New make-to-order (MTO) automation capabilities available with the October 2022 release of Dynamics 365 Supply Chain Management streamline order-taking and related downstream processes. Supply chain planners can benefit from improved capable-to-promise (CTP) accuracy with plan-specific delay tolerance, keep supply available for last-minute orders, and automatically populate external order information during intercompany trade.

Impact of make-to-order

With MTO, production only starts after a customer places an order for a specific product. The main benefits of MTO are that you can accommodate customer-specific products and you don’t need to keep inventories of finished goods with the related risk of wastage. However, with MTO, your delivery time includes the production lead time and depends on the availability of resources and raw materials. This often leads to the need for CTP, close tracking of resource capacity, and flexibility for last-minute orders.

Until now, supply chain planners had to monitor and adjust supply levels and current demand manually. With the new automation capabilities in Supply Chain Management, planners can automate these tasks. The system takes informed actions based on parameters they set.

Benefits of make-to-order automation

Let’s take a closer look at the benefits of six improvements we’ve made for make-to-order scenarios.

Delay tolerance control

Delay tolerance represents the number of days beyond the lead time that you’re willing to wait before you order new replenishment when existing supply is already planned. It helps you avoid creating new supply orders if the existing supply will be able to cover the demand after a short delay. With the new Negative days option for delay tolerance control, you can determine whether it makes sense to create a new supply order for a given demand. The ability to control delay tolerance at the master plan level gives you more flexibility between the static plan and the dynamic plan used for CTP calculations. Automating the process ensures that CTP calculations don’t allow delays. You can optimize refill orders on the static plan to use existing orders, even it causes a bit of delay.

Use latest possible supply

The Use latest possible supply option lets you keep products available for last-minute orders. It optimizes the use of existing supply by pegging the latest possible supply to a demand instead of using the first possible supply.

Single-level marking

Marking links supply to demand for the purpose of cost allocation. It resembles pegging, which indicates how master planning expects to cover demand. However, marking is more permanent than pegging because it’s respected by later planning runs. Now you can limit inventory marking to a single level when firming planned orders. That allows you to keep component assignments flexible for production orders after firming.

Order-specific fulfillment policy

You can already set a global default fulfillment policy and then override it for specific customers. Now you can view which default policy applies directly on the order and override it for individual orders. Previously, the order taker had to manually change the policy on the sales order. Now this step is automated, giving more control to the order taker and enabling flexible order processing.

Line-controlled delivery

Delivery terms, mode of delivery, and external item numbers are critical information to track when one company receives a customer sales order, and another company ships the goods to the customer. Now purchase order lines are updated automatically to include this information from the intercompany sales order. This improvement enhances intercompany information exchange. It ensures that detailed demand information flows to the supplying company and that companies meet their customer commitments.

User-defined period on Capacity load page

We’ve added a field to the Capacity load page. The new Number of days field allows you to define a custom period over which to view the capacity load of a resource, enabling long-term evaluation.

Learn more about make-to-order automation

To learn more about MTO automation in Supply Chain Management, read the documentation: Make-to-order supply automation | Microsoft Learn.

For more information about the delay tolerance impact, read Delay tolerance (negative days) | Microsoft Learn.

For more information about the impact of marking when firming planned orders, read Inventory marking with Planning Optimization | Microsoft Learn.

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In supply chain management, when you have an urgent demand, you want it to be prioritized across your planning system. The ability to enable such a broad, yet flexible factor as prioritization, is now available in Dynamics 365 Supply Chain Management.

Priority-based planning can help businesses optimize their supply chain while increasing service levels and reducing inventory levels. The 2021 release wave 2 includes a public preview of this feature for the Planning Optimization Add-in for Dynamics 365 Supply Chain Management.

Benefits of priority-based planning

This feature adds support for demand-driven planning, which is one of the five steps related to demand driven material requirements planning (DDMRP). With priority-based planning, the optimization of supply to cover demand is based on priorities, not requirement dates, which are used in classic material requirements planning (MRP).

Priority-based planning lets you prioritize replenishment orders to ensure that urgent demand is prioritized over less important demand. For example, a stockout replenishment order will be prioritized over a standard refill replenishment order.

On top of this, the system can automatically split large refill orders into separate, smaller orders, with different priorities assigned to each order. This approach provides coverage of the critical portion of an inventory refill, instead of simply refilling warehouses to maximum with a single supply. This minimizes the risk of stockout by optimizing the use of available supply.

Another benefit of priority-based planning is that priority can be used to compare the importance of relevant orders across products and locations during execution planning.

Broad impact of the planning priority value

The new field, Planning priority, is now available for purchase orders, sales orders, transfer orders, planned orders, and forecast lines. This value is the backbone of priority-based planning; it is used to define the importance of demand and supply.

Planning priority is typically defined by the master planning calculation related to a planned order, or by a default value when manually created. Users can modify the planning priority value when needed. For example, it might be important to adjust the value to honor the importance of a critical sales order. For intercompany orders, the planning priority value is kept in sync between linked purchase and sales orders to ensure transparency of cross-legal entities.

Flexibility with the Priority coverage code

By using the new coverage code of Priority, you can control when Planning Optimization uses planning priority during pegging. This will calculate the derived planning priority on planned orders based on inventory levels and demand priority constraints.

This addition makes possible a flexible approach with a mix of 1) classic date-driven MRP using coverage codes of Min/max, Period, or Requirement, together with 2) item coverage using the new priority-driven approach defined by use of the Priority coverage code.

Planning priority models

The user-defined planning priority models enable a variety of options. One option is to do a standard DDMRP priority calculation, based on projected on-hand supplies as a percent of maximum (see “% of maximum” in the following graphic). However, another option is to use specific planning priority values, based on priority ranges (see “Zone grouping” below).

With priority ranges, you can also choose to split planned orders according to the priority ranges. This ensures that available supply is distributed based on the risk of stockout. With this approach, you seek to fulfill the demand quantity to reach maximum inventory level by creating multiple planned orders, each with individual planning priorities. During firming, it is possible to group planned orders based on priority to limit the number of actual orders to process.

In supply management, sometimes your projected on-hand inventory will reach a critically low level because less important demand orders are repeatedly delayed. Eventually, this triggers a high-importance supply request. When you enable the Consider demand priority setting, a new planned order supply will never be assigned a planning priority that is more important than the demand that triggered the supply. This lets you balance the importance of supply when refilling stock levels in a supply chain with inventory buffers.

How to get started with priority-based planning

• Enable the Planning Optimization functionality. For more information, see Get started with Planning Optimization.
• In Feature management, turn on “(Preview) Priority driven MRP support for Planning Optimization”. For more information, see the priority-based planning documentation.
• Set up your first planning priority model to control the planning priority calculation and the default value of planning priority on new orders and forecast lines.
• Set up a coverage group that includes your planning priority model.
• Ensure that at least one product includes item coverage with coverage code Priority.
• Add the planning priority fields prominently to relevant forms like planned orders.
• Run master planning and try out the planning priority model setup to see the impact on the calculated planning priority on planned orders.

Next steps

Watch this video about the highlights of priority-based planning: Planning optimization support for priority-based planning in Dynamics 365 Supply Chain Management.

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