The topicality of eCommerce continues to dominate the news, however when it comes to the crunch customers are interested in two things – cost and delivery. These are also the primary concern of suppliers, so it is with this in mind, we need to look at software that is set 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 APS is an essential add-on for a manufacturing company of today.
The term enterprise or manufacturing resource planning reveals the origins of these systems as manufacturing resource planning systems, if one replaces the resource planning functionality with an APS system the heart of ERP/MRP is removed. 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% of will adopt APS in the next five 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 never stopping 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 at 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.
APS focuses on the satisfaction of customer demands, whereas ERP systems are designed to co-ordinate manufacturing. Whilst ERP’s main objective is cost control; APS seeks to optimise manufacturing performance, and in so doing can anticipate and be proactive rather than reactive like ERP. APS offers cost control by providing transparency and revealing constraints and non-productive time.
Depth of planning and thoroughness can be enhanced with APS, as ERP systems tend to consider only materials and machines. APS has a broader span of planning taking into consideration factors such as: design, materials, machines, labour, transport, synchronised demand. This breadth of planning by APS is further enhanced with a concurrent and constraint based approach.
APS also has the advantage over ERP when quoting delivery times, by recognising the dynamics of the process being executed, ERP assumes all will happen as prescribed.