Planning horizon
The planning horizon is a crucial parameter in material requirements planning that determines how far into the future demand planning looks, i.e. how far material requirements, inventories and, if available, planned orders and planned additions are offset against each other in the future.
The planning horizon must be clearly distinguished from the forecast horizon. The forecast horizon determines the period in the future for which forecast values are to be generated, which can then be incorporated into planning as primary requirements.
The planning horizon and forecast horizon do not have to be the same length. If the planning horizon is significantly longer than the forecast horizon and there are no other sources of demand beyond the forecast horizon (e.g. programme planning, customer orders, safety stocks), the MRP will assume that there is no demand.
Our tip:
In many classic ERP systems, the planning horizon is usually a global or material group-related control parameter that is not linked to the material but can be set in a more differentiated manner via MRP groups, MRP areas or planning strategies. In many add-on systems, on the other hand, this value can be set individually for each material number, which allows for even more differentiated control.
In practice, the planning horizon is often set too short in order to reduce computing times or avoid planning uncertainty. However, this leads to long-term requirements being systematically identified too late and planning being reactive rather than proactive. It is crucial that the planning horizon is selected in such a way that, taking into account the replenishment times of all items, material requirements can be identified at an early stage and orders can be placed with suppliers in good time.
For material number-related planning horizons, it is generally advisable to select a horizon that is slightly longer than the respective replenishment times. A global planning horizon should cover at least the longest relevant total replacement time of the planned items or the critical paths in the most important bill of materials structures.
At an aggregated level (e.g. within the framework of S&OP or programme planning), significantly longer planning horizons are often used than in operational material planning. Clear coordination between these levels is crucial for consistent planning.
