Co-product and By-product Planning

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


Agenda

• What is co-product/by-product planning?• Co-product definitions and planning assumptions• Configuring co-product relationships• Examples• Wrap-up


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


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


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


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


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


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


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


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%


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


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


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


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


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


Thank You!

Documents

Co-product and By-product Planning