Planning in a supply chain is not one activity. It happens across several time horizons, and each horizon has its own purpose, its own tools, and its own questions to answer. This article walks through the planning horizons in Business Central, from long-term asset budgeting down to daily execution, and explains why you plan in each one.
Asset budgeting is your longest horizon. You break down your expected forecast into capacity and equipment requirements, so you know whether to buy or sell equipment based on your growth strategy.
Long-term planning is about sales forecasting. You forecast on your sales items and break down the requirements, which lets you negotiate frame agreements with vendors. This matters because procurement lead times are often longer than your sales lead times.
Master planning covers a 2-week to 3-month horizon and uses MRP 1 and MRP 2 planning to balance material and capacity requirements. The goal is to avoid stock-outs, keep a high service level, and minimise inventory binding.
Detailed planning is where the production planner builds specific, executable production plans, often using Gantt charts and a lot of manual work.
Execution and history close the loop. You collect time and production data to measure performance, and you review history to improve your routings, reduce waste, and forecast better next time.
Asset budgeting: planning for the very long term
Asset budgeting is a long-term exercise. You take your expected forecast and break it down into requirements, so you can figure out what your expected bindings on stock will be and what capacity you are going to need.
This is also where you decide on equipment. If you have a growth strategy, do you need to buy new equipment? If the situation is the opposite, should you sell equipment instead? Asset budgeting is about predicting what will happen in the very long term and what assets you need to change to meet it. You can use Business Central to do this breakdown.
Long-term planning: sales forecasting and vendor agreements
The period for long-term planning differs from company to company, but the purpose stays the same. You make some kind of sales forecasting, typically forecasting on your sales items, and then break down the requirements.
This gives you a clear picture of your expected requirements over the longer term. With that picture, you can set up agreements with vendors for items, such as frame agreements.
The reason this matters is timing. Procurement time is often longer than the expected sales lead time. If you wait until the sale appears, you are already too late to buy. Forecasting lets you break down the demand early enough to act on it.
Master planning: MRP for the 2-week to 3-month horizon
On the 2-week to 3-month horizon, you run master planning. In practice this means MRP 1 planning and MRP 2 planning, where you figure out your requirements for materials and your requirements for capacity.
The point is to avoid stock-outs on items in demand, gain a high service level, and keep inventory binding low. Bringing inventory down as far as possible is the complex part, and it is just as important in this phase as the others.
Detailed planning: building executable production plans
Detailed planning is about making the specific production plans. A production planner usually handles this, working with Gantt charts or other capacity planning algorithms.
The questions here are concrete. Do we have enough capacity? Do we have enough labour? Do we have enough items at the right time to start the production orders? What is the load on the machinery and the capacities? And, in the end, is it possible to make a plan we can actually execute?
Detailed planning works through all of these possibilities, and it often turns out to be very manual.
Execution: managing material flow and collecting production data
The execution phase is where the plan meets the shop floor. You want tools for time and attendance and shop floor registration, and tools that tell you whether you have shortages on production orders and sales orders, and whether you can start the orders.
The goal is to handle the material flow in a clever way and to collect time measurements from production. That data lets you calculate how you perform in the production environment. It is also about making good quality and having good data so you can keep improving the way you work.
History: reviewing performance and improving forecasts
Finally, you look back at history. You want to see what you actually did and whether it created value or whether things can be optimised.
This is where you check whether your routings are set up correctly, whether you have too much waste to look into, and how you are doing on improvement. Reviewing history makes you better at forecasting in the long-term planning next time. Together, these phases cover the full supply chain where you need to plan.
Q&A
What are the planning horizons in a supply chain?
The horizons are asset budgeting (very long term), long-term planning (sales forecasting), master planning (2 weeks to 3 months), detailed planning (specific production plans), execution (material flow and data collection on the shop floor), and history (reviewing performance and improving forecasts).
Why do you forecast in long-term planning instead of waiting for actual sales?
Procurement time is often longer than the expected sales lead time. If you wait for the sale to appear, you cannot procure the materials in time. Forecasting lets you break down demand early enough to set up vendor agreements and meet it.
What is master planning in Business Central used for?
Master planning covers the 2-week to 3-month horizon and uses MRP 1 and MRP 2 planning to determine your material and capacity requirements. The goal is to avoid stock-outs, keep a high service level, and keep inventory binding as low as possible.
What does detailed planning involve?
Detailed planning is where a production planner builds the specific production plans, often using Gantt charts or capacity planning algorithms. It answers whether you have enough capacity, labour, and materials at the right time to start production, and whether the plan can actually be executed. It is often a very manual process.
Why is the execution phase important for improving production?
During execution you collect time measurements and production data. That data lets you calculate how you perform, maintain quality, and build the foundation for reviewing history and improving your forecasts and routings later.