Building Business Speed with Advanced Planning Systems
SYDNEY, Australia - May 11th, 2004
This article by SYSPRO, published in Manufacturers Monthly in April 2004 looks at how "business speed" is the key benefit of Advanced Planning Systems (APS) - it gives the ability to give rapid and accurate quotes on product delivery dates and cutting manufacturing lead times.
APS extends ERP systems by giving users control over shop floor activities. APS is designed to optimise production schedules based on the idea that production from a supply chain is limited by "bottlenecks" - the capacity of its weakest resource.
HOW many times have you walked in to a shop - and then out again without buying a thing because you weren’t served quickly enough? You may not be a retailer, but as a manufacturer you could be losing customers the same way.
Taking too long to provide a quote and calculate delivery times – or, not coping with unexpected orders – these are signs that an Advanced Planning System (APS) could be worth thinking about.
In recent years APS seems to have fallen out of fashion. But in an age where “business speed” is crucial, this tool should be re-examined by manufacturers.
“Business speed” is the key benefit of APS. Giving a rapid and accurate quote on product delivery dates and cutting manufacturing lead times are two ways of responding faster to your customers. Quickly adjusting production when there’s a change in an order is another gain.
But firstly – how does APS fit with ERP and MRP?
Traditional ERP deals with accounting, distribution and manufacturing data. However, it does not look at the real-time changing capacity of plant resources, or unexpected changes in orders.
In contrast, APS is designed to optimise production schedules to meet customers’ orders. APS systems can “see” the shop floor in real-time because it is linked with data capture at the point of manufacture. It extends ERP systems by giving users control over shop floor activities.
APS is based on the idea that production from a supply chain is limited by the capacity of its weakest resource – “the bottleneck”. Thus, if “nonbottleneck” resources continue to operate, this simply produces unwanted inventory.
Each resource - materials, machines and tools, people, warehouse capacity or transportation - has a constraint. This could be the number of working hours in a day, the manufacturing time needed for each process, the capacity of a machine.
APS looks at the capacity of each resource and process, and then creates a plan to match those constraints.
This compares with MRP which can only plan for materials. MRP has several major shortcomings:
It assumes that a factory has unlimited machines, people and other resources such as warehouse capacity.
It assumes that lead times are known in advance, and that the date the order is required is the starting date for planning
It assumes that the system needs fixed processes or routings, and ignores alternative processes.
Too often, manufacturers will use their MRP system to calculate material requirements, but then turn to spreadsheets to schedule their labour, machines and other manufacturing processes.
Even a spreadsheet genius in a medium-sized plant knows it is almost “mission impossible” to quickly create a schedule that minimises the number of labour shifts, optimises multiple machines and tools, warehouse capacity, and then predict exact demand due-dates – especially when order volumes keep changing.
APS takes over this work by typically combining shop-floor data with ERP or MRP data then running a massive number of sophisticated calculations to generate a production schedule where each resource is synchronized and optimised.
APS provides “business speed” by rapidly creating realistic production schedules. It allows managers to rapidly determine actual lead times and instantly answer “what-if” questions that can be viewed as real-time representations of the shop floor. Schedules can be run and re-run
according to events that change each day or even each hour.
Manufacturers who have installed APS systems find immediate cost savings from more efficient schedules.
One major saving is reduced lead-times and improved throughput from reduced cycle times. A manufacturer who needs to quote multiple weeks for delivery although only a fraction of that time is actually needed for production can boost their throughput with APS through more efficient scheduling.
Reduced inventory and materials on hand is the other major saving. In a marketing-driven age where goods have much shorter product life-spans, and smaller runs of products with greater variations, the manufacturers who can avoid overproduction will have a business advantage.
So far, the Internet has allowed some superficial trading over web sites. However, the introduction of Microsoft’s .NET technology will change the next generation of ERP and APS systems for manufacturers.
The .NET technology enables seamless exchange of data between an enterprise with its suppliers and customers. These transactions can feed directly across each part of a manufacturer’s supply chain through secure Internet access or a local wireless network.
A customer making an order from an online catalogues generates a data transaction that automatically updates customer accounts and changes inventory levels. Future integrated APS and ERP developments will see that same customer knowing accurate delivery dates when they submit their order.
If you found this article useful, you may also wish to download SYSPRO's brochure on Factory Scheduling.
