Many of us have used, or at least read about, Process Manufacturing and Distribution functionality in D365 F&O.
It is always noticed that some parts of this functionality are not commonly used on process manufacturing projects, but they are there for good reasons. Simply because each of them is a best fit for a specific industry.
The one under the spotlight here is Planning Items. This topic is not clear enough for many people when generically described in Microsoft documentation.
Using a real-life example to explain the topic makes much more sense. While I have many examples in mind, I am going to use the one that some friends heard from me before, the poultry industry. I think this example makes it simple even for readers with no manufacturing background.
A planning item is a perfect fit for process industries where there are fixed or natural ratios between co-products produced together on batch order.
Let’s apply that on meat and poultry operations, where the material is livestock and the outputs are different cuts.
In the chicken example, we can process a whole chicken to get four different cuts with fixed ratios of two each. We can’t process only one cut alone; we can’t produce drumsticks for example without getting a similar quantity of the other cuts as a result of processing live hens.
Master planning considers this concept in demand and supply calculations. Even if the demand is only for a specific cut, we will have to process the whole chicken. That means, a production (batch) order will produce the four different cuts together as co-products.
Let’s see how that works in production. The input for the batch order is the hen from livestock. Then, the four physical outputs will be the four different cuts. But the production order in that case is created for the whole chicken which is the planning item. So if we process 10 hens, we get 20 each for every cut.
To see that in action, let’s put our scenario in a few D365 F&O screenshots.
Starting with the item definition, we have the whole chicken defined as the planning item and this is the one we create the production order against. Then the live hen, which is the main ingredient/input from the livestock. Then we have the four co-products (cuts) in our example:
If the batch order is manually created, it will be created against the planning item as illustrated.
When master planning (now called planning optimisation) is used, the demand will be for sellable products, which are the co-products in this scenario, and the order will be created for the planning item to produce all the co-products together. That means, even if the demand is only for drumsticks, the batch order will be created for whole chicken.
The input/ingredient items will be on the batch order formula where we have the hen from livestock.
Finally, thinking about the outputs, we have four co-products for the batch order “report as finished” update. The four sellable products here are the chicken cuts. There is no mention for the planning item at “Report as finished” stage as it was only for order creation.
I hope this post was able to explain the idea of using planning items in a simplified real-life example to help consultants and clients utilize this great functionality when they have the right business case.