Planning Horizon

What is Planning Horizon?

Planning Horizon

In the world of logistics, planning is a crucial aspect that ensures the smooth flow of goods and materials from their point of origin to their final destination. One important concept in logistics planning is the "Planning Horizon." For beginners in the field, understanding the planning horizon is essential to effectively manage and optimize the supply chain.

The planning horizon refers to the length of time into the future for which a planning system generates requirements. In other words, it is the timeframe within which logistics professionals anticipate and plan for the demand and supply of goods. This timeframe is typically measured in periods or days, depending on the specific needs of the organization.

In the context of Material Requirements Planning (MRP) systems, the planning horizon plays a vital role. MRP systems are computer-based tools that help organizations manage their inventory and production processes. These systems generate requirements for materials based on factors such as customer demand, lead times, and production schedules.

Setting the planning horizon in an MRP system is crucial for accurate and efficient planning. It should be long enough to accommodate the longest cumulative lead time for any item in the population. Cumulative lead time refers to the total time required for an item to be procured or produced, including all the intermediate steps and processes involved.

By setting the planning horizon appropriately, logistics professionals can ensure that they have enough time to procure or produce the required materials to meet customer demand. It allows them to anticipate potential bottlenecks or delays in the supply chain and take proactive measures to mitigate them.

Another important concept related to the planning horizon is the Planning Time Fence. The planning time fence is a designated period within the planning horizon where changes to the production schedule are restricted. This restriction helps maintain stability in the production process and prevents last-minute changes that can disrupt the entire supply chain.

In conclusion, the planning horizon is a fundamental concept in logistics planning. It determines the timeframe within which logistics professionals generate requirements for materials and plan for the demand and supply of goods. By setting the planning horizon appropriately and considering factors such as cumulative lead time, organizations can optimize their supply chain operations and ensure timely delivery of goods to customers.