INDEPENDENT STUDY PAILIN UDOMSANTI

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1 1 INDEPENDENT STUDY ERP Comparison : Production Planning and Control Module PAILIN UDOMSANTI An Independent Study submitted in Partial Fulfillment of the requirements For the Degree of Master of Engineering (Engineering Management) International Graduate Program, Kasetsart University 2010

2 2 Pailin Udomsanti 2010: ERP comparison: Production Planning and Control: Master of Engineering (Engineering Management), Major Field Engineering Management, International Graduate Program in Industrial Engineering: Advisor: Pornthep Anussornnitisarn, Ph.D. ERP software is used widely in SME for at least five years ago. Due to the cost of license and implementation of proprietary ERP is very high, SME try to use open-source ERP to save license cost. SAP and Openbravo models are selected to compare in this study due to SAP has the biggest area in ERP market share and Openbravo has the highest downloads from open-source ERP on the internet. Production Planning and Control is the most complex area in ERP. Many ERP vendors provide different frameworks. For standard comparison APICS model is chosen to be main model by comparing with SAP and Openbravo. The comparisons are set in terms of purpose, input, method and output for each function. By comparing, SAP has most of APICS functions except providing supply plan which is necessary for SME. On the other hand Openbravo have only MRP I functions. By comparing with APICS, it needs to create MRP II function which is resource planning to cover all SME types in future.

3 i TABLE OF CONTENTS Page TABLE OF CONTENTS i LIST OF TABLES ii LIST OF FIGURES iii LIST OF ABBREVIATIONS vii INTRODUCTION 1 PROBLEM STATEMENT 4 SCOPE 5 BACKGROUND 6 OBJECTIVES 10 LITERATURE REVIEW 11 METHODOLOGY 13 RESULT ANALYSIS 14 CONCLUSION AND RECCOMMENDATION 50 Conclusion 50 Recommendation 53 LITERAUTURE CITED 55 APPENDICES 57 Appendix A SAP 58 Appendix B Openbravo 74

4 ii LIST OF TABLES Table Page 1 Summary data of APICS Business Planning, SAP Sale and Operation Planning (SOP) and Openbravo Business Partners forecast Summary data of APICS Master Production Scheduling (MPS), SAP Long Term Planning (LTP) and Openbravo Summary data of APICS Rough-Cut Capacity Planning (RCCP), SAP Sale and Operation Planning (SOP) Part Capacity Leveling and Openbravo Summary data of APICS, SAP Demand Management and Openbravo Planning Method Setting Summary data of APICS Material Requirement Planning, SAP Material Requirement Planning and Openbravo Material Requirement Planning Summary data of APICS Capacity Requirement Planning, SAP Capacity Requirement Planning and Openbravo Summary data of APICS Production and Activity Control (PAC) + Operation Sequencing + Input / Output control, SAP Production order 47 creation + Production Execution and Openbravo Production Management. 8 Summary of three models. 49

5 iii LIST OF FIGURES Figure Page 1 Downloads of open-source ERPs ERP Vendor license revenue share in Average Software and Service $ s by Vendor 4 4 Traditional Material and Capacity Planning Hierarchy 7 5 SAP Process in Production planning and Control 8 6 Openbravo framework in Production planning and Control 9 7 Complexity of the production-scheduling problem 12 8 A comparative flow chart of APICS Business Planning and SAP Sale and Operation Planning A comparative flow chart of APICS Business Planning and Openbravo Business Partners Forecast A comparative flow chart of APICS Business Planning and Openbravo Business Partners Forecast A comparative flow chart of APICS Master Production Scheduling and SAP Long Term Planning (LTP) A comparative flow chart of APICS Master Production Scheduling and Openbravo A comparative flow chart of SAP Long Term Planning and Openbravo A comparative flow chart of APICS Rough-Cut Capacity Planning and SAP Sale and Operation Planning Part Capacity Leveling A comparative flow chart of APICS Rough-Cut Capacity Planning and Openbravo A comparative flow chart of SAP Sale and Operation Planning Part Capacity Leveling and Openbravo A comparative flow chart of APICS and SAP Demand management A comparative flow chart of APICS and Openbravo Planning Method Setting. 30

6 iv LIST OF FIGURES (Continued) Figure Page 19 A comparative flow chart of SAP Demand management and Openbravo Planning Method Setting A comparative flow chart of APICS Material Requirement Planning and SAP Material Requirement Planning A comparative flow chart of APICS Material Requirement Planning and Openbravo Material Requirement Planning A comparative flow chart of SAP Material Requirement Planning and Openbravo Material Requirement Planning A comparative flow chart of APICS Capacity Requirement Planning and SAP Capacity Requirement Planning A comparative flow chart of APICS Capacity Requirement Planning and Openbravo A comparative flow chart of SAP Capacity Requirement Planning and Openbravo A comparative flow chart of APICS Production Activity and Control + Operation Sequencing + Input / Output control and SAP Production Order Creation + Production Execution A comparative flow chart of APICS Production Activity and Control + Operation Sequencing + Input / Output control and Openbravo Production Management A comparative flow chart of SAP Production Order Creation + Production Execution and Openbravo Production Management Suggestive framework for SAP Suggestive framework for Openbravo 54

7 v LIST OF FIGURES (Continued) Appendix Figure Page 1 Planning Method for Information Structure Data in Consistent Planning 59 3 Data in Level-by-Level Planning : Planning at Lower Level Data in Level-by-Level Planning : Planning at Higher Level 60 5 Assigning Resource in the Rough-Cut Planning Profile Capacity Utilization in the Standard Planning Table Distribution Strategy and Function for Time-Based Disaggregation Assigning the Sales Orders to Planned Independent Requirements Parameter of the Planning Scenario and Their Default value Comparison Between Long-Term Planning and Operative Planning Overview of Material Requirement Planning for SAP Example of Net Requirements Planning in the Stock/Requirements List Backward Scheduling and the Dates of Planned Order Order Report Production Order Initial Screen Dates of the Production Order Dates of Production Order at Header Level Dates of the Operation Distribution key Standard Evaluation for CRP Finite Scheduling Result (Triggered by Capacity Availability Check) Finite Scheduling Result (Triggered by Dispatching) Executing the Collective Release Good Receipt Posting for the Production Order Business Partners forecast. 75

8 vi LIST OF FIGURES (Continued) Appendix Figure Page 26 Sale orders Planning Methods Process Manufacturing Plan, Generate material Requisitions and b Generate work requirements Material Requirement Planning Calculation Process Plans Work requirements Processing Work requirements Work Efforts Validating Work Efforts 80

9 vii LIST OF ABBREVIATIONS APICS = American Production and Inventory Control Society CRP = Capacity Requirement Planning DM = Demand Management ERP = Enterprise Resource Planning LRP = Long Term Planning MPS = Master Production Scheduling MRP = Material Requirement Planning PAC = Production Activity and Control PM = Production Management PP = Production Planning RCCP = Rough-Cut Capacity Planning SME = Small and Medium size Enterprise SOP = Sale and Operation Planning

10 1 ERP COMPARISON: PRODUCTION PLANNING AND CONTROL INTRODUCTION Today successful companies mostly apply Enterprise Resource Planning (ERP) in their businesses. In the beginning of ERP projects the entrepreneurs must decide which vendor will be selected. Due to the cost of implementation ERP is typically high thus it is very carefully for an entrepreneur to select the appropriate ERP software to his company. One of the powerful and notable license vendors is SAP, the world s largest business software company and the third-largest independent software provider in terms of revenues. Over 37 years in software business SAP present that it is the best customer-focused company. SAP dominates market share 42% of ERP license vendors and 27% of total market share in Now it can officially says there are over 100,600 SAP installations serving more than 41,200 companies in 120 countries. Main revenue of the company is from ERP license product (Jacobson, Shepherd, D Aqila, and Carter, 2007). At the present open-source ERP have known and used widely in small and medium enterprises (SME) because they want to save cost by using free software license. Source codes of the programs always visible and available to download. Developers of each company can modify the program to be suitable for their business. The open-source ERP vendor which is selected in this study is Openbravo S.L. This company provides two software solutions which are ERP and POS (Point of sale). The ERP program is fully web based which mean users can access the system anywhere if they have the connected internet browser. Head office of Openbravo S.L is in Spain. The company revenues are from sale and delivery of services to their partners around the world. Some service types are fee-based, like training, supporting, custom development, consultancy and providing an important source

11 2 (McConnachie, 2007). The reason of selecting this vendor is Openbravo ERP is the successful installing in SME business (Serrano and Sarriegi, 2006), and it has the highest downloads and project activities in 2007 (Johansson and Sudzina, 2008). It represents that this ERP vendor has the high potential to catch the market share from any other open-source vendors or even license ERP vendors. Although an idea ERP system should support the majority of enterprise business process, the production planning is the most complicated area for manufacturing company. Due to changing demand and strategy, most of companies prefer flexible system more than constraint-based logical planning. SAP provides Production Planning and Control module (PP) which are many planning base such as discrete manufacturing or shop floor production, Repetitive manufacturing, Process manufacturing, Kanban and Engineering to order production. On the other hand Openbravo provides Material Requirement Planning module (MRP) and Production Management module (PM) which is orientated toward covering the usual necessities of a discrete production environment. Figure 1 Downloads of open-source ERPs 2007 Source ERP systems and open source: an initial review and some implications forsmes (B. Johansson and F. Sudzina, 2008)

12 3 Figure 2 ERP Vendor license revenue share in 2006 Source The ERP market sizing report (Shepherd, D Aqila and Carter, 2007)

13 4 PROBLEM STATEMENT Due to customers have to pay license and service cost for SAP company. The total cost is calculated by summation of software cost and service cost. From Figure 2 the company will pay at least about $5,995 or 197,835 THB (rate 1$ = 33THB) per one user. Figure 3 Average Software and Service $ s by Vendor Source The Total Cost of ERP Ownership by Aberden Group (Jutras C., 2006) This research offers the alternative option for SME by using open-source ERP because of the companies will not pay this cost if they use open-source ERP or they can purchase less user license by take place some module with open-source program. From the study of Metaxiotis, Psarras, and Ergazakis (2003) presented that production planning and control area cover more than one-third of ERP areas. The company will save a lot of money if they use open source program instead.

14 5 SCOPES This research will focus on functional comparing of Production Planning and control area which is the most complicated in ERP. It is represented in module Production Planning (PP). For Openbravo it is represented in two modules which are Material Requirement Planning (MRP) and Production Management (PM). However, the production planning areas must related by other modules such as Sales, Material Managements and Warehouse. For the standard comparison this study follows the general model of Traditional Material and Capacity Planning (G.A Langenwalter 1999) from APICS (The Association for Operations Management). Main type of business considering in this study is SME (Small and Mediumsized Enterprises). Although ERPs provides many types of production planning but for this research the discrete manufacturing is focused because it is the most common of production.

15 6 BACKGROUND SME BACKGROUND SME (Small and Medium size Enterprise) classified by asset value is represented as following. Manufacturing : Medium < 200 Million Bath, Small < 50 Million Bath Service : Medium < 200 Million Bath, Small < 50 Million Bath Trading : Medium < 100 Million Bath, Small < 50 Million Bath (Whole Sales) : Medium < 60 Million Bath, Small < 30 Million Bath (Retails) The value of asset above is not included land value. SME classified by total employee is represent as following. Manufacturing : Medium < 200, Small < 50 Service : Medium < 200, Small < 50 Trading : Medium < 50, Small < 25 (Whole Sales) : Medium < 30, Small < 15 (Retails) APICS BACKGROUND APICS (The Association for Operations Management) is a not-for-profit international education organization, offering certification programs, training tools and networking opportunities to increase workplace performance. It was founded in 1957 as the American Production and Inventory Control Society, and currently has more than 43,000 individual and corporate members in more than 10,000 companies worldwide. The module Production Planning and Control of APICS is named Traditional Material and Capacity Planning Hierarchy and the framework is as following.

16 Demand Forecast Business Planning Aggregate Sale Plan Supply Plan or Capacity Plan Procurement Purchase requisitions Order already placed Production Planning MPS (Master Production Scheduling) MRP (Master Requirement Planning) Gross requirements Gross requirements Gross requirements Plan orders Plan orders Resource Requirements Planning RCCP (Rough Cut Capacity Planning) CRP (Capacity Requirements Planning) Planned orders PRC (Production and Activity Control) Figure 4: Traditional Material and Capacity Planning Hierarchy Source : Enterprise Resource Planning and Beyond by APIC Plan orders Production orders Production orders Production orders Production orders Operation Sequencing Input / Output Control 7

17 8 SAP BACGROUND SAP : SAP(System Analysis and Program Development ), the biggest license revenue share (42% )of ERP license vendors and 27% of total market share in 2007.Now it officials say there are over 100,600 SAP installations serving more than 41,200 companies in 120 countries. SAP Production Planning and Control Framework is as following. Sale History + Demand Forecast Planed Independent Requirements Sales and Operations Planning Operation Planning Demand Management Sales and distribution Sale Orders Planed Independent Requirements Sale Orders Purchase Requisitions Procurements Good Issue Components Material Requirements Planning Planned Orders Production Order Creation Production Orders Production Execution Planned Orders Production Orders Long-Term Planning (MPS) Capacity Requirement Planning Goods Receipt Figure 5 SAP Process in Production planning and Control Source Production Planning and Control with SAP by SAP PRESS

18 9 OPENBRAVO BACKGROUND Openbravo is the company that provide open-source software for ERP and POS (Point of Sale). It has the highest download open-source ERP in Openbravo ERP is a fully web-based and it is the only one system that clearly describe itself as having a focus on SME business. The head office is in Spain. Openbravo has framework in Production Planning and Control area as following. Demand forecast Planning Method Setting Planning Methods Process Plans Business Partners forecast Material Requirement Planning Production Management Demand forecast by customers Work requirements Sales Management Sale Orders Goods Receipt Figure 6 Openbravo framework in Production planning and Control Source Openbravo functional documentation

19 10 OBJECTIVES Due to the considered target is SME thus the study aims to provide the answers of the following questions. 1. By comparing with APICS Model, Does SAP can operate in Production Planning and control area for SME? 2. By comparing with APICS Model, Does Openbravo can operate in Production Planning and control area for SME? 3. By comparing with SAP Model, Does Openbravo can take place in Production Planning and control area?

20 11 LITERATURE REVIEW The literature review in this study is divided into two subjects which are The benefits of using open-source ERP for SMEs and The role of Production Planning in ERP. The benefits of using open-source ERP for SMEs According to the survey of Thomas Herzog (2005) represented that the most key advantage of open-source ERP are lower cost, commercial alternative and flexible. For SMEs, In this decade its environment has become more complex though globalization. Form the study of Johansson and Sudzina (2008), they pointed out that open-source ERP seem to be increasing for SMEs. They concluded that proprietary ERPs are dissatisfied for customers because they need many resources to implement while SME normally avoid increasing resource. By implementing open-source ERP the users and creators can share source-codes and develop ERP to match their business process and local regulations (Serrano and Sarriegi, 2006). From both study, it represent that SME customers who buy proprietary ERPs have a chance to pay more in resource needed. The cost is of hardware usually one-ten of the implementation project cost (ERP FAQs, 2007) while open-source ERPs do not need expensive hardware to run. From the study of Serrano and Sarriegi (2006) the cost of license fee for proprietary ERP is one-six to one-third of the implementation project cost. Customers can avoid this issue by using open-source ERPs. On the other hand, fee paid to a consultant for a specific open-source ERP is greater than proprietary ERP twice(danielsson, 2007). Open-source ERP itself has to pay not only a consultant but also the customization fee. Proprietary ERP can customize only regal requirements specified in the contact otherwise they have to pay more to the vendor company. Open-source ERP customers can avoid customization fees by using flexible ERP

21 12 package that suitable for each business. The study of Johansson and Sudzina (2008) presented that Openbravo ERP is the only system that clearly describe itself as having a focus on SME business. They suggested that this maybe cause Openbravo to be the highest download on world s largest open-source software development website. The role of Production Planning in ERP Implementation From the study of Injazz J. Chen (2001), one of the reasons that cause ERP failure is lacking of critical foundations. Many unsuccessful companies bypassed the Planning issues by implementation with all automation. When the problems were happened some of users blame on unreasonable expectations. They pointed back to the lack of support from software. This issue will never happen if the users understand the planning foundation from their ERPs. Moreover, the study of Metaxiotis, Psarras, and Ergazakis (2003) presented that scheduling is the most complicated area in ERP. All production scheduling systems suffer from the complexity of the job-shop scheduling problems. The number of possible schedules grows exponentially with a linear increase of resource or jobs to be planned. Figure 7 Complexity of the production-scheduling problem Source Production scheduling in ERP systems: An AI-based approach to face the gap (Metaxiotis, Psarras and Ergazakis, 2003)

22 13 METHODOLOGY The study sets comparing flowcharts among three models and considers by functionality. Comparing models are set by following. APICS Model versus SAP Model APICS Model versus Openbravo Model SAP Model versus Openbravo Model Summary tables gather details of all three models. The results of comparing are represented in term of purpose, input, process explanation, method and output. The conclusions are contained in the final part of each function.

23 14 RESULT ANALYSIS APICS : Business Planning or Sale and Operations Planning (SOP) SAP : Sale and Operation Planning (SOP) Part Forecast + Events Demand Plans Demand Plans Sale History Business Planning or SOP Sale and Operation Planning (SOP) Part Forecast + Events 1* Plan for Demand Plan for Supply 1* Plan for Demand Aggregate Sale Plans Supply Plan Demand Forecasts classify by product group MPS 2* Automatic process Resource Requirement Planning SOP : Part Capacity Leveling Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 8 A comparative flow chart of APICS Business Planning and SAP Sale and Operation Planning.

24 15 APICS : Business Planning or Sale and Operations Planning (SOP) Openbravo : Business Partners Forecast Demand Plans Demand Plans Customer List Business Planning or SOP Business Partners Forecast 1* Plan for Demand Plan for Supply 1* Plan for Demand Aggregate Sale Plans Supply Plan Demand Forecasts classify by customers MPS 2* Automatic process Resource Requirement Planning MRP Remark : * Number of a comparing couple. Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 9 A comparative flow chart of APICS Business Planning and Openbravo Business Partners Forecast.

25 16 SAP : Sale and Operation Planning (SOP) Openbravo : Business Partners Forecast Demand Plans Sale History Demand Plans Customer List Sale and Operation Planning (SOP) Part Forecast + Events Demand Forecasts classify by product group Business Partners Forecast Demand Forecasts classify by customers SOP : Part Capacity Leveling MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 10 A comparative flow chart of SAP Sale and Operation Planning and Openbravo Business Partners Forecast.

26 Table 1 Summary data of APICS Business Planning, SAP Sale and Operation Planning (SOP) and Openbravo Business Partners forecast. APICS: Business Planning (Sale and Operations Planning) Purpose Bring together all the plans for business into one integrated set of plans for minimum months. Input Demand Forecasts Production factors Supply constraints Process It is reviewed by top management explanati at product group level. on SAP: Sale and Operation Planning (SOP) To define the product type and quantities to be sold for 4-12 months. Demand Forecasts Sales History Standard SOP use product groups in conjunction with level by level planning. Openbravo: Business Partners forecast To define the product type and quantities to be sold for 4-12 months. Demand forecasts Customer list It is reviewed outside the system. Method Linear Programming Basic Disaggregation The users have to created spreadsheet and Mixed Integer Programming is in Level by Level Planning program manually and input to the system functions suggestion. Hierarchical Production Planning classified by customers. 17

27 Table 1 (Continued) APICS: Business Planning (Sale and Operations Planning) Method and Spreadsheet programs using functions demand and supply to formulate (Continued) Output Aggregate Sale Plans Supply Plan SAP: Sale and Operation Planning (SOP) Special quantity from events will be included in this step. Demand forecast classify by product group. Openbravo: Business Partners forecast Demand forecast classified by customers. 18

28 19 APICS : Master Production Scheduling (MPS) SAP : Long Term Planning (LTP) Business Planning Sale Orders Aggregate Sale forecasts Inventory Lot sizes Maintenance schedules Rough Cut Capacity Planning Work orders already placed Purchase order already placed Rough Cut Resource Planning Demand Management Operation Plan Inventory Sale Orders Creating scenario and Planning Capacity Leveling Transfer Sales & Distribution Firm Receipts Planned Orders CRP Master Production Scheduling (MPS) Master Production Schedule report Planned Independent requirement Firm Planned Orders MRP MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 11 A comparative flow chart of APICS Master Production Scheduling and SAP Long Term Planning (LTP).

29 20 APICS : Master Production Scheduling (MPS) Openbravo Business Planning Rough Cut Capacity Planning Business Partners Forecast Demand Forecasts classify by customers Sale Orders Aggregate Sale forecasts Inventory Lot sizes Maintenance schedules Work orders already placed Purchase order already placed Rough Cut Resource Planning Master Production Scheduling (MPS) Master Production Schedule report MRP MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 12 A comparative flow chart of APICS Master Production Scheduling and Openbravo.

30 21 SAP : Long Term Planning(LTP) Openbravo Demand Management Operation Plan Inventory Sales & Distribution Sale Orders Firm Receipts Planned Orders Business Partners Forecast Demand Forecasts classify by customers Creating scenario and Planning Capacity Leveling Transfer CRP Planned Independent requirement Firm Planned Orders MRP MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 13 A comparative flow chart of SAP Long Term Planning and Openbravo.

31 Table 2 Summary data of APICS Master Production Scheduling (MPS), SAP Long Term Planning (LTP) and Openbravo. APICS: Master Production Scheduling Purpose To plan how many of each item will be manufactured in each period. Input Sale Orders Aggregate Sale Plan Inventory Work orders already placed Purchase order already placed Lot sizes (user define) Rough Cut Resource Planning Maintenance schedules SAP: Long Term Planning (LTP) To simulate planning on long-term to medium-term requirement and capacity Planned Independent requirement (from DM) Sale orders Inventory planned order Firm receipts Openbravo MPS is not represented in Openbravo. All product classes is calculated in MRP level. 22

32 Table 2 (Continued) APICS: Master Production Scheduling SAP: Long Term Planning (LTP) Process MPS will be calculated when the available inventory The system uses demand from explanation is less than Actual orders or Sale forecasts (use the DM which is fixed to calculate greater) next period s plan then check capacity again. Method and Order promising Use Time-Phased record functions On-Hand Available = Previous On-Hand + MPS (MPS technique) Actual order/sale forecasts (use the larger) + order Capacity Leveling (To already placed check capacity again) MPS : Compute when Actual order/sale forecasts is greater than On-Hand + order already placed, depends on how to define lot sizes. ATP = On-Hand + MPS - Actual before next MPS Output Master Production Schedule report Planned Independent requirement Firm planned orders Openbravo ATP for Openbravo will represented in Sales Management (SM) Formula: ATP : = On-Hand Order reserved 23

33 24 APICS : Rough-Cut Capacity Planning (RCCP) SAP : Sale and Operation Planning (SOP) Part Capacity Leveling Available Capacity MPS Available Capacity Demand Forecast Rough-Cut Capacity Planning (RCCP) Sale and Operation Planning (SOP) Part Forecast + Events Overload Report Overload report Operation Plan Demand Management Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 14 A comparative flow chart of APICS Rough-Cut Capacity Planning and SAP Sale and Operation Planning Part Capacity Leveling.

34 25 APICS : Rough-Cut Capacity Planning (RCCP) Openbravo : Business Partners Forecast Demand Forecasts classify by customers Available Capacity MPS Rough-Cut Capacity Planning (RCCP) Overload Report MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 15 A comparative flow chart of APICS Rough-Cut Capacity Planning and Openbravo.

35 26 SAP : Sale and Operation Planning (SOP) Part Capacity Leveling Openbravo : Business Partners Forecast Demand Forecasts classify by customers Available Capacity Demand Forecast Sale and Operation Planning (SOP) Part Forecast + Events Overload report Operation Plan MRP Demand Management Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 16 A comparative flow chart of SAP Sale and Operation Planning Part Capacity Leveling and Openbravo.

36 Table 3 Summary data of APICS Rough-Cut Capacity Planning (RCCP), SAP Sale and Operation Planning (SOP) Part Capacity Leveling and Openbravo. APICS: Rough-Cut Capacity Planning (RCCP) Purpose To calculate does the capacity meet the gross requirement Input Available Capacity MPS (Gross requirement) Process Use routing to find the specific explanation resources and check the constraint Method Capacity Planning Using Overall and Factors (CPOF) functions Formula: Available = Maximum Capacity Capacity Requirement: The negative SAP: Sale and Operation Planning (SOP) Part Capacity Leveling To obtain the corresponding planning data for production. Available Capacity from work centers) Demand Forecast Users have to create a rough cut profile by selecting among work center, material, tool, cost Capacity Leveling : Rough-Cut planning Formula: %cap. Load = (cap. requirement / available cap. ) x 100 Openbravo There is no Rough Cut capacity for Openbravo. The planners have to create a plan to satisfy market demand within the resource available outside the system. The only one capacity planning that will represent in Openbravo Version 2.5 MP9 is daily capacity planning. 27

37 Table 3 (Continued) Method and functions (Continued) Output APICS: Rough-Cut Capacity Planning (RCCP) SAP: Sale and Operation Planning (SOP) Part Capacity Leveling available means overload : If %cap. Load >100 means overload The result of how many resources are Operation Plan overloaded and which are they A corresponding message will be displayed in case of a capacity is overloaded Openbravo 28

38 29 APICS SAP : Demand management Business Planning SOP Operation Plan Sale Orders Time-Based Disaggregation Operation Segment Assignment Consumption MPS Planned Independent requirement MRP Long Term Planning Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 17 A comparative flow chart of APICS and SAP Demand management.

39 30 APICS Openbravo : Planning Method Setting Business Planning Business Partner Forecast Demand forecast by customers Select Type of demands Define available period for methods Planning Methods MPS MRP Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 18 A comparative flow chart of APICS and Openbravo Planning Method Setting.

40 31 SAP : Demand management Openbravo : Planning Method Setting SOP Business Partner Forecast Operation Plan Demand considered by RCCP Sale Orders Demand forecast by customers Demand not considered by any capacity plan Time-Based Disaggregation Operation Segment Assignment Select Type of demands Consumption Define available period for methods Planned Independent requirement Planning Methods MRP Long Term Planning MRP Remark : * Number of a comparing couple Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 19 A comparative flow chart of SAP Demand management and Openbravo Planning Method Setting.

41 Table 4 Summary data of APICS, SAP Demand Management and Openbravo Planning Method Setting. APICS SAP: Demand Management Openbravo: Planning Method Setting Purpose Demand Management in the meaning of APICS is to prioritize all demands and rough-cut before sending To establish what quantities to be produced at what times. To select which demand and supply types will be allowed to MRP at what times. Input to Production Planning. Operation Plan Sale orders (Not use due dates) APICS define that Demand Sale orders (due dates also using) Demand forecasts management is the function of Total Material requisitions Enterprise Integration (TEI) which is Work requirements not ERP. Purchase order Process The forecast demand will be split in A planning method will tell that explanation to periods. Sale orders will also take place forecast demands in the same period. in one period setting which demand and supply type are allowed to MRP. Users also have to set how long of the planning methods are available in the system. 32

42 Table 4 (Continued) Method and functions APICS SAP: Demand Management Openbravo: Planning Method Setting Time-based disaggregation Select strategy : Most common are made to stock and made to order. Sale consumption Select Strategy : Make to stock : Select all demands. Make to order : Select only sale order Output Planned Independent requirement Planning method and period 33

43 34 APICS : Material Requirement Planning (MRP) SAP : Material Requirement Planning (MRP) Procurements MPS Procurements Demand Management Progressed Purchase Requisitions BOM Inventory Gross Requirements Safety stock Progressed Planned Orders Progressed Purchase Requisitions Scrap yield BOM Inventory Planned Independent Requirements Safety stock Production Orders Scrap yield Net Requirement Calculation Scheduling Purchase Requisitions Check Planning File Net Requirement Calculation Procurement Quantity Calculation Scheduling Planned Orders Purchase Requistions Production Activity and Control Planned Orders Production Order Creation Production Execution Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 20 A comparative flow chart of APICS Material Requirement Planning and SAP Material Requirement Planning

44 35 APICS : Material Requirement Planning (MRP) Openbravo : Material Requirement Planning (MRP) Procurements Progressed Purchase Requisitions BOM MPS Gross Requirements Safety stock Planning Method Setting Planning Methods Business Partner Forecast Demand Forecasts Inventory Progressed Planned Orders BOM Inventory Safety stock Planned Orders Net Requirement Calculation Scrap yield Scheduling 1* Monthly Weekly Daily Net Requirement Calculation Scheduling 1* Daily Purchase Requisitions Planned Orders Production Activity and Control Purchase Requistions Planned Orders Production Management Remark : * Number of a comparing couple Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 21 A comparative flow chart of APICS Material Requirement Planning and Openbravo Material Requirement Planning

45 36 SAP : Material Requirement Planning (MRP) Openbravo : Material Requirement Planning (MRP) Procurements Progressed Purchase Requisitions Scrap yield BOM Inventory Demand Management Planned Independent Requirements Safety stock Production Orders Check Planning File Planning Method Setting Planning Methods BOM Inventory Business Partner Forecast Demand Forecasts Safety stock Planned Orders Net Requirement Calculation Procurement Quantity Calculation Scheduling Purchase Requistions Planned Orders 1* Backward Scheduling - Monthly - Weekly - Daily Net Requirement Calculation Scheduling Purchase Requistions Planned Orders 1* Forward Scheduling - Daily Production Order Creation Production Execution Production Management Remark : * Number of a comparing couple Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 22 A comparative flow chart of SAP Material Requirement Planning and Openbravo Material Requirement Planning

46 Table 5 Summary data of APICS Material Requirement Planning, SAP Material Requirement Planning and Openbravo Material Requirement Planning. APICS: Material Requirement Planning (MRP) Purpose To produce right item, in the right quantity, at the right time Input MPS (Gross requirement) Inventory Safety stock Progressed Purchase Requisition Progressed Planned orders Scrap yield BOM Process Compute Net requirements for each explanation of their components by exploding the BOM. SAP: Material Requirement Planning (MRP) To calculate net requirements of materials to fulfill demand program and create planned order. Planned Independent requirements Inventory Safety stock Progressed Purchase Requisition Progressed Planned or production orders Scrap yield BOM Compute Net requirements for each of their components by exploding the BOM and determine basic dates again Openbravo: Material Requirement Planning (MRP) To created work requirements and material requirements base on product demand. Demand Forecasts Inventory Safety stock Planning methods Planned order (Suggested work requirements) BOM The product trees are exploded and all products related are planned. 37

47 Table 5 (Continued) APICS: Material Requirement Planning (MRP) Method Formula : and Project Available = Previous + functions Schedule receipts + Planned order receipts Gross requirement safety stock Net requirements = Negative Project Available Lot size : Fixed, EOQ, lot for lot technique Output Planned orders Purchase requisition MRP Reports SAP: Material Requirement Planning (MRP) Material requirement planning method Available Stock = Plant stock Safety stock + Planned order receipt + Schedule receipt Requirement quantity x (1+ scrap yield) Net requirements = Negative Available stock Backward scheduling method Lot sizes: SAP provide over 13 selection lot sizes including EOQ and fixed lot size. Planned orders Purchase requisition MRP reports Openbravo: Material Requirement Planning Formula : Net requirements = Demand forecast+ Safety stock Inventory Planned Orders Proposal lot size : Selecting Fix lot size and round up Multiple fixed value Lot for lot Planned orders (work requirements) Purchase requisition MRP reports 38

48 39 APICS : Capacity Requirement Planning (CRP) SAP : Capacity Requirement Planning (CRP) MRP MRP Planned orders Routings Feedback (delayed orders) Planned orders Routings Feedback (delayed orders) Work Center Capacity Maintenance Schedule Work Center Capacity Capacity Requirement Planning Capacity Requirement Planning Planned Orders Alarms or Report for Overloaded Production orders Alarms or Report for Overloaded Production Activity and Controls Long Term Planning Production Order Creation Planned Orders Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 23 A comparative flow chart of APICS Capacity Requirement Planning and SAP Capacity Requirement Planning.

49 40 APICS : Capacity Requirement Planning (CRP) Openbravo MRP Planned orders Routings Work Center Capacity Feedback (delayed orders) Maintenance Schedule MRP Planned Orders Capacity Requirement Planning Planned Orders Production Activity and Controls Alarms or Report for Overloaded Production Management Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 24 A comparative flow chart of APICS Capacity Requirement Planning and Openbravo.

50 41 SAP : Capacity Requirement Planning (CRP) Openbravo MRP Planned orders Routings Work Center Capacity Feedback (delayed orders) MRP Planned Orders Capacity Requirement Planning Production orders Alarms or Report for Overloaded Long Term Planning Production Order Creation Production Management Planned Orders Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 25 A comparative flow chart of SAP Capacity Requirement Planning and Openbravo.

51 Table 6 Summary data of APICS Capacity Requirement Planning, SAP Capacity Requirement Planning and Openbravo. APICS: Capacity Requirement Planning (CRP) Purpose To predicts which resource will have capacity problems. Input Planned orders from MRP Shop Floor control/feedback (delayed orders) Work center capacity Maintenance schedule Routings Process Find the specific resources base explanation on routings and check which resource constraint will be exceeded Method Capacity Leveling and functions SAP: Capacity Requirement Planning (CRP) To check the feasibility of scheduling and create a sequence of operation. Planned orders from MRP Shop Floor control/feedback (delayed orders) Work center capacity Routings Base on routings,crp check the overload of the capacity on each work center. Capacity Leveling: Time Consideration. Formula : Openbravo: Business Partners forecast There is no capacity planning for Openbravo. Users have to calculate outside base on daily capacity and set in product configurations. Formula: Daily capacity = Machine run rate x work hour To avoid overload in one period, before process work requirements user have to check: Work req. qty released (daily capacity x days of production) 42

52 Table 6 (Continued) APICS: Capacity Requirement Planning (CRP) Method Over / Under Load = Delay from the (Continued) previous + requirement capacity available capacity Overload : Positive number Underload : Negative number Output Planned orders The alarms or reports show which resources will have capacity problems SAP: Capacity Requirement Planning (CRP) Capacity Req = ( Standard value x Order quantity ) / Base quantity Base qty: Max. qty of each work center Standard value: Setup time + Machine time + Labor time The capacity will not allowed to confirm if it is overload. Planned orders to Long Term Planning Production orders to Production Order Creation The alarms or reports show which Openbravo: Business Partners forecast 43

53 44 APICS : Production Activity and Control + Operation Sequencing + Input / Output control SAP : Production Order Creation + Production Execution MRP MRP Planned orders Planned orders Release Orders Convert Plan orders to Production orders Scheduling Production orders Scheduling Production Release Production orders Withdrawing material Finish Products Confirmation Production Good receive Completion Finish Products Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 26 A comparative flow chart of APICS Production Activity and Control + Operation Sequencing + Input / Output control and SAP Production Order Creation + Production Execution

54 45 APICS : Production Activity and Control + Operation Sequencing + Input / Output control Openbravo : Production Management MRP MRP Planned orders Release Orders Scheduling Process plans Planned orders / Work requirements Release Planned Orders Production Production Create work efforts Finish Products Validate work efforts Close Work requirements Finish Products Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 27 A comparative flow chart of APICS Production Activity and Control + Operation Sequencing + Input / Output control and Openbravo Production Management

55 46 SAP : Production Order Creation + Production Execution Openbravo : Production Management MRP MRP Planned orders Convert Plan orders to Production orders Production orders Scheduling Release Production orders Withdrawing material Confirmation Production Good receive Completion Process plans Planned orders / Work requirements Release Planned Orders Production Create work efforts Validate work efforts Close Work requirements Finish Products Finish Products Remark : Color definitions Have in Both Model Only this model has Has full capability Has partial capability Figure 28 A comparative flow chart of SAP Production Order Creation + Production Execution and Openbravo Production Managemen

56 Table 7 Summary data of APICS Production and Activity Control (PAC) + Operation Sequencing + Input / Output control, SAP Production order creation + Production Execution and Openbravo Production Management. APICS: Production and Activity SAP: Production order creation + Openbravo: Production Management Control (PAC) + Operation Sequencing + Input / Output control Production Execution Purpose To release orders and do shopfloor scheduling and controls. To convert/create planned order to production orders and scheduling. To operate the planned orders (Work requirements) in shop floor. To operate the production orders in shop floor. Input Planned orders Planned orders Planned Orders Process Plans Process 1. Order release 1. Convert planned order to 1. Release Planned Order explanation 2. Shop-floor scheduling and control production orders 2. Production 2. Scheduling 3. Create work effort 3. Release Production Orders 4. Validate work effort 4. Withdrawing Material 5. Close work requirement 5. Confirmation 47

57 Table 7 (Continued) APICS: Production and Activity SAP: Production order creation + Openbravo: Production Management Control (PAC) + Operation Sequencing + Input / Output control Production Execution Process 6. Production explanation 7. Good receipt (Continued) 8. Completion Method and Most commonly used Finite Scheduling Print out papers to shop floor. functions Gantt Charts Backward scheduling User key actual data back to the Priority Sequencing Rules Users print out production orders papers system to confirm. Theory of Constraints Scheduling to shop floor. Output Finished Products Finished Products Final Products From the result of all comparisons the summary for three models are represented as following. 48

58 Table 8 Summary of three models. Models / APICS SAP Openbravo Remark for SAP and Openbravo using in SME Functions SOP 50% 50% Both SAP and Openbravo should create Supply Plan or Capacity Plan. MPS Openbravo user should monitor MPS by providing spreadsheets outside the system. RCCP Openbravo user should do RCCP by providing spreadsheets outside the system. MRP 80% Openbravo should add automatic scheduling process in MRP. CRP Openbravo should add Capacity Requirement Planning Function. PAC 80% Scheduling in PAC can be ignored if they are automatically in MRP process. DM 50% It is necessary for the business that has complex products. Symbol Remark : Have full function, Not have function and % Have partial function. 49

59 50 CONCLUSION AND RECOMMENDATION CONCLUSION Business Planning By comparing with APICS model, SAP and Openbravo have partially capability because they do not have Supply Plan or Capacity Plan. SAP and Openbravo have the same process in this area. The method of SAP is automatic while Openbravo is Manual. SME need Supply plan to be a guide line for capacity planning. Master Production Scheduling By comparing with APICS model, SAP has Long Term Planning (LTP) to compare. For Openbravo, we can see MPS by tagging data from the system and do manually in spreadsheets. SME need MPS to be a guide line for sale target. Rough-Cut Capacity Planning Rough-Cut Capacity Planning in APICS operates data from MPS while SAP calculates base on production rates. Openbravo does not have Rough-Cut capacity planning. SME should either has rough-cut capacity planning or calculate manually before sending data to MRP. 50

60 51 Demand Management For ERP Class APICS does not have Demand management. By comparing with SAP, Openbravo has one same function that is defining time period for demand. Demand management is essential for SME that has complex product. Material Requirement Planning APICS and SAP model have the same MRP process. By comparing with APICS model, Openbravo has partial function due to Demand data is raw and no scheduling theory in Openbravo There is rough scheduling in Openbravo related with daily capacity of each product. SME need Net requirement process but for scheduling, it can do manually because scheduling is the most complex process in ERP. The system need more resources to create this function. Capacity Requirement Planning Both APICS and SAP model have Capacity Requirement Planning but different methods. Openbravo does not have Capacity Requirement Planning. Capacity Requirement is essential for SME. Production Activity & Control + Operation Sequencing + Input/Output Control APICS does not define details in shop-floor due to they are depend on individual specific for each ERP. SAP has all APICS requirements. Openbravo does not have scheduling in shop-floor control. SAP and Openbravo shop floor processes are totally different after releasing 51

61 52 orders. Scheduling in Shop Floor is not essential for SME. 52

62 53 RECOMMENDATION According to the conclusion from the previous part SAP and Openbravo have some recommendations to develop by following APICS model. For SAP Production Planning and Control, although it can operate in SME but one of component that SAP should create for planners is supply plan. Supply plan is the report that shows all available capacity of resources. The planners will able to see how much they can increase or reduce demand and then they can quickly respond to top managements. The suggestive framework for SAP is represented as below. Sale History + Demand Forecast Operation Planning Planed Independent Requirements Sales and Operations Planning + Supply Plan Demand Management Sales and distribution Sale Orders Planed Independent Requirements Sale Orders Purchase Requisitions Procurements Good Issue Components Material Requirements Planning Planned Orders Production Order Creation Production Orders Production Execution Planned Orders Production Orders Long-Term Planning (MPS) Capacity Requirement Planning Goods Receipt Figure 29 Suggestive framework for SAP 53

63 54 For Openbravo, there is no MRP II function (Resource Planning) in the current version. To serve all SME types in the future, Openbravo teams should created MRP II functions in their ERP. By following APICS model, the suggestive framework for Openbravo is represented as below. Demand Forecast Planning Method Setting Planning Method Sales Management Sale Orders Business Partners forecast Demand forecast by customers Master Production Scheduling Demand Planned Material Requirement Planning Work requirements MRP II Resource Planning Rough Cut Capacity Planning Supply Plan Capacity Requirement Planning Overload report Process Plans Production Management Goods Receipt Figure 30 Suggestive framework for Openbravo 54

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