Hi,

Do you know why Baan MRP(BaanIV, BaanV, Baan5.2a ?) logic does not support planning of alternative items for standard materials? This is actually a very common requirement of so-called manufacturing service companies.

I believe that Baan does support planning for alternative items at the PRP level not at the MRP level. Can you tell us more about how you want to use the alternative item? Do you want to substitute an item based on particular criteria? Is this an inventory issue?

Baan support planning of alternative item for customized item. But for normal item, the alternative items entered are just for reference. The users can only have two options if they would like to use the alternative items, change the BOM every time or change the estimated material list of a production order.

Why alternative items? reasons may be the normal materials are not available on time and there are inventory of alternative items.

The users' requirement on alternative items is generally BOM specific and even manufacturers specific, i.e., approved vendor list/ approved maufacturer list.

Planning for alternative and substitute items waslacking in Baan IV. It drove some major customizations at various users. It has been made part of Baan V.

This function is still lack in Baan V. (5.0b, 5.0c, 5.2a). Customization is still required.

:rolleyes:
Maybe you want to automate the part where the alternative item is inserted in materials to issue (assuming the estimates are already frozen) which indeed becomes a customization. Then you will also need to set the proper values for the original component.
This part has nothing to do with planning as it is already part of operations.

As for planning, the objective is always to get the right part available which happens to be the normal part. In this case, the defficiency is not in planning but in material issuance.

The difficulty with planning for alternatives, other than inventory availability reasons, is with the constraints involved. Each constraint that triggers the substitution must be set and considered in planning. I'm sure MPS and MRP will take longer so it would be good to have that as a separate planning process.

For example, if the normal material has a longer lead time than the alternative, then the planned inventory will be for the alternative. This sample goes to the Baan wishlist and you can do it by requesting for the enhancement (priority 50). Encourage other users to do the same.

Cheers.

The logic for the substitution will have to be flexible to support the different possible reasons:
If the "old" item is obsolete, but still usable, then the logic will be use the old item until it is out of stock, then substitute the new one.
If the "new" item is "better than" the "old" item, then the logic will be to use the proper (old) item unless it is out of stock and the required delivery date is less than the lead time for the old item. In that case substitute the new item to meet delivery schedules.
If the "Old" item is obsolete and cannot be used (safety, ...), then immediately swich to the new item, regardless of old item stock.

Thsi was done in the past by using a variation of the item signal code, which already has the logic built in to interrupt processes.

Intersting discussion.

The reason why electronics contract manufacturers noramlly asks for alternative item functions are as below:
1. Out of stock, but the alternative items have stock
2. The item is no longer used, will be substituted by another item
3. for determining the least material cost of a contract

1. Out of stock, but the alternative items have stock
Ok, if material m1 is out of stock, the planning engine will suggest a purchase order to buy it. But if an alternative m2 have excess stock, let's use m2 this time. We only issue a p.o if both m1 and m2 have no stock.
For Baan, you can only do this after the planned production order has been transferred to a actual production order, by changing the estimated material list to include the alternative item manually. Yes, it will be good if the alternative item can be inserted automatically in the estimated material list. But this is not good enough, as purchasing material happens before assemblying of the product. Considering the number of p.o produced every day, the planner really need system to help him to determine whether a planned p.o is really necessary or it can be replaced by alternative items.



2. The item is no longer used, will be substituted by another item
Yes, this can be helped by using the item signal code if the sustitution is because the item becomes obsolete.
What Baan can do more is to support the adding of item signal code through ECO, rather than adding it manually.

3. for determining the least material cost of a contract
The BOM sturcture is not reasonable for many electronics manufacturers. It does not allow to specify the alternative items at the BOM level. For them, many similar ICs or similar transistor can be used in one product, but the price or physical specification of the components may vary. When replying a quotation from a customer, they really want to know the bottom line they can offer to the customer.

Actually my original question is, why Baan does not support the planning of alternative item if it claims it is so successful among contract manufacturers, with such big names like Flextronics and Solectron? Is it because the situation for big contract manufacturers is quite different from the small ones in Hong Kong. How Flectronics handle the planning of alternative items? Anybody know?

:)
Good question. How do they do it? I'm sure it's not just the software.

More importantly, what is the problem and what should be done. Based on your three comments, let me try to explain.

1. Item out-of-stock but alternative is available.
This is indeed part of PCS in Baan. However, you should pay attention to the reason why the original item is unavailable. The reason for this is simple, contract manufacturers have much to gain by ordering quantity nearest to the exact requirement. This means that if your alternative has stock, it will be needed for another order and has to be replaced also. This will make the planning really difficult which would be what you are experiencing at this time. You will easily find yourself with bloated inventory levels. So, the really key is to solve the reasons for the shortage. For example, accurate BOMs, leadtimes, scrap/yield factors, and the ever difficult shipping challenge. It has been proven that even the best planning software never do well with these problems. They have to be solved from the source.

2. Item is no longer in use - substituted by another item.
You can use expiry dates in BOM so that the planning will order for the current item only up to the time it is to be used.
In case the change has not be foreseen and there is still inventory available for this old item and you want to consume it before ordering the new item, look at when the economic stock will fall below zero (in inventory movements) and time the effectivity date of the new item for that period. It will not be exact but it will minimize your problem. This calls for close coordination between engineering, production, and warehousing.
Also, this helps solve slow to non-moving inventory problems.

3. Determining least material cost of a contract.
I think your best bet will be some kind of a price estimating system. Standard Baan has some capability in cost accounting, and another in PCS Budgets. If you really need flexibility, you will probably need PDM/PLM functionality. It will be also handy to be able to generate a sales proposal for the selected product in PDM/PLM. Further to that, if you have a performance monitoring software, you can benchmark which configuration works best, including rejection and other similar costs.

There, I hope this helps. Sometimes, the problem we know is just a sympton of the real ones.

To take the original question in its simplest form - Why does Baan not plan for alternative items; the answer is fairly simple. The BOM defines the CORRECT item to plan for. The reason it is the correct item may vary - cost/quality/availability balance. An alternative item, by definition is a sub-optimal replacement. It should be safe in use, but is still not what would be chosen if the original material was on-hand.

A single item may also have multiple alternatives, so the logic tree of which alternative to use in which circumstances would be complex to define and maintain,

More importantly, if there is a shortage which seems to be resolvable by use of an alternative part, then it is still not safe to automatically change the estimated material to show the alternative. That stock of the alternative should not be there for no reason; it is probably planned for something else. Therefore SOMEONE, not a system, should assess whether the consequences of stealing stock to fix today's shortage are less serious than not making the assemblies with shortages.

Most of us who have worked in manufacturing will know what happens when tomorrow's stock is stolen to solve today's shortages. Its like a ripple effect, and you finish up with more shortages, more WIP and less output. Let's leave alternative item allocation to planners who can at least be chewed out if they make the wrong decisions. And let's not confuse alternative item recognition with Engineering Change and Supersession management!

Agree !

Thanks for all of your replies! I like such kind of discussions.

I can see some reasons why big contract manufacturers like Flectronics may not have much concern on the function of alternative items. This may be due to their well managed supply source. Their material supplying contract is long term. If they practise VMI, this will even not a problem to them as they do not own the inventory of raw materials.

But surely for small or medium contract manufacturers, considering their relative small sales order quantity, non-favoured supply constraint(minimum order quantity, long lead time, fluctuated price), they will normally have excessive stock in their warehouse. How to consume such excessive stock is a big problem to them, so they will look for the system to optimize the usage of such stock as alternative items in new orders.

This discussion has an answer finally.
We should see some changes in Baan products for supporting alternative items in this year. Nice move even a little bit late.

1. Definition of alternative items
Definition of alternative items by product - Baan6.0 (?). Some source said this will be supported in Baan6.0. It is better to support in 4.0 and 5.0c also.

2. Scheduling of production orders, take alternative items in consideration.
Supported by Scheduler, current version.

3. Suppressing purchasing orders by considering alternative items
Supported by a new component, developed in Baan Canada.

2. Item is no longer in use - substituted by another item.
You can use expiry dates in BOM so that the planning will order for the current item only up to the time it is to be used.
In case the change has not be foreseen and there is still inventory available for this old item and you want to consume it before ordering the new item, look at when the economic stock will fall below zero (in inventory movements) and time the effectivity date of the new item for that period. It will not be exact but it will minimize your problem. This calls for close coordination between engineering, production, and warehousing.
Also, this helps solve slow to non-moving inventory problems.

____________________________________________________

This can be accomplished using Phanthom Items in the BOM. Not an ideal work around, but it does get the job done. Much easier than projecting future economic stock levels.

Jon P. Elliott CPIM

The last post on this thread has been on 2002. I wonder if the Baan versions like 5c is yet to support planning for alternate items?

I went through the discussion and it was really good. Maybe Planning engine considering alternate items or not could be parameterised so everyone can benefit

I have not heard any updates to this functionality. As I posted earlier, Carrier implemented extensive modifications to achieve this capability in Baan IV. Boeing Electronics also addd this functionality, but using another route than the Signal Codes that Carrier used.

Any updates out there?

<advertising on>

In SSA ERP 6.1 LN (FP2) alternatives and use up items are support in the BOM.
Also mrp plans for the alternatives and use items.

</advetising off>

Interesting.

What are the mechanics of this functionality? does the substitution allow for options? Such as
"Use up current stock, then go to new item"
"Substitute only if current item is out of stock, but reorder old stock"
"Switch to new item immediately".

Interesting.

What are the mechanics of this functionality? does the substitution allow for options? Such as
"Use up current stock, then go to new item"
"Substitute only if current item is out of stock, but reorder old stock"
"Switch to new item immediately".

The alternative/use up functionality is defined on BOM level. Per item in the BOM it is possible to define more then one alternative/use up item.

All the options are available, however the last option is not a specific alternative/use up feature. This is handled by setting the correct effective and expiry dates in the BOM.

regards,

Sicco