Page 226 - DCAP302_ENTERPRISE_RESOURCE_PLANNING

Enterprise Resource Planning

notes unit 14: case study – erp application on supply chain

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Case Study optimizing the supply chain: Baans’ perspective
his study aims to emphasize the importance of planning in the process of supply
chain as there is scope for enormous savings by making supply chains effective. For
Tthis, ERP (Enterprise Resource Planning) applications are used to streamline and
integrate business processes. But most of these applications have shortcomings such as
sequential approach for planning, lack of constraint identification, lack of visibility, static
lead times and level of details used for capacity planning. A new class of planning software
called APS (Advanced Planning and Scheduling) refutes these problems and it works on
popular constraint – based techniques.
Keywords: Enterprise Resource Planning, Advanced Planning and Scheduling, leadtimes,
BaanSCS, Materials Requirement Schedule, Material Requirements, Planning Capacity
Requirements.
introduction
The intricate complexity of today’s supply chains is staggering. Sales, supply, production,
distribution – all must be deftly balanced and seamlessly integrated if one wants to compete
in the global market place. However, these supply chains are far from efficient – billions of
dollars in potential savings lie trapped in inefficient supply chains. Intelligent supply chain
management represents the single greatest opportunity for increasing market share, cash
flow and profits. It enables you to make informed decisions along the entire supply chain,
from acquiring raw materials to manufacturing products to distributing finished goods to
the consumer.

Companies seeking to re-engineer their supply chains have taken a variety of approaches.
Many companies implement ERP (enterprise resource planning) applications, to solve this
problem. These applications contain capabilities such as inventory management, material
planning, order processing, procurement, shop – floor management and finance. ERP
systems allow companies to streamline and integrate business processes by improving
information flow and velocity, both within a company’s supply chain, as well as, externally
with trading partners.

Beyond erp: supply chain solutions
Planning is a fundamental process that occurs across the entire supply chain and impacts all
aspects of the demand fulfillment process – from procuring raw materials and transforming
them into a finished product, to delivering that product to customers. However, for most
ERP systems, their planning environment has several shortcomings.
Traditional ERP systems use a sequential approach to derive a plan. First, a Master Production
Schedule (MPS) is created, which provides the basis for Material Requirements Planning
(MRP), and, after this step, attempts to perform Capacity Requirements Planning (CRP).
Unfortunately, this approach considers material and capacity as independent variables at
each stage that results in an infeasible plan. To resolve this, MRP’s logic advocates iterating
this sequence multiple times to adjust for changes made at each step. Soon these actions
become very confusing due to the complexity of the planning problem and the scope of the
product – mix being planned. Consequently, the planner starts planning with more slack
to protect the feasibility of his plan.
Contd...

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