By: Scott Hamilton
Editor’s Note: This article is drawn from the recently published book by Dr. Hamilton about master planning in manufacturing. It represents the first of a 2-part article about SCM-related calendars. The contents apply to those firms using Microsoft Dynamics 365 for Operations as well as previous versions of Dynamics AX because the functionality related to calendars has essentially stayed the same.
Several types of calendar assignments provide critical information for coordinating supply chain management (SCM) activities in manufacturing and distribution. The calendars impact the dates for sales orders and supply orders (both planned and actual), and changes in calendars can result in action messages to advance or postpone these orders. While the importance of calendars is easily grasped, there are multiple nuances that can impact an organization’s efficiency.
To understand these nuances, calendars can be broadly classified into two groups based on their significance. One group involves calendars that simply identify the working days (aka open dates) for warehouses, customers, vendors, and modes of delivery. They primarily impact receiving and shipping activities related to sales orders, purchase orders, and transfer orders. A warehouse calendar can also impact production orders in terms of open dates for scheduled receipts. The second group involves production-related calendars for production resources, where each calendar identifies the working hours within working days for a resource. This article covers the first group of SCM-related calendars, and a subsequent article covers the second group of production-related calendars for production resources.
The different assignments of SCM-related calendars – where each calendar identifies open dates — provide a starting point for explanatory purposes. Additional considerations build on this starting point. For example, an additional “closed for pickup” policy applies to a calendar assigned to a warehouse. Several situations can optionally consider the open dates within a calendar, such as the delivery date control option for a sales order line and the definition of a purchased item’s lead time. And changes to calendars can result in action messages to postpone or advance orders. These considerations are reflected in the following sections within the article.
- Define the Open Dates within a Calendar
- Assignments of SCM-Related Calendars
- Warehouse Calendars and the Closed for Pickup policy
- Optional Use of Working Days within Calendars
- Impacts of Changes in Calendars
- Some Suggestions for using SCM-Related Calendars
- Case Studies
The contents of this article apply to Microsoft Dynamics 365 for Operations as well as previous versions of Dynamics AX because the functionality related to calendars has essentially stayed the same since AX 3.0. Screenshots within the article reflect the user interface in Dynamics 365 for Operations.
The article focuses on the significance of SCM-related calendars, and does not cover other types of calendars such as fiscal calendars or payroll calendars. The approaches to defining a calendar – including the use of a base calendar – merit a separate article, and are not covered here.
1. Define the Open Dates within a Calendar
Dates within an SCM-related calendar can be designated as open or closed. When using a working time template (with working times) to define a calendar, the calculations assume an open date applies to any date with working hours (regardless of the number of working hours). Information about the number of working hours is only relevant when the calendar will be assigned to a production resource, as described in the second of this 2-part article covering production-related calendars.
The example screen shown in Figure 1 illustrates a standard calendar for US operations with a 5-day work week, and it would typically identify national holidays as closed dates. The “closed for pickup” policy is automatically assigned to any closed date, and it can be optionally assigned to an open date. However, the “closed for pickup” policy only applies for calendars assigned to a warehouse, as described in a subsequent section.
Figure 1. Example Screen of a Calendar and its Open Dates
2. Assignments of SCM-Related Calendars
A calendar can be assigned to a warehouse, vendor, customer, and mode of delivery. The significance of a calendar depends on its assignment. These four different types of calendar assignments are listed in top half of Figure 2, and their significance is described below. The bottom half of Figure 4 lists two additional types of calendar assignments – for the legal entity and for a coverage group — that only provide a source of defaults when a calendar has not been assigned. All dates are assumed to be open when a calendar has not been assigned and a default does not apply.
Figure 2. Assignments of SCM-Related Calendars
Calendar for a Vendor Assigning a “purchase calendar” to a vendor indicates their working days. It impacts the lead time for a purchased item expressed in working days. It also indicates when they accept placement of a purchase order, so that it impacts the order date for planned purchase orders. The example data in Figure 2 displays a vendor-specific calendar of “VendA-Cal” for the vendor “Vend-A”. If a purchase calendar has not been assigned to a vendor, all dates are assumed to be open dates. However, a default may apply based on the calendar assigned to an item’s coverage group, as described in a subsequent point about the source of defaults.
Calendar for a Customer Assigning a “receipt calendar” to a customer indicates their open dates for when they accept delivery, and it impacts the delivery date on sales order lines. The example data in Figure 2 displays a customer-specific calendar of “CustZ-Cal” for the customer “Cust-Z”. If a receipt calendar has not been assigned to a customer, all dates are assumed to be open dates. It is worth noting that a calendar cannot be assigned to a delivery address for a customer (with standard functionality), and Case 3 describes different solution approaches.
Calendar for a Mode of Delivery. Assigning a “transport calendar” to a mode of delivery indicates the open dates for making deliveries from a ship-from warehouse. It can impact delivery dates on sales orders and transfer orders, but it does not impact purchase orders or returns to vendor. In cases where the open dates (for a mode of delivery) differ by ship-from warehouse, you can assign a different transport calendar for the warehouse. The example data in Figure 2 displays a transport calendar and a truck route (both labeled “TruckRte-1”) for deliveries from warehouse “WH10”, and Cases 4 and 5 illustrate different calendars for different truck routes. Other examples would not involve a warehouse-specific calendar. If a transport calendar has not been assigned to a mode of delivery, all dates are assumed to be open dates. A previous article covered modes of delivery related to the fundamentals of transportation.
Calendar for a Warehouse Assigning a calendar to a warehouse indicates the open dates for receiving and shipping. It impacts the delivery dates for planned and actual purchase orders (and transfer orders), and the ship dates for sales orders (and transfer orders). Ship dates are also impacted by the “closed for pickup” policy within the calendar assigned to a warehouse, as described in the next section. The example data in Figure 2 displays a warehouse-specific calendar of “WH10-Cal” for the warehouse “WH10”.
If a calendar has not been assigned to a warehouse, all dates are assumed to be open dates. However, a default may apply as described in the next point about the source of defaults.
The calendar for a warehouse also applies to production scenarios. It indicates the working days for scheduling delivery of completed production orders to a warehouse.
Assigning a calendar to a transit warehouse (for supporting transfer orders) does not have any impact based on my testing. For example, it does not impact the applicable ship or receipt dates for planned or actual transfer orders. The applicable dates are defined by open dates within the calendars for the related warehouses and the mode of delivery.
Calendar provides a Source of Defaults The calendar assigned to a legal entity or a coverage group can act as a source of defaults in cases where a calendar has not been assigned, as described below.
- Calendar for a Legal Entity. The assigned “shipping calendar” for a legal entity simply acts as a default for sales order shipments when a calendar has not been assigned to a ship-from warehouse. It does not serve any other purpose based on my testing, and is not needed when each warehouse has an assigned calendar. The example data in Figure 2 displays a calendar of “Standard” for the company “USMF”, and Figure 1 illustrated the open dates within this calendar.
- Calendar for a Coverage Group. The coverage group assigned to an item defines multiple policies for modeling SCM decision making. One of the optional policies consists of a calendar, which can impact orders for the item. It acts as a default when a calendar has not been assigned to a vendor or warehouse. The example data in Figure 2 displays a calendar of “Standard” for the coverage group “Period-1”.
There are two schools of thought about the use of calendars in a coverage group, and they reflect different assumptions. One school argues for always using these calendars as a precaution against unassigned calendars, so that orders are not scheduled on weekends. It assumes relevant calendars have not been assigned. The second school assumes relevant calendars have been assigned, and argues against the use of calendars for a coverage group because the various combinations of calendars can lead to confusing results.
Special Cases of Calendar Assignments Examples of special cases include the calendars for subcontracted production, and a calendar for determining the run date of the master planning task.
- Run date for the Master Planning task. One special case involves the master planning parameter for the “today’s date calendar”, where the selected calendar can define the basis of the run date (as the next open date) when performing the master planning task on weekends. The example data in Figure 2 displays a calendar of “Standard” for this parameter.
- Subcontracted Production. A second special case involves subcontracted production at a vendor, where one or more components must be supplied to the subcontractor. Depending on the approach to subcontracted production, you typically need to assign a resource calendar (and possibly a warehouse calendar) to the production resource (and warehouse) that represent the subcontractor. A previous article summarized the approaches to subcontracted production.
Examples of Different Calendars A standard calendar of “open dates” may be applicable in many cases such as a 5-day work week with national holidays, or another common pattern. Other cases require a unique calendar — such as the open dates for a specific warehouse, customer, vendor, or mode of delivery. Examples of these unique calendars were displayed in the previous Figure 2, and they are repeated in Figure 3.
Figure 3. Example Screen of Different Calendars
3. Warehouse Calendars and the Closed for Pickup policy
The “closed for pickup” policy for an open date within a calendar only applies when the calendar has been assigned to a warehouse. It limits the shipping dates for sales order shipments (and transfer order shipments) from the warehouse. The name of this policy is slightly misleading, since it applies to any shipment including customer pickups. A typical example involves a warehouse that may be open for production purposes but not for sales order shipment purposes.
The limitation regarding “closed for pickup” will be enforced (or ignored) in the shipment date for a sales order line based on the delivery date control option, as described in the next section. This same logic also applies to the shipment date for a transfer order line.
4. Optional Use of Working Days in Calendars
There are several situations which support optional use of working days. These include the delivery date control option (of none) to ignore working days when assigning dates to sales orders and transfer orders, and the optional use of working days when defining an item’s lead time. These situations are summarized in Figure 4 and described below.
Figure 4. Optional Use of Working Days within Calendars
Use of Working Days within the Delivery Date Control Option The delivery date control option can enforce (or ignore) the working days in calendars, as described below.
- Delivery dates for sales orders. The delivery date control option assigned to a sales order header and line items can enforce several rules, such as consideration of the working days within calendars for the ship-from warehouse, customer receiving point, and mode of delivery. Assigning the option of “None” will ignore these rules. A previous article provided further explanation of the delivery date control options for sales orders. Case 2 illustrates situations when calendars must be ignored for a sales order.
- Delivery dates for transfer orders. In a similar fashion, the delivery date control option for a transfer order header and line can enforce rules concerning the calendars for both warehouses and the delivery mode, and the expected transport time. Assigning the option of “None” will ignore these rules.
Use of Working Days within the Planning Data for an Item The lead time represents a key aspect of an item’s planning data, and it can be expressed in working days or calendar days.
- Lead time for a purchased item. The purchase lead time for an item can be defined as a companywide value, and optionally overridden for a site or warehouse. When expressed in working days (as illustrated by the example data in Figure 4), it can reflect the working days defined by the “purchase calendar” assigned to the vendor. A previous article provides further explanation of purchase lead time in the context of SCM decision making for purchased items.
- Lead time for a manufactured item. The production lead time for an item can be defined as a companywide value, and optionally overridden for a site or warehouse. This fixed lead time will be used by scheduling logic when routing data does not apply; it can also be used in calculating item’s safety stock and determining the due date of safety stock requiremenrs. When expressed in working days (as illustrated by the example data in Figure 4), it can reflect the working days defined by the calendar assigned to the destination warehouse of production orders. A previous article provides further explanation of production lead time in the context of SCM decision making for manufactured items.
- Lead time for transfers. A transfer lead time can be defined for a specific item as part of its Item Coverage data. When expressed in working days (as illustrated by the first part of the example data in Figure 4), it can reflect the working days defined by the combination of calendars assigned to the ship-from and ship-to warehouse as well as the mode of delivery.
However, the transfer time (aka transport days) is often defined between a warehouse pair rather than specifying it for an item. This approach always reflects calendar days, and is illustrated by the second part of the example data in Figure 4 for transfer lead time.
- Safety margins. An additional aspect of planning data includes safety margins. The number of days for safety margins can be expressed in working days or calendar days, as defined by a companywide policy embedded in the Master Planning Parameters (and illustrated by the example data in Figure 4).
5. Impacts of Changes in Calendars
While the assignment of a relevant calendar – to each warehouse, vendor, customer, and mode of delivery – is important, it is equally important to update the calendars to reflect changes. A change in the open and closed dates within a calendar can affect orders. Master planning calculations will generate action messages to postpone or advance the affected sales orders, transfer orders, purchase orders and/or production orders.
These impacts of a calendar change do not apply to sales orders and transfer orders with a delivery date control option of “none”, which was described in the previous section.
6. Some Suggestions for using SCM-Related Calendars
The assignment of a relevant calendar – to each warehouse, vendor, customer, and mode of delivery – is important. The assignment should be part of the business processes for creating a new record, and the responsibility for updating the open dates should be clarified. The assignment may initially reflect a standard calendar such as a 5-day work week with national holidays, or some other common pattern of open days. When an exception becomes known (such as a shutdown period for a warehouse or vendor), a unique calendar should be created and assigned, and subsequently updated as needed. The calendar for a warehouse may also have open dates that are closed for pickup.
As noted earlier, there are two schools of thought about whether a calendar should be assigned to a coverage group, since it can act as the source of defaults. My preference would be to assign all relevant calendars, and not assign a calendar to coverage groups. This approach avoids possible confusion resulting from the combinations of calendars.
7. Case Studies
Case 1: Updating SCM-Related Calendars During the initial software implementation at a manufacturing/distribution business, the calendars assigned to customers, vendors, and warehouses reflected currently-known business practices, or a standard calendar when they were unknown. However, as these practices changed over time (or became known), nobody was responsible for updating the calendars or changing the calendar assignments. This resulted in a poor model of the supply chain until the responsibility was clarified, and calendars were updated when a change became known.
Case 2: Ignore Calendars when making Sales Order Delivery Promises At a manufacturing company, the sales order delivery promises were typically based on ATP logic for make-to-stock products or CTP logic (or sales lead time) for make-to-order products. This enforced several rules related to calendars. In some cases, an unrealistic promise date needed to be assigned that ignored the calendars, and the sales line was assigned a delivery date control option of “None”. These line items required follow-up action to resolve potential problems in meeting the promise date.
Case 3: Different Calendars for Different Delivery Addresses of a Customer At a manufacturing/distribution business, many customers had multiple delivery addresses with differing dates on when they accepted delivery. In terms of solution approaches, one option involved a customization because standard functionality only supports a single receipt calendar for a customer. A second option would identify each delivery address as a separate customer (with their own receipt calendar), and the overall customer would be identified as the invoice account.
Case 4: Identify Truck Routes for Regional Customer Deliveries A company employed internal trucks for making regional customer deliveries, and identified the variations of truck routes as different modes of delivery. For example, one truck route applied to northern customer locations with Monday and Wednesday deliveries, and another truck route applied to the southern locations with Tuesday and Thursday deliveries. The calendar assigned to each mode of delivery identified these periodic deliveries. The relevant mode of delivery (aka the truck route) was assigned to each customer so that it would be inherited by sales orders.
Case 5: Transportation Constraints about Transfer Orders to/from a Subcontractor An electronics manufacturer located in the United States sent supplied material via truck to its subcontractor in Mexico, and the completed subassembly was sent back via truck to its US location. The weekly truck schedules to and from Mexico were identified as two different modes of delivery, and the associated calendars identified which days the truck departed. The contents of a given truck were identified as line items on a transfer order. Master planning logic used these transportation constraints to suggest appropriate dates and quantities for planned transfer orders and subcontracted production orders, and coordinate the supply chain accordingly. This approach provided full visibility of inventory at the subcontractor location and in transit.
Calendars provide critical information for coordination of supply chain management activities in manufacturing and distribution. This first of a 2-part article summarized the assignments of a calendar to warehouses, customers, vendors, and modes of delivery – where the calendar defines the working days (aka open dates) for shipping and receiving purposes. It highlighted several situations that can optionally consider the working days within calendars, and provided some guidelines for using these calendars. The second article covers assignments of a calendar to production resources where the calendar defines the working hours for open dates.