Using Approved Planned Orders in Microsoft Dynamics AX 2012

Approved planned orders in Microsoft Dynamics AX 2012 can be a key tool for production in many S&OP scenarios.  These approved planned orders will be treated as if they have been scheduled for the specified quantity and due date, and they will not be automatically deleted by master scheduling logic or the Delete Plan task.  In addition, master scheduling logic recognizes planned changes to bill of material (BOM) components within the BOM version for an approved planned order, whereas actual orders have an order-dependent BOM and route.  The approved planned orders for production can serve different purposes, such as level-loading production, accounting for material or capacity constraints, overriding the item's active BOM or route versions, or supporting manually-maintained master schedules.  Some scenarios will also use approved planned orders for purchases or transfers, typically to reflect periodic deliveries.

An approved planned order within Dynamics AX is more commonly known as a firm planned order within other ERP systems and by the APICS dictionary.  These terminology differences sometimes cause confusion.  Within AX, the term "approved planned order" helps to differentiate it from "firming a planned order" which generates an actual supply order.  The different constructs are reflected in the different number sequences for planned orders and actual supply orders.       

You can approve a planned order for production, purchase or transfer, although it is most commonly employed for production.  A planned order is initially assigned a status of "Unprocessed" whether it is manually created or generated by master scheduling logic, and approving a planned order updates the status to "Approved".[1]  An approved planned order must still be firmed to create an actual supply order.  The key impacts vary slightly for approving the different types of planned orders, as described in the following sections.

1. Approving a Planned Production Order (or Batch Order)

Planned orders apply to both AX approaches for modeling the product structure of a manufactured item - the BOM approach (and related production orders) and the formula approach (and related batch orders).  A previous article explained these two approaches.  For simplicity's sake, further explanation employs the production order terminology.

Master scheduling logic will treat an approved planned order as if it has been scheduled for the specified quantity and due date, and for the specified versions of the item's BOM and route.  A planned production order normally inherits the active version of the item's BOM and route.  In some cases, an item may have multiple active versions that reflect different validity dates or quantity breakpoints.  When overriding the suggested date or quantity that would affect the active version, an infolog forces a decision to keep the currently specified version or change to the active version for the new date or quantity.  Planned changes to components within a BOM version (based on effectivity dates) are still recognized by master scheduling logic, which may be important in scenarios with evolving product designs.  

A planned production order will also be created for a manufactured component that has a BOM line type of pegged supply or phantom.  Master scheduling logic generates these planned orders in order to communicate requirements, but they cannot be approved or firmed.  A previous article provided further explanation about linked production orders for pegged supply components.

Case 1: Approved Planned Orders for Make-to-Order Manufacturing  A manufacturer for a line of make-to-order products had several weeks' visibility of actual sales orders.  The master scheduler for this product line employed approved planned orders during a rolling three week time horizon in order to level-load the final assembly work center.  As time progressed, the master scheduler firmed these approved planned orders to create actual production orders for the "next day", and also extended the approved planned orders for an additional week.  The combination of approved planned orders and actual production orders reflected the proposed production sequencing (termed the "line up"), and provided supply chain coordination for all other items within the product structure.  This approach was especially helpful for the make-to-order products with an evolving product design, so that the changes to the BOM components could be easily incorporated until the last possible minute prior to creation of actual production orders. 

2. Approving a Planned Transfer Order 

Master scheduling logic will treat the approved planned order as if it has been scheduled for the specified quantity and due date.  For example, planned transfer orders might be approved for a specified date that represents a periodic delivery between two sites/warehouses.  In addition, an approved planned order may be assigned to an existing transfer order. 

Case 2: Approved Planned Orders for Transfers to Distribution Centers  A manufacturer had several distribution centers requiring weekly deliveries from the manufacturing plant.  Demand forecasts and sales orders were entered for the relevant distribution centers, and master scheduling logic suggested planned transfer orders in weekly increments based on period lot sizing logic and the scheduled dates for truck deliveries.  Each week, the distribution manager would approve the planned transfer orders for "this week" deliveries to each distribution center, and also adjust the suggested quantities to achieve full truckloads.  The distribution manager would then firm the planned transfer orders one day prior to actual delivery, thereby creating actual transfer orders for reporting actual shipment and receipt.  This approach provided visibility of scheduled transfers to the manufacturing plant, supported last minute changes to planned transfers, and also helped in truck load planning.

3. Approving a Planned Purchase Order 

Master scheduling logic will treat the approved planned order as if it has been scheduled for the specified quantity and due date.  For example, planned purchase orders might be approved for a specified date that represents a periodic delivery from the preferred vendor.  In addition, an approved planned order can be assigned a different vendor, or it may be assigned to an existing purchase order.  

A planned purchase order will also be created for a purchased component that has a BOM line type of vendor or pegged supply.  Master scheduling logic generates these planned orders in order to communicate requirements, but they cannot be approved or firmed. 

4. Summary

Approved planned production orders within Dynamics AX provide a key tool for many S&OP scenarios.  They lock down scheduled dates and quantities prior to creating actual production orders, and prevent deletion by master scheduling logic.  They can serve different purposes, such as level-loading production, accounting for material or capacity constraints, recognizing evolving product designs, and supporting manually-maintained master schedules. 

[1] The variations of status for a planned order include unprocessed, approved and completed. Assigning a completed status simply provides reference information, typically indicating that you have completed analysis of the planned order.  You can change status back and forth, and also manually delete a planned order regardless of its status.