artificial nodes are required for presentation.

Technicians should be modeled as sub-inventorie(s) in the field service supply chain. If the technician is involved in the recovery of defective parts, a second

defective sub-inventory would be used. Spares Management providesfunctionality to flag a sub-inventory as either “usable or defective” and typically a technician would require both.

Warehouses of any significant size need to be setup as inventory organizations.Sub-inventories, however, could be used in the case where there are a largenumber of relatively small metropolitan warehouses.

The following sections will describe in detail how planning works for the fieldservice technician and warehouses.




PLANNING THE FIELD TECHNICIAN INVENTORY

This section will describe how to produce and maintain min-max levels for thefield service technicians using Spares Management functionality. With thepotential for hundreds or maybe even thousands of technician inventories toplan and manage, an automated process to create and maintain min-max levelsis a key need. Also, technician stocking levels should be updated frequently toreflect the latest usage trends and supersession activity.

This same basic process can be used to plan stocking levels for the warehouseinventories, but there are some differences in terms of methodology andemphasis. So planning warehouse inventories is covered in a later section of this white paper.

There are three basic planning methods provided in Spares Management:

• Personal Usage

• Territory Norm

• Product Norm

All three can be used to plan the technician inventory.

Personal Usage and Territory Norm follow a similar flow and are coveredtogether. Combination methods are also available that provide a blend betweenPersonal Usage and Territory Norm or Product Norm.

The Personal Usage method in combination with product population changescan also be used to plan technician inventories. But this approach is morecommonly employed in planning stocking levels at the warehouse so it will becovered in that section of the white paper.

Planning the technician inventory with Personal Usage or Territory Norm

Personal Usage and Territory Norm are Planning Methods used to create andmaintain min-max levels for the technicians. Product Norm is also arecommendation method that can be used to plan technician inventories butthis method follows a different flow so it’s covered separately in a differentsection.

Personal Usage Method

With this method the “technician’s usage history” is used for planning thetechnician’s inventory. The usage history is associated with the sub-inventory assigned to the technician and is acquired primarily through the debrief processwhen the technician reports parts used on a task. Usage history can also beacquired through Miscellaneous Transactions entered directly into OracleInventory.

This method would be employed when the technician is in a reasonably stableworking situation doing similar tasks on a regular basis. In this scenario, recent




usage history would provide a reasonably good indication of what thetechnician would likely be needing in the immediate future.

Territory Norm Method

Territory Norm defines parts usage that is average or typical for a group of technicians assigned to a node in the planning tree. This method can be used in

the scenario of a new technician who does not have usage history or atransferred technician who has usage history that is not applicable to the new assignment.

Care must be taken to avoid using this planning method where the techniciansin the group are individually doing unique tasks.

Personal Usage in combination with Territory Norm

Territory Norm can be used in combination with Personal Usage. Weighting factors are provided to define the percentages to use for blending of the two

methods.

This blended method might be used in the scenario where a technician hadbeen off the normal field service routine for a period of time due to training,special assignment etc. In this situation, recent usage history would beunderstated due to the absence from normal tasks and usage reporting routines.Personal Usage, which is understated in this scenario, would be supplementedwith Territory Norm.




Technician Planning Process Using Personal Usage and Territory Norm

The process for creating min-max levels using the Personal Usage or Territory Norm planning methods is covered in the following section. Additional detailson the min-max calculations are included at the end of the section.

Table 1.0

Process for creating and maintaining min-max levels for the technicians

Step Description Comments

1.0 Enter planning parameters for thetechnician being planned.

Use Planning Parameters tab as shown above.Planning parameters entered at a higher levelnode will default down the tree unlessotherwise overridden at the technician.

Forecast Rule Defines number of history periods, forecast

periods, size of each period, forecast method,Tracking Signal Cycle and other forecastparameters.

The Tracking Signal Cycle is used todetermine the number of Forecast Periods touse in calculating the Tracking Signal.

Tracking Signal Periods = Tracking SignalCycle * Forecast PeriodForecast Rules are setup in:Spares Management >> Setup >> BusinessRules >> Forecast RulesIn Territory Norm the Forecast Rule is usedto define the number of history periods to use

in the Territory Norm calculations for averageusage across a group of technicians.

Service Level Planned level of service for the technician.

The service level defines the percent of timesthe technician should have the part on-handwhen needed.Service level is used to determine safety stock in the Personal Usage method.The Territory Norm method does not usesafety stock.

EDQ Factor This is a combination of carrying cost and

ordering cost in the Economic Delivery Quantity calculation.

EDQ is a function of the value of the annualusage.

The EDQ is used to determine Max levels.

As a general rule, the EDQ factor would be




set between 5 and 15. The user wouldobserve results and make adjustments untilseeing min-max recommendations that weresensible for that user.

Authorized for ASL When the parameter is set to NO, the ASLwill be recommended for viewing but itcannot be accepted.

Use safety stock If the parameter is set to NO, safety stock willnot be used in the min quantity calculation.

Step 1.0 and 2.0

Planners Desktop with Planning Parameters tab

2.0 Select Planning Method

Planning Method tab

Personal Usage or Territory NormOr Personal Usage and Territory NormWhen Personal Usage and Territory Normare selected weighting factors are used todefine how to blend the two methods.The weighting factor, expressed as a decimal,

less than one, defines how much weight togive personal usage. Example = 0.6. In thisexample the weight for Territory Norm wouldbe 1 - 0.6 = 0.4.

3.0 Define Recommendation Rules Navigator >> Setup >> Business Rules>> Recommendation Rules Tab




Automates Min-Max Recommendations • Value Change• Value Change %• Quantity Change• Quantity Change %• Tracking Signal Min• Tracking Signal Max

The Min-Max Recommendation would“pass” for automation if the Quantity orValue change or % was less than the enteredvalue.

The tracking signal measures cumulativeforecast error relative to standard deviation.

When the Tracking Signal is negative, forexample -5.0, actual usage on a cumulativebasis is running greater than forecast.

When the Tracking Signal is Positive, forexample 5.0, actual usage on a cumulativebasis is running less than forecast.

The Min-Max Recommendation would“pass” for automation if the actual Tracking Signal was:

> TS Min and < TS Max




Step 3.0

Recommendation Rules

4.0 Create Min-Max Recommendations. Navigator >> Reports and Programs

Run concurrent program: Create Usage forRecommendations.This program needs to be run only if usage orthe supply chain has changed.

Run Concurrent Program: Create UsageRollup if the planning tree in the desktop haschanged.

Run concurrent program: Create ASLRecommendations.This program can also be run from theplanning tree node.

Min = Reorder Point = usage during leadtime + safety stock

Max = Min + EDQ

Additional details on Min-Max calculations are described below

5.0 View and review min-maxrecommendations

Spread-table in recommendations tab as seenbelow shows:

• Delta Cost between current max andrecommended max

• Actual cost of current max• Actual cost of recommended max




• Delta min between current minrecommended min and

• Delta max between current max andrecommended max

Usage history and forecast can be viewed inthe lower tabs

6.0 Change Min-Max recommendations asrequired

Change Service Level and/or EDQ Factor inPlanning Parameters tab and save.Recommendations are automatically changedin Recommendations tab.It is not necessary to rerun concurrentprogram.

7.0 Accept or reject recommendations Use Accept or Reject button.Accept button will cause new min-max valuesto be implemented.Accepted recommendations automatically update Oracle Inventory table for min-maxvaluesThe Stock List tab in the Desktop is also

updatedReject button will cause recommendation tobe deleted from the spreadtable

Steps 5.0 – 7.0

Planner’s Desktop with Recommendations tab

From the Recommendations tab the planner can accept or reject therecommendations.




8.0 Add new min-max recommendation orchange current min maxrecommendation.

Based on review of min-maxrecommendation planner may want to:

Make a change to an existing min-max levelthat is different than the recommendation.Use Stock List tab as shown below tochange a current min-max.Or create a new min-max level for a part.Use Add button to create a new min-maxlevel for a part that does not currently haveone.

Step 8.0


Planner can enter min– max levels different than the recommendation in thelower Stock List tab.




Planning the technician inventory with Product Norm Method

Product Norm is another planning method that can be used to create andmaintain min-max levels for the technician. The Product Norm method inSpares Management uses product populations and failure rates to plan thetechnician inventory.

Product Norm

Product Norm is a recommendation method that uses product populations andfailure rates to plan min-max levels for the technician. The Product Norm isused in the scenario where a technician’s installed base is well defined andfailure rates are known or can be calculated from historical usage associatedwith the product. Spares Management provides functionality to calculate failurerates if they are not otherwise known.

When using the product norm, failure rates are defined at a higher level node inthe Spares Planning Tree. Failure rates are calculated from product populationand usage transactions collected from the field service debrief process wherethe part used can be related back to the product through the service request.Failure rates in Spares Management are expressed in terms of usage per productper week.

Product Norm can also be used in combination with personal usage andweighting factors are provided in the Spares Management functionality tohandle this blended approach.

Technician planning process using Product Norm

This process is very similar to Personal Usage and Territory Norm as describedabove except for the additional step required to calculate failure rates.

Table 2.0

Creating and maintaining min-max levels using Product Norm


1.0 Enter planning parameters for thetechnician or node being planned.

Planning parameters entered at a higher level node widefault down the tree unless otherwise overridden at alower node, technician or warehouse.

Forecast Rule Defines number of history periods for accumulating usage in the failure rate calculation.

Forecast Rules are not used at the node being planned forecommendation method Product Norm.

Service Level Planned level of service for the technician or warehou

Service Level is not used in the Min level for Product No




EDQ Factor This is a combination of carrying cost and ordering coin the Economic Delivery Quantity.

The EDQ is used to determine Max levels.

Authorized for ASL When the parameter is set to NO, the ASL will berecommended for viewing but it cannot be accepted.

Use safety stock If the parameter is set to NO then safety stock will nobe used in the Minimum quantity.

Safety Stock is not used in the Min level for Product Norm

2.0 Enter Planning Method Product NormOr Personal Usage and Product NormWhen Personal Usage and Product Norm is selected,weighting factors are used to define how the twomethods are blended.

The weighting factor expressed as a decimal, less than ohow much weight to give personal usage. Example = 0.6this example the weight for Product Norm would be 1 - 00.4.

3.0 Enter planning parameters for thePlanning Tree node where thefailure rates are being calculated.

Calculate Failure Rates checkbox Check this box when failure rates are calculated for thnode.

Forecast rules Defines number of history periods for accumulating usage in the failure rate calculation.

4.0 Enter product and population forthe node where failure rates arebeing calculated.

See Planner’s Desktop below with Failure Rate tabactive.In this example a Product = AS54888 and a Populatio= 500 was entered for Node = Territory 01

5.0 Calculate failure rates Navigator >> Reports and Programs >> CalculateFailure RatesRun concurrent program: Create Failure Rates. Thisprogram can be run from the planning tree node.Parts and failure rates can also be entered manually if known. For example, as in the case of a new product.The manual rate will override if there is also a calculafailure rate for the same Item.




Step 4.0

Planner’s Desktop with Failure Rates tab active at node where failure rates are beingcalculated

Failure rates are calculated for the product and population at a node on theplanning tree. Failure rates can also be entered manually if known.




EXAMPLE OF CALCULATING AND USING FAILURE RATES

Failure Rates are expressed in terms of: u sage per product per week. Failurerates are calculated at a higher level node and used for planning at a lower levelnode.

Calculating the failure rate

Product A at the Field Service node has a population of 1000 machinesThe Forecast Rule has History Periods = 10The Forecast Rule Period Size = 7 days or 1 week The usage reported for Part B over the 10 week period when Product A wasbeing serviced = 125

Note: This usage would include all usage for the part -product reported in asub-inventory attached to the Field Service node or a node underneath it.

Failure Rate = Usage / Population / Weeks in history periods

Failure Rate for Part B used on Product A = 125 / 1000 / 10 = .0125

The failure rate is expressed in terms of usage per machine per week

So it’s .0125 pieces (usage) per machine per week

Sometimes failure rates are expressed in pieces per 1000 machines per week

So, in this case it would be 125 pieces per M machines per week

Using the failure rate in Planning

The failure rate is used to calculate the Average Weekly Usage or AWU

For example at a technician’s truck the impact on Part B using a populationof 2500 machines would be:

AWU impact for Part B = Population * Failure Rate

AWU impact for Part B = 2500 * .0125 = 31.25 pieces per week

New AWU = Current AWU + AWU impact from Product Norm

If the current AWU = 0 as in the case of a new product scenarioThen new AWU = 0 + 31.25 = 31.25

If the current AWU = 10.00 as in the case of a population increaseThen new AWU = 10.00 + 31.25 = 41.25 pieces per week




Step 6.0

Planner’s Desktop with Failure Rates tab active for node being planned

6.0 Enter product and population orpopulation change for the nodebeing planned

Failure rates will be populated from the firsthigher level node in the tree that has the CalculateFailure Rates checkbox checked.

7.0 Create min-max recommendations. Same as described above for Personal Usage andTerritory Norm.


Same as described above for Personal Usage andTerritory Norm.

8.0 Accept or reject recommendations Same as described above for Personal Usage andTerritory Norm.

9.0 Add new min-max recommendationor change current min maxrecommendation.

Same as described above for Personal Usage andTerritory Norm.




Details on the Min-Max levels

Table 3.0, as shown below, describes in detail how the min-max levels arecalculated. The details are the essentially the same no matter which Planning Method is used. The different Planning Methods provide different ways of getting to the AWU or Average Weekly Usage.

Table 3.0

Additional details describing the min-max calculation


1.0 Enter planning parameters in thePlanner’s desktop.

• Forecast Rule• Service Level• EDQ Factor

2.0 Generate usage transactions • From Field Service debrief or• Field Service Usage transactions

3.0 Calculate Average Weekly Usage orAWU

For Personal Usage

Using the Forecast Rule

AWU = (Sum of forecast quantity) / (Numberof weeks included in the forecast)

Where: Weeks included in the forecast =(Forecast Periods ) * ( days per period ) / 7

Example: Forecast is created using weekly bucketsForecast is created for 13 weeks

Sum of forecast quantity for the 13 weeks = 130

AWU = 130 / 13 = 10

For Territory Norm

Using the Forecast Rule

AWU is calculated at a node in the Planning Tree

AWU = (Sum of the usage within the history periods for all technicians attached to the node) /(Number of weeks included in the history period)

Where: Weeks included in the history =(History Periods ) * ( days per period ) / 7

4.0 Calculate usage during lead time UDLT = AWU * Leadtime in Weeks

Lead time is from Oracle Inventory as defined atthe organization, sub-inventory, or Item levelwhen the supplier is a vendor.

When the supplier is an organization the leadtimecomes from shipping networks




5.0 Calculate Safety Stock Safety Stock = (Safety Factor) * (StandardDeviation)

Where: Standard Deviation = sqrt [ sum ( Xi- Aver) 2 ] / ( n - 1)

Where: X i = usage history for the periodand Aver = the average of the usage history overthe specified periodThe safety factor is taken from a table, which isrelates safety factors to both EDQ or exposuresand desired service level.The Safety Factors Table is shown below.

6.0 Calculate the Minimum level For Personal UsageMin = UDLT + Safety Stock For Territory NormMin = UDLTSince Territory Norm is by definition anaggregation of usage from multiple technicians,safety stock is not used with this method.

Safety Stock is also not used when the Planning Method is Product Norm.

7.0 Calculate the Economic Delivery Quantity or EDQ

EDQ in units = ( EDQ factor ) * sqrt [ 52 *AWU * Cost ] / CostThe EDQ is a function of the annual value of usage.

If the part does not have a Cost then Min-Maxlevels will not be calculated

8.0 Calculate the Max level Max = Min + EDQ

The Safety Factors Table shown below in abbreviated version is used todetermine safety factors for exposures (across the top) and desired service level(down the left side). As the exposures or deliveries per year increases so doesthe safety stock required for a given level of service. If the exposure per year is18 (meaning 18 deliveries per year based on EDQ and annual usage) and thedesired service level is 94%, then the safety factor is 0.96. For the exposure rateof 17 per year the service level will be 85% withno safety stock at all .

The service level is equated to stockouts per year (down the left side).




PLANNING THE FIELD SERVICE WAREHOUSE INVENTORY

This section will describe how to produce and maintain stocking levels for theField Service warehouse using Spares Management functionality. With thepotential for many warehouse inventories to plan and manage, an automatedprocess to create and maintain min-max levels is an important requirement.

This same basic process as was described above for the technician is used to

plan stocking levels for the warehouse with some minor differences. Forexample, the Territory Norm Method is not used for planning inventory at thewarehouse. That Planning Method is used exclusively to plan technicianstocking levels.

Both the Personal Usage and Product Norm methods would be used to planwarehouse inventories. The combination methods using a blend of Personalusage and Product Norm are also available for planning the field servicewarehouse.

Another scenario for planning the warehouse inventory involves planning forproduct population changes, either up or down. In this situation the planneruses personal usage as the base planning method but can include changes inproduct populations to adjust the final result. This approach can also beemployed in planning the technician inventory but it is more often employed inwarehouse planning.

Planning warehouse stocking levels also uses the advanced supersessionfunctionality from Spares Management. Min-max levels at the centralwarehouse will always be positioned at the top part in the supersession chainunless there are defective parts available with need that cannot be repaired tothe top part. For the intermediate warehouses, min-max levels will becoordinated with the supersession parameters and supply chain inventories.

Optimizing the Warehouse Inventory The Spares Management approach to optimizing the warehouse inventory islimited to optimization at the individual warehouse. Optimization acrossmultiple warehouses, which may be needed for the larger, more complex supply chains, is beyond the scope of the product.

For an individual warehouse, however, Spares Management uses a very advanced approach to inventory optimization using algorithms that synchronizesafety stock and lot size to insure optimum inventory levels consistent withservice level requirements.

Planning the warehouse inventory with the Personal Usage Method Personal Usage is a planning method that can be used to create and maintainmin-max levels for the field service warehouse. The usage for planning thewarehouse is based on a summary of usage transactions rolled-up fromtechnicians tiering into the warehouse through the supply chain structure.




Field Service Supply Chain

CentralWarehouse

UsableInventory

IntermediateWarehouses

UsableInventory

FieldTechnicians

UsableInventory

ServiceCustomer

FieldTechnicians

DefectiveInventory


DefectiveInventory

CentralWarehouse

UsableInventory

RepairSupplier

New-buySupplier

Planning at the warehouse based on a sum of • Usage at that warehouse• Usage at all technicians and warehouses rolling into the warehouse through

the supply chain structure

In this example, the usage for planning at the central warehouse would be basedon the total of: usage at the central warehouse, usage at the intermediatewarehouse(s) tiering into the central warehouse, and usage at the technicianstiering into the intermediate warehouses that tier into the central warehouse.

The process for planning the warehouse using the Personal Usage planning Method would be the same as described above for the technician.

Planning the warehouse inventory with Product Norm The Product Norm method also provides functionality for planning warehouseinventories. Product Norm is a planning method that uses product populationsand failure rates to plan min-max levels for the warehouse. This method would beused when the product populations supported by the warehouse are known andfailure rates can be calculated from history or are otherwise known.

When using the product norm, failure rates are typically calculated at a higherlevel node in the Spares Planning Tree. Failure rates are calculated fromproduct population and usage transactions collected from the field servicedebrief process where the part used can be related to the product through theservice request. Failure rates in Spares Management are expressed in terms of usage per product per week.

Product Norm can also be used in combination with personal usage andweighting factors are provided in the Spares Management functionality to

handle this blended approach.

The process for planning the warehouse using Product Norm would be thesame as described above for the technician.




Planning the warehouse inventory for product population changes Spares Management also provides powerful functionality for planning warehouseinventories in the scenario where there is a significant change to current productpopulation. Used in combination with the Personal Usage planning method, thewarehouse inventory can be planned or re-planned based on a known increased (ordecrease) in product population. The stocking levels for the parts affected by thepopulation change would be incrementally increased or decreased based on the

magnitude of change in population.This method can be used, for example, when a third party service provider gains orloses a contract that has a significant impact on product population being serviced.It could also be used in the scenario where a new product is being introduced orextended into a new area.

Process for planning the warehouse using product population changes The following process describes the step-by-step flow used to plan warehouseinventories using product population changes.

Step 1.0Planners Desktop with Planning Parameters tab




Table 4.0

Process for creating and maintaining min-max levels for the warehouse using productpopulation changes


1.0 Enter planning parameters for thetechnician or node being planned.

Planning Parameters tab

Planning parameters entered at a higher level nodewill default down the tree unless otherwiseoverridden at a lower node, technician or warehouse.

Forecast Rule Defines number of history periods for accumulating usage in the failure rate calculation.

Service Level Planned level of service for the technician orwarehouse

EDQ Factor This is a combination of carrying cost and ordering cost in the Economic Delivery Quantity.The EDQ is used to determine Max levels.

Authorized for ASL When the parameter is set to NO, the ASL will berecommended for viewing but it cannot be accepted.

Use safety stock If the parameter is set to NO, then safety stock willnot be used in the Minimum quantity.

2.0 Enter Planning Method

Planning Method tab

Personal Usage




Step 2

Planners Desktop with Planning Method tab active

3.0 Enter planning parameters for thePlanning Tree node where thefailure rates are being calculated.

Calculate Failure Rates checkbox Check this box when failure rates are calculated forthe node.

Forecast rules Used to define the number of history periods foraccumulating usage in the failure rate calculation.




Step 3.0

Planners Desktop with Planning Parameters tab active

4.0 Enter product and population forthe node where failure rates arebeing calculated.

See Planner’s Desktop below with Failure Rate tabactive.In this example a Product = AS54888 and aPopulation = 1000 was entered for Node = SparesPlanning

5.0 Calculate failure rates Navigator >> Reports and Programs >> CalculateFailure RatesRun concurrent program: Create Failure Rates. Thisprogram can also be run from the planning tree node.Parts and failure rates can also be entered manually if known. For example, as in the case of a new product.The manual rate will override if there is also acalculated failure rate for the same Item.




Step 4.0

Planners Desktop with Failure Rate tab active for node where failure ratesare being calculated

6.0 Enter product and population orpopulation change for the nodebeing planned

Failure rates will be populated from the firsthigher level node in the tree that has the CalculateFailure Rates checkbox checked.

7.0 Create min-max recommendations. Same as described above for Personal Usage andTerritory Norm.




Step 6.0

Planners Desktop with Failure Rate tab active for node where failure rates willbe used for planning


Same as described above for Personal Usage andTerritory Norm for technician planning.

9.0 Accept or reject recommendations Same as described above for Personal Usage and

Territory Norm for technician planning.

10.0 Add new min-max recommendationor change current min maxrecommendation.





Step 8.0 – 10.0


From the Recommendations tab the Planner can accept or reject therecommendations.




Planning the Technician or Warehouse Inventory with Supersessions

The supersession represents a supplier or engineering driven business situationwhere one part has been replaced by another part. The supplier typically notifies the customer that a part has been replaced and is no longer available.Notification of the supersession can also come from engineering. New orderswould be placed for the superceding part. In some cases the supplier will alsodictate that existing orders should be converted to the superceding part.

Multiple supersessions can result in the so-called supersession chain, forexample where Part A is replaced by Part B which is replaced by Part C etc.

Supersessions have a major impact on inventory planning and the time frameover which this impact occurs can be quite long. Unlike manufacturing, when asupersession impact can cycle through very quickly, the supersession in FieldService, depending on the size of the Installed Base, could take a long time tocompletely implement. Ideally, when a supersession occurs, the min-max levelswould be positioned on the top part in the supersession chain. But in thescenario where significant inventory is still available on the superceded part, thebest inventory utilization strategy would keep the min-max levels positioned onthe superceded part, whenever possible, until the inventory is exhausted in thesupply chain or supply chain segment.

This strategy will drive parts out to the technicians where the parts can be usedand the inventory depleted in an orderly process. The positioning of Min-Maxlevels within the supersession chain will be determined by whether inventory isstill available for the part that has been replaced.

This strategy assumes, of course, that the supersession has a “use to depletion”Disposition Option as defined in the supersession details. If the supersessionhas a “scrap” Disposition Option then the Min-Max levels would be positionedimmediately on the superseding part and any inventories on the replaced part

would need to be scrapped or otherwise purged from inventory.

Definition of a Supersession and Parameters

Supersession definition: Part A is replaced by Part B

• Supersession Type: Unilateral or Bilateral

Bilateral is the scenario where an order for Part B, the higher level part, canbe filled by either Part A or Part B.In the Unilateral scenario, an order for Part B can only be filled by Part B.The lower level Part A cannot be used to fill an order for Part B. However,if Part A is ordered, Part A could be supplied consistent with Disposition

Rules.• Disposition: “Use to Depletion” or “Scrap”.

Defines how the disposition of existing inventory needs to be handled onthe lower level part.




A disposition of Scrap would indicate that inventory on the lower level partcannot be used and should be scrapped or purged from inventory. Thisdisposition would cause the Min-Max levels to immediately go to thesuperseding part.

Use to Depletion indicates that inventory for the lower level part can beused consistent with the rules defined by supersession type. Thisdisposition would cause the Min-Max levels to transfer to the superseding part when the inventory had been exhausted.

• Repair To:

Defines the highest level in the supersession chain that the lower level partcan be repaired to. Ideally, the lower level part could be repaired to the toppart in the supersession chain. But this is not always technically oreconomically possible so the “Repair To” could be the same part oranother part less than the top part in the chain..

For example, Part A has been superseded by Part B but Part A cannot berepaired to Part B. In this scenario the Repair-to part for Part A would bePart A. If Part A could not be repaired to Part A, the Repair-To would beleft blank.

Supersessions and Substitutes

Supersessions should not be confused with substitutes. In the substitutionscenario Part B can be substituted for Part A. Part A is considered to be asuitable substitute for Part B but Part A and Part B are both independent itemsthat are procurable.

Supersession Strategy

In Spares Management, the supersession strategy will minimize obsolescence by positioning the Min-Max levels on the lower level part so long as inventory for

the lower level is available in the supply chain. This approach will drive partsout to the “point of use” where usage can occur and lower level inventories canbe depleted. When inventory in the supply chain is used up for the supercededpart the min-max levels will move up the supersession chain to the next levelthat has inventory available.

Planning with Supersessions

The following section describes how the supersession impact is integrated intothe planning process.




Table 5.0

Planning process with supersessions


1.0Create the supersession Navigator >> Setup >> Define

SupersessionsSupersession Parameters:• Replaced Item• Superceding Item• Repair-To Item• Reciprocal• Disposition

The Reciprocal can be defined as eitherBilateral or Unilateral.The Reciprocal parameter defines whichitems can be used in order processing.

Unilateral means that if an order is receivedfor the superseding part then the replacedpart can not be used to fill the order.Bilateral means that if an order is receivedfor the superseding part then either thereplaced or superseding part can be used.

The Disposition has two options:• Use to Depletion• Scrap

If the “Use to Depletion” option is used the“Stockable” Flag in Inventory will bechecked.If the “Scrap” option is used the“Stockable” Flag in Inventory will be un-checked.




Step 1.0

Define the Supersession

3.0 Create supply chain At the item-organization level:Inventory >> Organization Items >> GeneralPlanning tabEnter sourcing Or at the item-sub-inventory level enter sourcing Or at the organization or sub-inventory

Step 3.0

Enter sourcing to create the supply chain




Step 50 and 6.0


4.0 Create min-max recommendations Spares Management >> Reports and Programs

Run concurrent program in the following sequence:

1. Create Usage for Recommendations if usage orsupply chain has changed2. Create usage rollup if Planning tree has changed.3. Process Superseded Items if supersessions areinvolved4. Create ASL recommendations

The programs need to be run in the sequence indicateabove.



6.0 Accept or reject recommendations Same as described above for Personal Usage andTerritory Norm for technician planning.

7.0 Add new min-max recommendationor change current min max

recommendation.





Supersession Impact on Min-Max Recommendations

Spares Management will automatically position the min-max levels for thepart(s) in the supersession chain to achieve maximum utilization of availableinventory. The approach is explained in the following scenarios.

Scenario 1.

Supersession: Part A replaced by Part BType: UnilateralDisposition: Use to DepletionOn-hand available at central warehouse = 500 when the supersession wasenteredMin level at Central Warehouse = 50The central warehouse is the source for the technician org

In this scenario Spares Management would recognize the need to utilize the 500pieces of inventory under the Use to Depletion disposition option.

The min-max levels for the technicians would stay at Part A until the inventory

at the central warehouse dropped below min level or reorder point (ROP).This would pull the parts out of the central warehouse to the technicians whereusage could occur and inventory depleted.During the transition while inventory on Part A is being depleted, Min-Maxlevels would also be planned for Part B for the technician if there were usagehistory for Part B.When the central warehouse inventory dropped below min level, the technicianmin-max levels at Part A would shift to Part B and be calculated based on thecombined usage for both Part A and Part B.

Min-Max levels for the Central Warehouse would shift to Part B when thesupersession was entered and calculated based on the combined usage for bothPart A and Part B.

Scenario 2.

Supersession: Part A replaced by Part BType: UnilateralDisposition: Use to DepletionOn-hand available at central warehouse = 50 when the supersession wasenteredMin level at Central Warehouse = 500The central warehouse is the source for the technician org

In this scenario Spares Management would recognize that the on-hand availableat the central warehouse was below the min level or ROP and that nosignificant level of inventory was available to utilize to deplete.

The min-max levels for the technicians would shift to Part B when thesupersession was entered and calculated based on the combined usage for bothPart A and Part B.




Scenario 3.

Supersession: Part A replaced by Part BType: UnilateralDisposition: ScrapOn-hand at the Central Warehouse = 500 when the supersession was entered

Min level at Central Warehouse = 50In this scenario Spares Management would recognize that the inventory forPart A at the Central Warehouse is not usable.

The Min-Max levels for the technicians would shift to Part B and calculatedbased on the combined usage for both Part A and Part B.

Min-Max levels for the Central Warehouse would shift to Part B when thesupersession was entered.




REPLENISHING THE FIELD SERVICE WAREHOUSE

Standard Min-Max Planning from Oracle Inventory works reasonably well in“warehouse to warehouse” or “warehouse to technician” replenishmentscenario where all replenishment is being shipped from another warehouse.But this functionality falls significantly short of what is needed to handle themore complex warehouse planning environment in Field Service where partsare being procured dynamically from external suppliers, internal suppliers,repair suppliers and other warehouses where excess utilization is required.

The “dynamic replenishment” from repair suppliers and excess warehouses iscontingent upon defective or excess parts being available at the point in timewhen replenishment action needs to be taken.

The economics of “dynamic replenishment” dictate that replenishmentdecisions are made based on options available at the time the replenishmentaction needs to be taken. Excess utilization is typically the first procurementpriority and would be the option of choice whenever excess is available. Thesecond option is normally repair. When requirements still exist after utilizing allexcess, then repair would be used when defectives are available. And finally,

when requirements still exist after utilizing both excess and repair, then new-buy would be considered as a final replenishment option.

In the Spares Management supply chain, any warehouse in the chain couldpotentially have replenishment options that include excess utilization and repairas well as new-buy. But it is the central warehouse, at the top of the supply chain, where these activities will almost always be found.

Integration with Repair and Excess Utilization execution

The potential for large volumes of replenishment actions for excess utilizationand repair makes integration with the execution process key to a smoothflowing replenishment planning process. The planner wants to be able to easily review the replenishment plan, make changes as necessary, and then launch theindividual orders for excess and repair. From the perspective of the planner,the flow from replenishment planning to replenishment execution should be afully integrated process.

In 11.5.10 Spares Management includes full integration for excess utilization andintegration with repair when the supplier is an internal depot.

Automation for Warehouse Replenishment Notifications

The potential for large volumes of replenishment activity suggests thatautomation can play a key role in the replenishment process for Field Servicewarehouses . The number of replenishment actions required to sustain theField Service supply chain is determined by the number of warehouses andparts to manage. It is also important for the warehouse be frequently




replenished against the latest stocking levels to insure that inventories aremaintained at levels needed to support service level requirements.

Warehouse Replenishment Notifications in Spares Management

The following section describes how the Warehouse ReplenishmentNotifications work in Spares Management.

Table 6.0

Creating and processing Warehouse Replenishment Notifications


1.0 Update Min-Max Levels Min-Max levels need to be current with the latestusage trends and supersession activity.

2.0 Review and update WarehouseParameters in the Planner’sDesktop

Navigator >> Spares Management >> Planner’sDesktop >> Warehouse Parameters tab

• EDQ Multiple

Used to define Excess On-order

Excess Limit = ROP + EDQ * Multiple

Excess On-Order = OnHand Available +

OnOrder - Excess Limit• Minimum Value

Used to filter Excess On-order

Excess OnOrder Notification > Minimum

Value•

Assignment UsableUsed along with the Sourcing Rule to definethe designated warehouse(s) where excessneeds to be utilized in replenishment

• Assignment Defective

Used along with the Sourcing Rule to definethe designated warehouse(s) where defectiveparts are located that when repaired can beused to replenish the Field Servicewarehouse.

• Depot Repair Suppliers

Used along with the Sourcing Rule to definethe designated warehouses where defectiveparts are located and that when repaired canbe used to replenish

• Notification Rule Used to automate the Notifications




Step 2

Planners Desktop with Warehouse Parameters tab

3.0 Update Notification Rules The Notification Rule is used to automate the New-buy Notification. Depending on sourcing and Makeor Buy parameters, the Newbuy can be:

• Internal Order.Source is another warehouse (org)

• Requisition

Source is an external supplier• Wip Order

Source is another org (manufacturing)

For each of the new-buy types, parameters can be setto control automation for that type:

• Excess ValueValue of the excess quantity shown in theNotification

• Repair ValueValue of the excess quantity shown in theNotification

• Notification ValueValue of the Notification quantity

For automation of the Newbuy to be approved, theactual values on the Notification must all be less thanthe business rule parameters entered.




Step 3.0

Notification Rule

4.0 Run Concurrent program togenerate WarehouseReplenishment Notifications

Navigator >> Spares Management >> Reports andPrograms >> Warehouse Notifications

5.0 View and review Notifications

6.0 Execute Notifications Execute Notification in Lower tab:

• Wip Order

RequisitionInternal OrderExcessEnter order quantity if different thanAvailable Quantity and click on Orderbutton.Appropriate document will be created toexecute process.

• Depot RepairEnter order quantity if different thanAvailable Quantity and click on Order

buttonDepot Repair Order is created. Also internal orderto ship defectives to Depot and internal order toreceive from Depot to Field Service Warehouse iscreated




Step 5.0 and 6.0

Planners Desktop with Notifications tab




REPLENISHING THE FIELD SERVICE TECHNICIAN

Standard Min-Max Planning from Oracle Inventory works well in Technicianreplenishment where the technician is typically replenished exclusively from aField Service warehouse. The technician is typically not directly involved inrepair and excess utilization activities.

Integration of Technician Replenishment into the Planner’s Desktop

In Spares Management the standard Inventory Min-Max Planning functionality is integrated into the Planner’s Desktop.

Technician Replenishment in Spares Management

The following section describes how the Warehouse ReplenishmentNotifications work in Spares Management.

Table 7.0

Technician replenishment


1.0 Update Min-Max Levels Min-Max levels need to be current with the latestusage trends and supersession activity.

2.0 Launch Min-Max Planning toreplenish the technicianinventoryReview and updateWarehouse Parameters in thePlanner’s Desktop

Navigator >> Spares Management >> Planner’sDesktop

• Highlight technician being replenished• Right click to bring up menu• Select Min-Max Planning

The “Restock” option Yes/No can be used toautomate the creation of the replenishment orders orrequisitions.Yes = Automate No = Report to review

Also the Min-Max report can be launched from any node on the tree. Min-Max report will be launchedfor all technicians under the node.




Step 2.0

Launch Min-Max Planning from the Planner’s Desktop




Spares Management Inventory Planning

June 2005

Author: John Moore650.607.2694

[email protected]

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