Planning the enterprise resource

Enterprise resource planning has optimised and streamlined many manufacturing operations. Andy Ferrar asks whether ERP is still the system of choice today

The topicality of e-Commerce continues to dominate the news, but when it comes to the crunch customers are interested in two things – cost and delivery. These are also the primary concerns of suppliers, which is why there is a need to look at software designed to improve both cost and delivery performances throughout industry.

The Institute of Operations Management (IOM) has concluded that ERP systems are no longer the solutions of choice for master production scheduling, material planning, capacity planning, distribution planning or detailed scheduling. And other influential organisations, including Cap Gemini, Cambashi, ARC, PA Consulting and KPMG, all advocate that advanced planning and scheduling (APS) software is an essential add-on for the manufacturing companies of today.

APS has such a significant impact on the current systems that the next five years will see a radical upgrading of the information systems used by manufacturers to embrace APS. Perhaps as many as 40% will adopt APS in the next few years. AMR Research suggests the payback on APS can often come within the first year, with returns on investment of between 30% and 300%. Paybacks of 12 weeks are not unusual.

APS systems were developed to address many shortcomings within ERP/MRP systems. A major weakness of ERP is that it assumes that supply lead times are known constants, and do not vary with flow.

ERP systems also require fixed processes or routings, ignoring alternative processes that could be used. The sequencing logic prioritises orders only by period or date, when other options, for example highest priority, minimal tool changes, may be preferred.

With ERP, all work is loaded under assumption of infinite capacity, when working capacity is always constrained by time and the resources available and the process of regeneration takes considerable time to calculate, review and process the recommended actions.

APS solutions are based on mathematical formulae, or algorithms, that crunch data entered into the model until it arrives at a feasible plan or schedule. Some APS vendors have more sophisticated solvers that perform a process called optimisation. These systems go through numerous iterations of production schedules, adjusting to accommodate for constraints each time, until they produce an optimal schedule for meeting delivery dates while also making the most efficient use of all resources. For planners, APS systems quickly analyse the implications of alternative decisions.

The customer penalises delivery failure as it adds to costs. The mission of a supply chain operation is to never stop producing what is required. ERP systems that control production with course daily time buckets do not offer the transparency for the precision of controlled deliveries or shipments required.

APS offers a time granularity of minutes and seconds to make the just-in-time process a reality. Advanced planning uses a dedicated server and in-memory processing, combined with special algorithms, to generate production plans recognising material, capacity, and other constraints as they are a that moment. Processing speed allows for flexibility in planning and lets users run simulations that predict and control delivery promises based on actual production conditions.

APS systems download data from ERP/MRP or other systems to a dedicated server that does memory-resident processing for fast re-planning, or for evaluating alternative production scenarios. The results maybe re-integrated with the transactional business application systems. However in other cases, the advanced planning system actually performs master production scheduling and material requirements planning.