Dynamics 365 Master Planning - Simply Explained

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Imagine a customer wants 100 bicycles next month, the frames arrive late.

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The wheels sit in a different warehouse, and your assembly line already has work booked

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for the next two weeks.

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So what do you buy?

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What do you build?

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What do you move?

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And when do you need each piece?

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EOtem and Mirko Peters from M365 FM.

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This knowledge nugget is about Dynamics 365 Master Planning AU, the part of supply chain

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management that works through those questions behind the scenes.

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Think of your business like an office building with a stockroom attached.

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Mothers come through one door, inventory sits on shelves, suppliers bring goods to the loading

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dock, production turns parts into finished products.

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Master Planning looks across the whole building, instead of leaving each team with its own separate

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list.

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Today we, Goodtem and will follow one bicycle order from the customer request all the

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way to the supply actions Dynamics 365 suggests.

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Why businesses need a plan, not a spreadsheet?

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Before connected planning tools existed, companies worked from separate pieces of information.

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Sales had customer orders in one place.

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Warehouse teams checked stock in another system, purchasing tracked supply updates and emails

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or spreadsheets.

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And production kept its own notes about what the factory could build this week.

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Each list looked correct on its own.

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The trouble started when someone tried to answer one customer question.

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"Oh can we deliver 100 bicycles by the date we promised?"

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Aeolitaoctums imagine the warehouse holds 30 finished bicycles today.

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That sounds like a good start.

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But the order still needs another 70 bicycles.

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And those 70 bicycles need frames, wheels, chains, seats, bolts, packing materials, people

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to assemble them and time on the right machines.

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A simple stock count only tells you what sits on the shelf right now.

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It does know it's time to tell you whether 70 more frames can arrive before production needs

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them.

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It does know, tell you whether an open purchase order already covers the wheels.

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And it does know it's time to tell you whether the factory has enough time to put everything

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together before the delivery date.

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Here out in is the thing, "Oh, that out in as we're planning becomes more than counting."

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When a customer orders 100 bicycles, the system looks at the demand for 100.

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It subtracts the 30 bicycles already available.

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Then it traces what must happen for the remaining 70.

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It checks the parts below the finished bicycle.

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It checks the supply already on its way.

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And it checks the dates attached to every piece of work.

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One missing part can change the whole answer.

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You might have enough wheels and enough seats.

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But if the frames need two weeks from a supplier, buying them the day before assembly will

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now suit them into the help.

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The order can look possible on a spreadsheet until you place every part on a calendar.

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And that calendar changes all the time.

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A supplier might move their delivery date earlier.

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Another sales order might take stock you thought was free.

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A production job might finish late.

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When those details live in separate places, people spend all their time calling, emailing,

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checking and updating their own version of the plan.

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Dynamics 365.

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Master planning pulls the current demand and current supply into one planning view.

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It reads "Custom orders, stock on hand, incoming supply and production information together."

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Then it works out where supply covers demand and where a gap remains.

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Instead of asking each team to manually connect the dots, the system creates suggested actions

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based on the information it can see.

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Now that does not mean the system runs the business by itself.

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A planner still checks the suggestions, asks questions and decides what should happen.

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But the planner starts with a connected picture rather than a pile of separate lists.

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Think of a spreadsheet as a photograph.

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It captures stock at one moment and it can be useful.

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Master planning is closer to a forward looking schedule because it connects quantities with

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dates, incoming supply and future demand.

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The next step is to separate the different kinds of demand that the planning process can

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read.

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The three planning modes.

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So here is the thing about Dynamics 365.

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There is no item.

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Just one way to plan.

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The planning mode you use depends on the question your business needs answered.

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A company handling this week, TMS customer orders, needs a completely different view from

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one preparing materials for next season.

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The first mode is master planning.

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This is your day-to-day plan and it calculates net requirements.

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Own it out just means the system looks at what you need and subtracts the supply you already

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have or expect to receive.

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It reads real business activity or sales orders from customers, purchase orders already sent

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to suppliers, production orders already on the factory floor and inventory sitting on

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hand in the warehouse.

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Imagine a customer order for 100 units of a product.

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Your warehouse holds 30 units that planning can use for that order.

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The system does now attempt to suggest buying or building all 100 again because it sees

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those 30 as supply so it calculates a remaining need of 70 units.

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At remaining 70 is the net requirement.

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A real plan can include more than just stock on a shelf.

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Maybe another 20 units are due from a supplier before the customer out.

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TM has as requested date.

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In that case, the system takes those 20 into account too, leaving an even smaller gap to

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cover, but dates control the answer.

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If those 20 units arrive after the customer expects delivery, they don't know how to

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help much.

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You physically receive them, but they automatically wait for this specific need.

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Master planning looks at quantity and timing together.

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Own.

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A simple total stock number can give you the wrong answer.

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For many businesses, this is the plan they run most often.

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Microsoft calls Master Planning a short term process, usually covering one week to six months.

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The exact range depends on how long supply takes to arrive or how long production takes

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to finish.

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A company buying simple, local items may only plan a few weeks ahead, but a manufacturer

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with parts that take months needs to look further forward I.U. often as far as the longest

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total lead time for its products.

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Otherwise, the planning run discovers a shortage after its outtems too late to avoid it.

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The second mode is forecast planning.

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Instead of starting with confirmed sales orders, forecast planning starts with expected demand.

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Maybe the sales team expects higher bicycle sales during summer, or a retailer expects

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a big promotion to create demand later in the year.

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These are forecast based on what the team expects, not confirmed orders.

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They are out in a useful because waiting for every customer order can leave too little

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time to buy raw materials, book factory work, or prepare enough capacity.

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Long lead items need earlier decisions even when the final customer order has no

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certainty arrived yet.

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Forecast planning calculates gross requirements.

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Ogrosso means it begins with the expected demand volume.

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If a forecast expects 500 bicycles in July, planning first sees the full 500 unit requirement

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and works from that expected need.

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Think of it as looking ahead at the workload coming toward the business.

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You can then plan materials and capacity around that expected volume.

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You might need to talk to suppliers early, prepare warehouse space, or check whether production

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can handle the expected workload.

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Costs are now empty, promises are you, they can change and actual sales might not match.

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Still, they give you a longer view than a plan based only on orders already placed.

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Then their old team's intercompany master planning.

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This comes into play when one legal entity needs supply from another.

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For example, one company in your group might produce an item while another company sells

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it to customers in a different country.

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The selling company sees customer demand.

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The producing company needs to see the supply requirement that demand creates.

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Another company master planning connects those needs across the company boundary, including

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planned demand and supply that have an out to make it become firm orders.

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The company's donno, tempty plan as if they operate alone.

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The sales company can plan for supply from the manufacturing company, while the manufacturing

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company can see that it needs materials and capacity to support that demand.

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The link carries the planning signal from one legal entity to the other.

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Each mode starts with demand.

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But demand is only the first signal because one finished product can create a chain of

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needs for many lower level parts.

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Sitten, from one order to a chain of supply, let's ask them to stay with the bicycle because

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this is where master planning starts doing its real work, imagine a customer places an

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order for 70 bicycles and asks for delivery on a specific date.

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That date is no-mighty just a note for the sales team.

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Oh, it becomes the point that planning works back from asking what needs to happen before

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those bicycles can leave the warehouse.

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The finished bicycle is only the first layer.

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Dynamics 365 checks the bill of materials, often called a bomb.

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The bulk of the bomb is the recipe for one bicycle.

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It lists the frame, wheels, chain, seat, handlebars, brakes, bolts and every other part required

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to build it.

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If the order needs 70 bicycles, planning expands that order into the parts needed for all

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70.

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That can become a long list very quickly.

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You might need 70 frames, 140 wheels, 70 chains, 70 seats and hundreds of small bolts.

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A planner does now at Métis have to count every part by hand.

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The bill of materials gives Dynamics 365 the structure so the system can trace demand

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from the finished bicycle down to each component, but parts alone don't now admit it produced

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bicycles.

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Production also needs a route.

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A route describes the work steps needed to build the item out, assembling the frame, fitting

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the wheels, checking the brakes and packing the finished bicycle.

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Each step can need a resource.

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That resource might be an assembly line, a workbench, a paint booth, a machine or a group

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of people with the right skills.

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Planning uses this information to place work at the right time.

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Instead of treating production as something that happens instantly, this is where dates

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start moving backward.

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If the customer needs the bicycles on Friday, the finished production order might need to

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complete on Thursday so the warehouse can pack and ship them.

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Assembly may need to start on Tuesday.

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The frames and wheels may need to arrive by Monday.

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If a supplier needs 10 days to deliver wheels, then the purchase order needs to leave your

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business even earlier.

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The customer date creates a chain of dates.

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Dynamics 365 works backward through that chain, taking account of lead times.

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A lead time is simply the time something needs, whether that out, TM's, a supplier delivering

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a part, a warehouse moving goods or a factory finishing a job.

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A lead part can push everything else, suppose the system finds 70 frames in stock.

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It also sees an open purchase order for 140 wheels, with delivery scheduled before assembly

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begins.

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That supply covers the wheel requirement, while the frames already cover their part.

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Then it checks the chains.

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Maybe there are only 40 chains on hand, and no purchase order brings in the other 30.

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Planning sees a gap and creates a suggestion to cover it.

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The same check runs for the finished bicycles, the parts beneath them, and any work in between.

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Some supply already exists.

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Available inventory can fill a need, an open purchase order can fill it if the goods arrive

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in time.

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An open production order can fill it if the factory finishes on time.

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When none of those sources cover the demand, the plan creates a planned order.

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A planned purchase order suggests buying something from a supplier.

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A planned production order suggests building something inside your business.

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A planned transfer order suggests moving stock from one side or warehouse to another.

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These are suggestions, not commitments.

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Dynamics 365 does no temt, silently send an order to a supplier, or start work on the factory

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floor.

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It gives the planner a proposed quantity and date based on the data it can see.

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A person still checks whether the supplier is right, whether the date is possible, and

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whether the business should approve the action.

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Picture a small problem with our bicycle order.

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Everything looks ready except one wheel.

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The planned supply covers frames, chains, seats, and nearly every wheel, but one wheel

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arrives a day after assembly needs it.

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At that wheel, one bicycle can open it be completed even though the warehouse may look full of parts.

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Master planning traces the gap back to its source.

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The planner can see that the shortage does no temt that come from the customer order itself

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o.

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It comes from the supplier date on the wheel purchase order.

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That gives the planner something specific to act on.

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Ask for an earlier delivery, find another source, or change the production date.

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The plan can suggest supply, but the next question is just as useful.

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Why did Dynamics 365 connect this supply to that demand?

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Using net requirements, the planning conversation.

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So planners use the net requirements page to dig into that connection.

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This page pulls together the full planning conversation for one item in one place.

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It shows every demand that needs the item and every supply source that can cover it with

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dates right next to each line.

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Take the bicycle wheel as an example.

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At the top, you pick the site or warehouse where that wheel matters.

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Then below Dynamics 365 shows all the related transactions, AU sales, purchases, inventory,

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production are all in one list.

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Demand shows up as a negative number against your available stock.

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That demand can come from many places.

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A sales order needs wheels because a customer ordered bikes.

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A forecast creates expected future demand.

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A production order needs wheels for the factory plan.

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And a transfer order creates demand when another warehouse requests stock.

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Each line answers a simple question.

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Who needs this item?

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How many do they need and on what date?

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That sounds simple, but it prevents a common mistake.

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You'll often see a total quantity and assume it belongs to one customer or one job when

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the same item may support several orders across several dates.

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On the supply side, you have on-hand inventory, oh, what's already in stock.

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Then purchase orders from vendors, production orders, your business plans to build, transfers

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between warehouses and planned orders that the system suggests, but nobody has created

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yet.

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The page sorts everything by date.

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As you scroll down the list, you can watch the available quantity change.

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Stock might look good early in the month, then drop when a production order uses parts,

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then rise again when a supplier delivery arrives.

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Timing changes the result.

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Suppose a hundred wheels sit in one warehouse on Monday, but a production order needs 80 on

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Tuesday and another customer need appears for 30 on Wednesday.

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The total demand exceeds the stock, even though an inbound purchase order for 50 wheels

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arrives on Friday.

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Friday's delivery doesn't solve Wednesday's shortage.

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That date-by-date view explains why the system makes its suggestions.

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Dynamics 365 isn't just randomly asking for more wheels.

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It sees exactly when available supply drops below the demand it must cover.

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Now you might ask a more specific question, which supply line covers which demand line?

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That connection is called pegging.

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Pegging is Dynamics 365's own planning link between demand and supply.

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It connects a need like a production order for bicycles, with the source expected to cover

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it, like a purchase order for wheels or a planned purchase order.

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The system builds this link during the planning calculation.

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If the demand changes, planning can recalculate the connection.

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The customer moves their delivery date or an inbound purchase order slips.

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Pegging can then point to a different supply source or create a new planned order where

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the gap appears.

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It helps you trace the whole chain.

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Start with a sales order, see the production order it connects to, follow that down to

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the parts needed, and find the purchase order that covers them.

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Sometimes you need more control.

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That's where marking comes in.

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Marking is a manual connection between a supply transaction and a demand transaction.

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It tells the system that this supply should cover that demand, rather than letting

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planning freely match it elsewhere.

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Think of it as putting a label on two related records.

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You might mark a specific incoming purchase order of wheels against a particular production

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order because those wheels were bought for that work.

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Planning respects that relationship more firmly than its normal pegging link.

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Still, marked supply isn't the strongest connection available.

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Reservation is stronger.

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When you reserve inventory or incoming supply for a specific demand, you create a hard link.

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That quantity is set aside for the chosen sales order, production order, or other demand.

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When master planning treats the reservation as a priority over normal pegging and marking.

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Imagine 10 wheels in stock, but those wheels are reserved for an urgent repair order.

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A later customer order may need wheels too, but planning can't treat those 10 reserved

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wheels as freely available.

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It needs to find other supply or suggest more supply because the reservation already assigns

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them elsewhere.

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So pegging, marking, and reservation give you three levels of connection.

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Pegging is the system's automatic match.

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Marking is a manual, more fixed link.

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Even locks supply to a specific need AU, the strongest of the three.

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Once you can read those links, planned orders, stop looking like unexplained instructions.

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The next question is how often this planning view changes and how quickly Dynamics 365 can

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calculate it.

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Static, dynamic, and planning optimization.

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The net requirements page shows a planning result, but not every plan updates the same way.

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A static plan changes only when someone runs the master planning job.

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That gives planners a stable view they can review during the day without every new transaction

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changing the numbers underneath them.

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And a large sales order arrives at 11 in the morning.

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If the static plan ran overnight, that new order won't appear in its suggestions until

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the next planning run.

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The plan still shows the last calculated result which can be useful when a team needs one

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agreed view for the day.

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But that stability has a cost.

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New demand can sit outside the static plan for a while, especially if your business runs

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planning once each night or once each week.

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A planner may know a customer order exists, but the static plan hasn't yet recalculated

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the supply response.

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That's where a dynamic plan helps.

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A dynamic plan shows current demand as it happens.

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Planners can see the effect of new sales orders and other demand without waiting for the

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next full master planning job.

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It's a shorter term view.

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Dynamic plans, skip forecasts and focus on what's happening right now.

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Say a customer places an unexpected order for 200 bicycles this afternoon.

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Before anyone promises a delivery date, the planner can open the dynamic plan and check

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the effect.

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Does the new order create a shortage?

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Does it push an existing need to a later date?

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Does it trigger a new suggested purchase or production action?

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This gives the team a practical what if view?

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You aren't changing the static plan just to investigate one new order.

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You're checking the likely impact first, then deciding whether the order needs attention

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now or can wait for the next scheduled planning run.

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Static and dynamic plans answer related but different questions.

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The static plan asks, "What did our last official planning calculation tell us to do?"

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The dynamic plan asks, "What does current demand look like right now?"

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Behind both plans sits the planning engine.

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For Dynamics 365 cloud environments, planning optimization is the modern engine Microsoft

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uses to run master planning.

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It calculates the requirements outside the main business application, which reduces the

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load on the system people use for daily work.

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Older planning runs could take a long time.

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Reports from customers and partners describe planning work that once took hours completing

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in minutes with planning optimization.

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Faster runs mean teams can refresh the plan more often, rather than waiting until the end

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of the day to see whether demand changed.

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But a faster answer can still be a wrong answer.

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Planning optimization can calculate a huge amount of connected data quickly, yet it only

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works from the records your business gives it.

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If a supplier lead time is wrong, the suggested order date can be wrong too.

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If the system thinks 500 wheels sit in stock when they don't, it may skip a purchase suggestion

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that you actually need.

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And if the bill of materials leaves out a part, planning can't create demand for that missing

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part.

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The calculation may finish in minutes, but the factory still stops when that part isn't

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there.

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There's also a change in how planning runs.

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With planning optimization plans are regenerative.

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That means each run reviews all requirements again, rather than using the older net change

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approach that only updated items with new requirements since the last run.

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Think of it as recalculating the full planning picture each time.

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That takes away some uncertainty about whether an earlier change escaped the calculation,

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while the faster engine makes full recalculation more practical for many businesses.

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So speed helps, but clean data decides whether the plan deserves trust.

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Once the plan produces its suggestions, the next job is deciding which ones need action

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first.

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But what master planning does and what it does now do so here's the simplest definition.

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After planning takes all the data inside Dynamics 365 and suggests what to buy, build or move

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out, complete with dates and quantities.

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A planner reviews those planned orders before acting.

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They check the vendor, the delivery date, the quantity and whether the factory can handle

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the work.

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Once they confirm, firming that suggestion turns it into a real purchase order, a production

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order, or a transfer order.

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But master planning can't see the future.

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Forecasts are just estimates, and real customer orders can change overnight.

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And it definitely doesn't replace human planners.

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People still handle supplier risk, customer promises and exceptions, the system simply can't judge.

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Stock alone isn't enough either, that inventory might arrive too late, sit in the wrong warehouse

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or already be reserved for another order.

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To get good results, start with clean data.

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Clean item records, accurate lead times, correct bills of materials, up-auto out-date stock,

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and realistic demand.

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For our bicycle order, existing stock covers part of the need, planning suggests supply

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for the rest, and the planner confirms the action.

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That brings us back to the question every team needs answered.

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What needs to happen next?

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Conclusion.

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One connected plan.

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Master planning takes demand, stock levels, supplier delivery dates, production schedules,

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and capacity, and turns it all into actions your team can review.

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Plant orders start the human decision or they don't finish it.

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That's why planners stay essential.

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Subscribe on your favorite podcast platform, and share this knowledge nugget with someone

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learning Dynamics 365 Supply Chain Management.