Management briefing Is an ERP system always enough? Discover why there s very little planning in enterprise resource planning (ERP) and what to do about it Production Planning & Scheduling
An ERP system delivers the bad news but provides little help in responding intelligently to changed circumstances Planning with an ERP system is like driving with your eyes glued to your rearview mirror. Crashes, in the form of missed delivery dates, the piling up of excess inventory, and unnecessarily long lead times, are almost inevitable. ERP are often excellent at doing what they are supposed to do but they also have limitations. Read on to find out what those limitations are and how to overcome them. Supply chain planning & optimization 2
What an ERP system can do. And what it can't. Your ERP system excels at tracking data as it flows through your organization and providing immediate access to accurate information. It was never intended to function primarily if at all as a planning tool. To illustrate, imagine that you could equip your planners with any planning capability you chose. Which would be most helpful? You d probably decide that a truly intelligent planning system should at least: Inform planners when something isn t going according to plan Highlight all the consequences of a change or disruption Make suggestions that help planners respond optimally An ERP system provides only one of these three fundamental requirements. It delivers the bad news but provides little help in responding intelligently to changed circumstances. Supply chain planning & optimization 3
The connection between delivery performance and intelligent planning Consider what happens when a customer calls with an order. To quote an accurate delivery date within seconds, you need to plan material and capacity simultaneously, while considering everything that affects your ability to deliver that order on time. For example: Do you need more raw material or can the order be produced from intermediate stock? Is the preferred production route already overloaded? Which orders should take priority? How much time would be lost if the order misses scheduled transport? Should you accept the order outright, propose another date or offer partial fulfillment? Supply chain planning & optimization 4
Planners need the support of an intelligent planning system that provides visibility into all the consequences of a disruption and offers insights into minimizing its impact. Of course, arriving at an accurate date is only the first step. Actually achieving it requires: Convincing sales that the date is indeed optimal and has been determined after considering all alternative production and procurement routes Creating a plan that can be executed by production and incorporates all relevant constraints Ensuring compliance by tracking sales and production KPIs that influence delivery performance Safeguarding the due date with daily re-planning and real-time KPI-based insights into the best ways to mitigate the effects of disruptions what-if scenarios that expose the consequences of accepting mega orders Determining a reliable due date and achieving it requires more than after-the-fact exception reports from an ERP system. Your planners need the support of an intelligent planning system that: Provides immediate KPI-based feedback on the quality of decisions even before those decisions are implemented Supports planners with access to automatically generated plans that optimize KPIs and minimize violations of business rules and constraints Ensures visibility into all the consequences of a disruption and offers insights into minimizing its impact. In other words, you need the interactive, simultaneous planning of material and capacity of a supply chain planning and optimization (SCP&O) solution. Supply chain planning & optimization 5
This isn't about extending your ERP system. It's about complementing it with an SCP&O solution that enables your planners to plan for profit. The way ahead Real planning gives you the control you need to meet delivery dates and achieve your business goals. This isn t about extending your ERP system it s about complementing it with an SCP&O solution that enables your planners to plan for profit. Such a system should: Fit your business rules perfectly Enable your planners to focus on adding value to your business As compromising on these requirements can be an expensive mistake, let s explore both. Require a perfect fit with your business rules Your planning and scheduling system should fit your operations perfectly. Look for a solution that enables you to achieve your business goals on your terms, rather than one that requires you to sacrifice your unique business model to accommodate the software. In our experience, it s often the seemingly trivial things that break a plan. A manufacturing plan that doesn t address a manufacturing constraint cannot be used. Don t overwhelm planners with what they don t need Imagine being faced with the combined dashboards of a nuclear power plant, fighter jet and ocean liner, when all you want to do is drive a car. Planners who are overwhelmed by unnecessary information and irrelevant choices are going to spend the bulk of their time filtering through data rather than planning. Supply chain planning & optimization 6
Choosing to maximize your return on investment Tip 1: Prioritize business benefits The added value of a best-of-breed SCP&O solution can far outweigh the convenience of implementing a planning module from your ERP vendor. A best-ofbreed solution is one that demonstrates significant business benefits and integrates seamlessly with your ERP system. Tip 2: Demand the best of both worlds Expect your SCP&O solution to provide the perfect fit of a bespoke solution and the cost advantages of standard software. This best-of-both-worlds approach gives you standard software that is easy to maintain yet flexible enough to capture your unique business model the very thing that sets you apart from your competitors. Supply chain planning & optimization 7
To learn more about planning, scheduling and optimization across your supply chain from manufacturing and logistics, to planning your workforce visit www.quintiq.com. Offices: www.quintiq.com/locations Email: info@quintiq.com Web: www.quintiq.com Supply chain planning & optimization 8