APS DEFINED
APS can be defined in terms
of dimensions.
APS Dimensions
One dimension is automation
of supply chain policies
and the business strategy.
The policies characterize
how
customer service is to be
delivered; how inventory is
managed; forecasts are
generated; assets are plans;
etc.
APS will fundamentally be
used to test the cost and
benefits
of the various policies and
strategies.
The second dimension is the
sequence of major decisions
along the physical supply
chain, knowing which
decisions are dependent (and
integrated with other
functions) and which are
stand-alone, independent
decisions.
The next dimension is risk.
APS will help decision-makers
understand the bounds of
risk in both the short
and long term.
Like it or not, despite the
stated mission and vision,
decisions are driven
in different directions
based on a
wide variety of drivers. The
marketplace is not the
driver
of decisions if management
chooses to restrict the budget
below what resources would
be required to meet the
demand. Efficient asset
utilization requires
forecasts to drive the
production schedule. If
customer orders drive the
schedule then that is a
conscience decision to
sacrifice
costs and asset utilization.
APS can be used to combine
these two drivers and find a
desirable compromise.
Similar to policies is
associated value. Value has
to
be placed on risk and
variability. Risk and
variability
are also highly related.
The last dimension is time.
Planning levels (strategic,
tactical, and operational);
planning horizons; lead
times; and frequency are
considered in the problem
formulation.
Policies
Some of the most common and
important policies define
customer service; the order
entry procedures; how
forecasts are to be derived,
safety stocks are to be set:
manufacturing and order
fulfillment sourcing; and
manufacturing and
replenishment lot sizes are
to be set.
Value Statement
ERP systems and the Internet
provide vast amounts of
information. Much of it has
minimal structure for seeing
the forest through the
trees. Management reports
aggregates information and
gives it a time snapshot
that
allows managers to assess
current and previous performance.
Spreadsheets take management
reports one step
further to provide
decision-makers the ability
to what-if
a limited number of
situations to help them
analyze a few options.
Supply chain models use APS
technology
to take vast amounts of
information, analyze many
more
options, and give the models
an objective function so
that an optimal solution can
be sought.
Time Dimension
All supply chain models
should be time-phased,
meaning that they give
different solutions as time
progresses
along. Different business
questions can be categorized
into a minimum of three time
frames. Which time frame
a particular questions falls
under depends on the lead
time of that question.
BUSINESS DRIVERS
What makes business so
interesting and challenging
is
that four business drivers
(customer service, asset
utilization,
cost/profitability, and risk
management) are
constantly being combined
and balanced to provide
control, growth, and
stability to the business.
Continued