APS is a pretty loose term that covers a lot of areas of applications. To name a few:
•long-term strategic planning and supply chain network design: de cisions as to how many plants or distribution centers we should have, which market they should serve or what products we should make to resolve conflicting objectives like customer service, cash flow, and revenue margins.
•demand planning and forecasting: This tool can be used to collaborate, coordinate, and communicate a coherent and repeatedly updated sales forecast, including the impact of promotional events, and consider the enterprise constraints. This can be done intracompany (marketing and production) or intercompany as a collaborative effort of the supply chain
•business-to-business transactions: The ATP process enables realtime transactions between sellers and buyers in many forms: electronic bidding exchange, automated follow-up, supply chain synchronization, etc. This area is rapidly emerging as a significant Internet-related activity. Even when supply cannot satisfy demand,
customers have the visibility when the supply will be available.
•distribution and transportation planning: The usage of optimization enables significant savings: reduced cost and increased utilization and efficiency.
•resource utilization: optimizes the use of on-hand materials and constrained capacity, overriding MRP to obtain optimal results. Objectives may be minimum deviation from the schedule, maximum customer service, maximum work on the floor, increased shortterm deliveries (for national emergencies or market opportunities), minimum inventory, improved cash flow, or a balanced mix of several of these objectives.
•production scheduling at different levels: from generation of a fea sible master schedule based on constraints to detailed sequencing and lot sizing of the work center. It will obtain an optimal balance between efficiency and schedule performance, considering the im pact to the whole supply chain or the delivery schedule, avoiding suboptimization of the work center with negative impact to the whole enterprise.
BEST OF BREED VS. ERP VENDORS
Like many cases of innovation and technical breakthroughs, APS started with dedicated and talented startups, which had a narrow focus on going beyond ERP in order to achieve specific objectives. There are many vendors like that. Some of them are not that small anymore and cover a wide spectrum of applications. What typifies them is that they do not offer an ERP solution, but a "bolt-on" module that interfaces with ERP data as feeders, and provides the additional "brain power." It took some time for the ERP vendors to realize they were losing ground and being threatened by ignoring this area, so they started to acquire their own capability, either by acquisition or by accelerated development. It is interesting to note that they also adapted the architecture of the APS as a bolt-on module, rather then an integral part of the backbone ERP package. The battle for market share between "best of breed" and the ERP houses is ongoing. The former try to keep ahead in functionality and flexibility to adapt to specific customer needs. The latter claim easier, more reliable interface, connectivity assurance to future releases and the convenience of having one point of contact (and accountability) for the enterprise applications' support.
APS VS. ERP
As we can see, the APS is like an upgraded brain transplant to the ERP system. Continuing this analogy, the brain cannot live without the body, and the body cannot live without the brain. They don't conflict with each other; they supplement and augment each other. The issue confronting today's business is where should they invest their dollars: getting a modern ERP first or trying to upgrade a legacy ERP with a modern APS bolt-on. Each case should be checked on its own. I would just like to point out something I think is often missed: replacing one ERP with another modern one rarely gives us a significant change in the data we collect or the basic processes we execute. The main difference is in the technical soundness, the user interfaces, the level of integration (as opposed to more or less loosely interfaced functions), and the quality of the output (which is a poor reason to change a system). The basic capabilities do not change.
Adding an APS is a step up in capability for a relatively lower cost. It is obvious that a minimum of sound foundation is needed to enable APS to be effective (garbage in will still yield garbage out). Studies show that the acquisition of an adequate APS will yield a higher ROI. It requires a smaller investment and involves fewer people than ERP replacement, with lower training cost. It is not a shock to the organization, and it does not impact the basic transactions or require data loading and conversion. There may be merit to adapt a different approach: Implementing APS capability first can reap quick benefits that may create the funding to replace or upgrade the ERP.
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