Requirement planning

Requirement planning: the basis for timely procurement of materials and goods

In terms of materials planning, it is important to ensure that the required goods and materials are procured on time. The less capital is tied up and the better production is supplied with goods, the better the planning. However, the prerequisite for this is a realistic determination of demand – the basis for demand-based or consumption-based planning.

We explain the differences in determining requirements and highlight the advantages and disadvantages of each approach.

Definition of requirements

Which material requirements are there in terms of time and quantity? The answer to this is not as simple as it seems at first glance. This is because requirements determination, also known as requirements quantity planning or procurement planning, is based on various procedures. But before we go into this in more detail, the first step is to look at how needs are met in the first place. Make-or-buy decisions are used to determine, among other things, whether the strategy involves in-house or external production – as part of the overarching material requirements planning. Demand assessment, on the other hand, focuses on short or medium-term demand, which is further subdivided into primary, secondary and tertiary demand.

Note: It is not just the costs of procuring requirements that play a role here, but also dependencies such as external batch sizes in production, which must also be considered in the context of transportation and storage costs in general.

Overview of different types of requirement planning

In the context of logistics, demand-driven or consumption-driven scheduling is primarily used to determine requirements. The basis for this is the determination of the number of parts or products required.

• Demand-driven scheduling

A key aspect of just-in-time (JIT) delivery is the predetermined provision of materials and their immediate further processing. The warehouse is only minimally dimensioned and production is almost completely without storage. Demand-driven scheduling is mainly used in areas with production operations where there is a high, precisely calculable demand for goods. Especially for large-volume goods with a high value (so-called AX parts), for example vehicle seats in car production.

Demand-driven planning is based on the principle that parts are only produced or procured when there is a specific need. Here, parts lists are used to determine the secondary requirements. The storage costs are fairly low, but this process requires precision and solid planning.

• Consumption-controlled disposition

In this form of requirements planning, only those goods are planned that are regularly required and can therefore be produced or procured according to plan. The smaller the random fluctuations and the better the consumption can be quantified on the basis of previous values, the more efficient consumption-controlled scheduling is. Conversely, this method of determining demand is associated with higher storage costs and potential supply risks, primarily due to inadequate demand forecasts.