This article provides an overview of how the three different lead times are used in DemandCaster in DRP.
Lead Time Values
In DemandCaster there are three lead times for both non multi-location companies and multi-location companies. The lead times are:
- Lead Time: This is the time to manufacture an item and the days that the explosion of the BOM's are backed off within a location where the item is manufactured. If the item is not manufactured, this value is the vendors manufacturing lead time or order processing time. The suggested order due date and safety stock is calculated using the Lead Time if there is no transfer time. This is the default lead time if no other lead times are provided.
- Transfer Lead Time: This is the time to move the item from one location to another when multi-location is enabled. It can also be used to set a transportation time for a purchased item (time on the water from supplier). The Transfer Lead Time + the Lead Time sets the total lead time for a purchased item. If the transfer lead time is 0, then the Lead Time is used for a purchased item. For the destination location, the lead time used to calculate safety stock is the greater of order lead time or manufacturing lead time plus transfer lead time.
- Order/Total Lead Time: This is the sum of the Lead Time and Transfer Time if a Transfer Time is provided when the source of inventory is from a supplier or another location. For a manufactured item, it is the time the system suggests a replenishment order be scheduled to arrive at the items location. If the order lead time is greater than the manufacturing lead time, the system schedules the order at the order lead time but backs off the explosion of the BOM using the manufacturing lead time above. The suggested order due date and safety stock is calculated using the order lead time in all cases. Please note that the order lead time value is rounded up to weekly increments when there is a transfer between source and destination when planning using the standard weekly planning buckets. In the example below, the transfer time is 14 days since the planning is weekly buckets and the location is receiving inventory from a source location since DRP is deployed. When the daily bucket option is enabled, the total time value will be 8 in the example below.
Setting Lead Time
To change the lead time value, click on the items options tab and then scroll down to the lead time settings section.
- Select the setting to enable and change
- Enter the value desired. If other settings need to be changed, repeat steps 1 and 2
- Scroll down to bottom of page and click "Save."
Order By Date / Start Date Logic in Daily Buckets
Order By date / start date is backed off by each of these times using calendar days, if the daily planning logic is enabled, depending on which lead time is applied by item and by location. If the backed off date falls on a weekend, it defaults to the earlier week day for Order By Date and the next week day for Due Date. If the default weekly bucketed logic is used, the pass downs of the lead times are defaulted to the default planning date set in system settings.
At a location where a suggested order is needed we always take the order lead time if it is greater than the manufacturing lead time. If only the manufacturing lead time is provided (which is the default lead time value), the order lead time will default to the manufacturing lead time. For a buy item, if only the manufacturing lead time is provided, we will use the manufacturing lead time as the purchase lead time otherwise we will use the manufacturing lead time plus the transfer lead time.
Example of DRP Lead Time Logic (assuming daily bucket requirement planning)
Item A is in location 1 and is transferred from location 2 where item A is manufactured.
Item A - Destination Location 1: Order Lead Time is 28, Transfer Lead Time is 3, Manufacturing Lead Time is 15 (red values in calendar).
Item A - Source Location 2: Order Lead Time is 28, Transfer Lead Time is 3, Manufacturing Lead Time is 15 (blue values in calendar).
The numbers in the calendar correspond to the numbered list below:
- A requirement for order A is created in location 1 as of the current requirement plan date (assume August 25 as the order date).
- The order lead time is applied 28 calendar days from August 25 (note: if the manufacturing lead time plus transfer lead time was greater than order lead time, then the sum of manufacturing plus transfer lead time would be used instead). The due date will be 9/22 and order by date will be 8/25. 28 days will also be the lead time used to calculate safety stock of item A in destination location 1 assuming the item is stocked.
- The requirement at location 2 is passed back 3 calendar days to accommodate the transfer time for a ship date of September 22 from source location 1 to destination location 2. We assume shipping on the work day before the weekend and not a Saturday in this case.
- Thereafter an additional 15 days is rolled back to accommodate the manufacturing lead time at source location 1. This sets the start date of September 4 for item A in source location 2.
- Item A - Location 2: Order Date of August 25 with a Due Date of September 22
- Item A - Location 1: Start Date of September 3 with a Ship Date of September 18
If weekly buckets are used for planning, all transfer times will be rounded up to the next 7 day value (i.e. 8 days will be rounded up to 14 days).