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The activities associated with determining a sourcing plan based on available demand and on-hand inventory, supplier scheduled deliveries and supplier contracts. This supply-demand balancing process will identify incremental supplier deliveries, excess inventory, undesired scheduled deliveries, excess contractual volumes and contractual shortages.

This process is generally highly automated and consists of two steps:

• Netting: Determine the incremental needs by deducting the inventory and current commitmwns from the demand
• Offsetting: Determine the timing of the incremental needs. This may include making recommendations to reschedule existing commitments

Alternative names include: Netting and Offsetting, MRP (Materials Requirements Planning), DRP Distribution Requirements Planning), Strategic Sourcing Plan (long term) Planning Frequency Cost of Goods Sold Direct Material Costs

Hierarchy

ID	Name	Level	x
P2	Plan Source	2	P2
P203	Calculate Sourcing Plan	3	P203

Metric(s)

ID	Name	Level	x
RS11	Planning Frequency	2	RS11
CO11	Cost of Goods Sold	2	CO11
CO111	Direct Material Costs	3	CO111

Term(s)

ID	Name	Clear	x
DRP	Distribution Requirements Planning		DRP
MRP	Material Requirements Planning		MRP

Workflow

From Input(s)	Process	Output(s) To
wf_process wf_arrow P201 Gross Material Requirements P202 On-hand Inventory P202 Scheduled Receipts	P203	wf_arrow wf_process Net Material Requirements P204

Calculate Sourcing Plan Plan Source 520300 3 Material, Acquisition, Planning, MRP, Calculate, Requirements, Supply chain, Supply, Procurement, Purchasing, Netting, Offsetting Calculating the sourcing plan by comparing demand and supply for materials (and services)