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APS Implementation Best Practices

John Barcus Senior Director, Supply Chain Applications Oracle Industry Business Unit

Abstract

Advanced Planning Systems have been credited with lowering costs, increasing efficiencies, and dramatically improving customer satisfaction. What are the challenges that a company faces when deciding to upgrade to an Advanced Planning Solution? Come learn how to overcome the challenges of upgrading to an Advanced Planning System, the benefits of implementing Oracle ASCP over Oracle MRP, and how to improve your supply chain practices to reduce your costs, improve efficiencies, and improve customer satisfaction.

Agenda

Common Business Challenges Advanced Planning Concepts Oracle APS vs. Oracle MRP Additional APS Capability Q&A

Does your business have any of these challenges? Customer service issues Constant reschedules Too much of the wrong inventory Manual disconnected planning processes (Excel) Too much obsolete inventory No formal S&OP Process Disparate Planning Systems Multiple source systems Competitive issues Inflexible planning tools Fragmented planning data Poor forecasting capability Global supply chain requirements Changing business conditions

The business environment is getting more competitive


Customers are demanding: Accurate and timely commitments Shorter lead times Flexibility Product differentiation Dedicated inventory Visibility into the supply chain High quality Automation Lowest costs Forcing businesses to better manage: Inventories Ability to promise Global suppliers Supply/Demand Forecasts Cycle time Stocking policies VMI/SMI processes Replenishment
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Increasing business risks of : Too much inventory Inventory in the wrong place Ordering the wrong inventory Missing delivery dates Losing orders Shipping the wrong products Increased expediting costs Losing customers Increased obsolescence

Todays Market Reality

Orders: 20% filled imperfectly Forecasts: only 65% accurate Markdowns: on 30% of merchandise sold Inventory: $1.2 trillion stockpiled in the supply chain New Products: 75% fail to meet forecast expectations

Agenda

Common Business Challenges Advanced Planning Concepts Oracle APS vs. Oracle MRP Additional APS Capability Q&A

Evolution of Planning
1960s MRP Material Requirements Planning Time Phased Pegging Logic Infinite Capacity Open Loop Does not account for capacity MRP II Closed Loop Visibility into constraints Visibility into financial budgets Financial reporting ERP Enterprise Resource Planning Closed loop system Includes financials and enterprise activities APS Advanced Planning Systems Made possible with more computer processing power Optimization capability More flexible capability

M R P M R P 2 E R P A P S

1970s 1980s 1990s


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Impact of data on advanced planning implementations

For the most part. Data requirements and setups are the same, reliance on good data is greater

Impact of Data/Risk

Oracle ASCP Scope can match any of these concepts MRP MRPII Planning Concept
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Advanced Planning

Bad Data Impacts all Planning BOM Example The more you rely on the system, the greater the impact
End Assy Qty 1 Mfg Lt 3

Data dependency is similar for MRP and Advanced Planning Effective MRP requires good data
Purch 1 Qty 1 Purch Lt 5

Sub Assy X Qty 2 3 Mfg Lt 2

Purch 2 Qty 1 Purch Lt 3

Purch 3 Qty 1 Purch Lt 5

Negative impacts can be significantly increased in advanced planning Constraints can automatically move related items Automated actions based on exceptions Material Requirements Planning (MRP) Not enough Subassy, Purch2, or purch3 ordered

Advanced Planning (APS) Not enough subassy, purch2, purch3 Schedules for End Assy and Purch1 moved out Automatic messaging

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Supply Chains are becoming much more efficient

Total Business Inventories/Sales Ratios


(US Census Bureau)

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Improved Sales and Operations Planning


Companies that excel at S&OP outperform their competition Percent performance 00 0% 0% 0 0% 0 0% 0 0% 0 0 % Complete order Percent gross fill rate margin Percent customer retention
Laggard Industry norm Best-in-class

Source: AberdeenGroup
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Agenda

Business Challenges Advanced Planning Concepts Oracle APS vs. Oracle MRP Additional APS Capability Q&A

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MRP/Advanced Planning Terms Separate product from Concept/Process


MRP Concepts/Process Definitions MRP Time phased Material Requirements Planning process used for netting requirements to meet demand ERP Enterprise Resource Planning. Closed loop planning process that takes into account enterprise requirements. MRPII Adds the ability to visualize and manage constraints including enterprise budgets, etc. Advanced Planning Can include automations, optimization, and extension of supply chain to include customers and suppliers Oracle Product Definitions MRP Standard MRP single organizational unconstrained planning tool (Can do MRP or non-automatic MRPII) ASCP Advanced planning tool that is capable of planning single organizational unconstrained plans through automated enterprise wide optimized planning (Can do MRP, MRPII, and more)

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Common Objections Why companies choose to not implement APS

We are not ready for Advanced Planning Advanced Planning is too complicated for our planners Our data is not good enough for Advanced Planning APS is much more expensive to implement Training is much more difficult

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Answers to common Objections APS Can be as easy as MRP to implement Need to separate the concepts from the products Oracle APS can be implemented with the very same scope as MRP The planning processes can be very similar Oracle APS uses the same setups as MRP Oracle APS can be implemented in an unconstrained mode Implementing additional Oracle APS functionality can be incremental

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Incremental Solution ASCP can be implemented incrementally


Allows for a building block approach Walk before you run Implement additional functionality
when you are ready Uses same data and setups as Oracle MRP Some increased dependencies on data quality Additional data requirements can be setup incrementally in the source system Can test additional functionality without going into production Plan comparisons

ASCP Optimized Constrained Unconstrained MRP APS Common Infrastructure

Oracle Applications (11.0, 11i)

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ASCP - Managing Scope Scope Decisions to keep costs/complexity down


Very easy to add additional scope to solve business problems Additional functionality can be easy to justify Additional scope adds complexity, timing, and costs If these are a concern then scope can be limited Incremental scope increase may not seem significant If deciding between ASCP or Standard MRP to do simple organizational MRP It is possible to keep scope similar to Standard MRP Unconstrained Planning Using MDS (same as MRP Approach) Planning Instance as a part of source instance Minimal implementation costs associated with separating instance Plan by single Organization Sourcing complexity

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Unconstrained ASCP Make better decisions


Use a single plan to plan your entire supply chain to reduce planning cycle time
Simultaneous material and capacity planning Plan process and discrete mixed models Perform forecast consumption inline

Plan at aggregate level, as well as detailed level in a single plan, with better accuracy
Time granularity in plan horizon Account for yields

Leverage advanced problem solving and analysis tools


Comprehensive exception management and automation through workflow Extensive pegging capabilities

Measure plan to target performance


Integrated performance management

Oracle Advanced Planning Model


E-Business planning solution: zero latency, real-time collaboration
Customers Suppliers
Tier 2

Enable closed loop


collaborative planning processes across your value chain

Tier 1

Have complete supply chain


Portal Portal Internet Automated Exceptions

visibility

Make better decisions React immediately to


disruptions in supply chain

Marketing Manufacturing Sales Demand Hub & Multidimensional analysis S&OP Process Consensus forecast and prod. plan Single holistic plan Supply Planning

Build a responsive Supply Chain on INFORMATION not inventory

Mfg.

Business Intelligence

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Holistic Planning and Optimization


Highly adaptable to your business segment problem as needed
One holistic plan

Adapts to your current


SCP for all Organizations

One DRP, multiple DRP


DRP for all Orgs

business model Single plan or multiple plans

Evolve planning model at your


own pace Re-configure easily by modifying plan options instead of re-implementing or re-modeling

MRP Org 1 MRP Org 2 MRP Org 3

Multiple MPS, multiple MRP


MPS for BU 1 MPS for BU 2

Multiple models can co-exist


MRP Org 1 MRP Org 2 MRP Org 3 MRP Org 4 MRP Org 5 MRP Org 6

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Holistic Planning and Optimization


For planners, not programmers built-in optimization

Make better decisions faster Level load Choose alternatives Make or buy decisions Out-of-the-box optimization Use cost or decision rules Start quickly Planners define the
problem to solve Flexible defaulting

Reduce planner workload


GE AE has moved from running separate plans in 36 facilities to running a single holistic plan across their DCs, end-assembly, contract manufacturing, and component shops, and as a result has reduced their planning organization significantly

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Ability to define and compare multiple plans Plan different scenarios with different plan options

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Improved Planner productivity Powerful easier to use analysis tools

Personal Queries Improve Planner Efficiency

Scalable and Open Architecture Database centric architecture: scalable, robust, secure
Trading Partners Internal Users

High performance

In-memory only when needed Multi-threaded snapshot Leverages key database features Portal Portal like materialized views, partitions, and analytical workspaces Internet Reliable Analytical Workspaces Order Promising All plan information resides in the Engine database Oracle ERP Hot backup and recovery APIs KPIs Workflows Plans Leverages grid computing Advanced Planning infrastructure XML EDI Open and standards based Flat file Runs against all versions of Oracle Legacy Systems EBS - 10.7, 11.0, 11i Cochlear, Embraer, FXAP, NCR, Interceramic, GE Deploy against legacy systems Legacy Deployments Aircraft Engines, Perkin Elmer, Xilinx, XML, flat file, EDI support

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Oracles Planning Data Hub Single Repository for all Planning Data

Inventory Optimization

Not a separate product, part of the current APS application Single data repository for all planning data, enabled with ASCP Common robust data model Secure and reliable database technology Reporting and data comparison capability Plan comparison capability Integration tools with templates provided out of the box Flexible integration tools (XML, AS, Flatfiles, etc.) Tools available for VMI capability Workflow enabled technology

KPIs

Demand Planning Analytical Cube

Collaborative Planning Workflows

Multiple MPS, multiple MRP

One DRP, multiple DRP

One holistic plan

MPS for BU 1

MPS for BU 2

DRP for all Orgs

SCP for all Organizations MRP MRP MRP MRP MRP MRP Org 1 Org 2 Org 3 Org 4 Org 5 Org 6 MRP Org MRP OrgMRP Org 3 1 2

Operational Data Store

XML EDI Flat file Data Sources

XML EDI Flat file

Oracle 11.0

Oracle 11i

Othe r

Othe r

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Process Automation Reduce planners workload through workflow automation


Automated end to end planning
process DP IO ASCP GOP CP Automated plan execution Auto-release orders and reschedule recommendations Configurable exception management Workflow enabled exceptions User-defined exceptions Configurable thresholds

Kyocera has workflow-enabled their planning process to the extent where their planners manage all the plan exceptions by responding to email notifications

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ASCP Scope Planning Run Setup


Solutions Enabled with ASCP Standard MRP Forecasts Sales Orders Load Forecasts Directly Forecasts Sales Orders Single plan with Different Aggregations Forecasts Sales Orders

MDS

MPS

Holistic Plan

MPS

MRP

MRP
Implementing with Same scope as Standard MRP

Simpler processes, however different from what is allowed in standard MRP process

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Planning Cycle Options


Standard MRP Create Forecast Planning Cycles Enabled with ASCP Create Forecast Create Forecast Data Collection Run MPS Create Forecast Data Collection Run Holistic Plan

Standard MRP

Load MDS

Load MDS Data Collection Run MPS Run MRP

ASCP

Run MPS

Run MRP

Run MRP

Same Process Similar Results

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ASCP over MRP Functionality Summary Functionality with no additional implementation costs Easy and intuitive navigation Horizontal and vertical plan display Enhanced supply/demand view Improved exception management Improved multiple planner support Improved plan run times Change tracking and undo capability Enhanced Reporting Integrated performance management Plan comparisons User Preferences
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Implementing Unconstrained ASCP Same effort to deploy as MRP Reuse all existing setups!
Discrete Manufacturing Process Manufacturing

0 1 2 3 4 5

Upgrade to 11i (optional)

Upgrade to 11i (mandatory)

Install Setup Collect Plan Analyze

Install ASCP using the 11i rapid install process Decide on deployment (one instance, distributed) Link Planning instance to ERP source instance Define profile options (optional) Run data collection process to collect ERP data for planning Collect from one or more source instances (optional) Define plan and plan options Run plan

Launch Planner Workbench to analyze plans

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Customer ASCP Proof of Concept Compared to Oracle MRP


Functional area
Performance Related Benchmarks - Compressed planning cycle - Reduced MRP run times - More reliable response More efficient user interface Reducing manual effort From 17 hours to 4 hours 330 Minutes to 144 Minutes Consistent/Predictable planning run times Easier Queries, Exception messages improvement, easier to use Fewer process steps, Researching a demand stream cut from 4 steps to 2 steps Help global planning efforts

Benefit

Multi-tier planning

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Customer ASCP Proof of Concept Compared to Oracle MRP


Functional area
Increased capacity to run what-if scenarios Improving ability to react to a ramp

Benefit
Plan comparisons, on-line re-plan, what-if constraint planning all provide capability What-if planning, exception messaging, plan comparisons, multi-tier planning all in a single tool ATP Inquiry tool in ASCP, what-if planning capability to aggregate multiple customer requests Single global plan with reduced run times Multi-Tier planning to provide visibility of supplier liability across supply chain, optimization helps prioritize across supply chain

Cycle time improvement on responding to customer requests Enabling global growth Better able to identify supplier liability

34

APS is continually being enhanced MRP has limited new functionality


<< 11i.8
Holistic planning and optimization Out-of-the-box optimization Distribution planning Material and resource constraints Demand planning (OLAP based) Collaborative supply planning Collaborative demand planning Vendor managed inventory Inventory optimization Supply chain intelligence Database centric planning Mixed mode manufacturing Capable to promise Allocation rules Process automation via workflow Industry enhancements focused on High Tech Aerospace and Defense Industrial Manufacturing Process Manufacturing Automotive 2002

11i.9
Sales and operations planning Continuous real-time DP Integrated sales forecasting Collaborative exception management Personal events Automated demand and supply planning collaboration Zero downtime order promising Integrated asset and material planning Manufacturing scheduling for process manufacturing Planning constraint rootcause analysis Industry enhancements focused on High Tech Semiconductor Process Manufacturing Automotive 2003

11i.10
Sales and operations planning Consigned VMI with customers Global forecasting Transportation planning Configure to order enh. Inventory budget constraints IO analysis workbench Hub-n-spoke planning enh. Personal queries Pegging enhancements Item and product family ATP Shipping, receiving calendars Co-product planning enh. User productivity enh. Analytical workspaces for DP

12 and beyond >>


Deployment planning* Liability analysis* Detailed scheduling enhancements* Service supply chain planning* Continuous planning Supply-demand matching Complex outsourced model support Transportation planning Fleet routing and scheduling Ocean, air, rail intl transportation* Contract manufacturing enh. Causal forecasting enhancements* Trade management integration* Next generation architecture Numetrix integration* Fusion

Industry enhancements focused on High Tech Process Manufacturing Logistics and Distribution Industrial manufacturing 2004

Industry enhancements focused on Process Manufacturing Logistics and Distribution High Tech Automotive Service 2005 2006

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Agenda

Business Challenges Advanced Planning Concepts Oracle APS vs. Oracle MRP Additional APS Capability Q&A

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Oracle Offers a Complete and Robust Suite of APS Products


Supply Chain Intelligence SCI

From detail to summary

Strategic Network Optimization SNO Sales and Operations Planning Demand Planning Inventory Optimization IO DP

Service Fulfill Make Procure

Maintain

Finance HR
All Product, Customer, & Supplier Information

Projects

Supply Chain & Manufacturing Planning ASCP Global Order Promising Distribution Planning Production Scheduling Transportation Planning PS TP GOP ASCP

Plan

Order

Sell

Market

Develop

SC Exception Management CP Collaborative Planning CP

From short-term to long-term


* Future enh.: short term deployment planning

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Integrated, Yet Modular


Integrated demand, inventory, and supply planning solution
Sales and Operations Planning Demand Planning Forecast and demand variability Inventory Optimization Time-phased safety stocks Advanced Supply Chain Planning Constrained plans Global Order Promising Supplier capacity Supply commits Collaborative Planning Order forecast Order forecast Customer forecast Forecast

Suppliers

Customers

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APS Additional Opportunities beyond ASCP Expand to other areas as your business requires
Sales and Operations Planning
Sales and Operations Planning Demand Planning Inventory Optimization Collaborative Planning Global Order Promising MRP ASCP Optimized Constrained Unconstrained

APS Common Infrastructure

Oracle Applications (11.0, 11i)

Balance demand, supply, inventory and budgets Demand Planning Improve forecast accuracy Inventory Optimization Improve service level at lower inventory cost Global Order Promising Promise more reliable dates to customers Collaborative Planning Automate inventory replenishment and supply chain collaboration with your trading partners

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Sales and Operations Planning Complete and integrated process


Inputs
Financial plan Budget plan Sales opportunities Trade promotions Ship and book history Current order backlog Inventory history Production history Production backlog Customer forecasts Demand Plan

Planning
Inventory and service levels

Process
Capture all demand in one place Determine consensus forecast - Determine new product plan Balance supply, demand, and budgets: - Determine inventory targets - Determine supply plan - Determine allocations Evaluate and adjust plans

Exception management

Supply Plan

Sales Plan Production Plan Bookings Forecast

Management Reports

Outputs

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S&OP Demand Hub


Capture all historic and future demand in a single data store
Customers Suppliers

Central repository for all demand


information Customer and supplier forecasts POS data Sales and marketing forecasts Financial forecasts and budgets User-defined data (spreadsheets)

Portal

Portal Internet

Configurable and extensible Meta data driven User-defined dimensions and


ERP Systems Flat file loads EDI Transactions APIs

hierarchies
Demand Hub

Open Spreadsheets, XML, EDI, portal Audit exceptions Integrated Out-of-the-box loads for Oracle
ERP

Finance

Marketing

Sales

Manufacturing

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Inventory Postponement Optimization


Manage to uncertainty, reduce inventory, improve customer service
Without Postponement With Postponement

Customers

Inventory levels and policies are


Regional Distribution Centers

synchronized across the entire supply chain

Central Distribution Centers

Manage to uncertainty Demand, supply, and lead-time


variability

Pull model, driven by point of


postponement

Final Assembly

Higher customer service at lower


inventory cost

Time-phased safety stock buffers at


Contract Manufacturers

all levels

Multiple target service levels

Suppliers

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Inventory Postponement Optimization Key capabilities


Without Oracle

Reduce inventory without sacrificing


customer service Postponement Risk pooling

Manage supply chain variability


Inventory Investment

Choose the best service level


With Oracle
Lower Inventory Cost

strategy based on cost and revenue Inventory budget constraints

Invest in profitable channels,


products, and customers

Manage seasonality and product life


cycle characteristics Recommend time-phased safety stock to supply planning

Higher Service Level

10

30

50

75 80 85 90 95 100

Out-of-the-box optimization For planners, not programmers

Service Level

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Multi-tier Collaborative Planning


Full visibility and synchronization across the extended supply chain
Optional

Customer

You
Consensus forecast

Contract Manufacturer

Supplier

Plan your extended supply chain


Share forecasts and supply commits with customers and suppliers Get visibility to supplier capacity Reallocate key components Make alternate sourcing decisions

Demand systems

Run plan

Supply forecast Run plan

Demand boards

Reduce inventory cost and improve fulfillment


Suppliers manage your inventory Manage your customers inventory

Supply commit boards Supply commit memory

React quickly to supply chain exceptions


Waterfall analysis User-configurable exceptions Automated exception handling via workflow

Forecast memory

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VMI and Consigned Inventory


Automate inventory replenishment with customers and suppliers

Customer

You

Supplier

VMI Agreement Send consumption advice

VMI Agreement (with customer)

VMI Agreement (with supplier)

VMI Agreement Check inventor y status

Receive items

Ship items

Receive items

Ship items

Pay on receipt/use

Pay on receipt/use

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Configurable Collaboration Rules Automate exception handling


Secure access
Configurable security rules

Avoid exception overloads


User-defined exceptions Flexible thresholds Automate exceptions handling via workflow

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Zero Downtime Global Order Promising Promise more accurate order dates, 24x7
Promise orders based on: Material availability Manufacturing capacity Transportation capacity Supplier capacity Global statement of availability All facilities, material, resources, and suppliers Drive fulfillment decisions based on demand and supply plans Promise based on optimal supply decisions Allocate available supply and capacity By channel, customer, or product Priority and stealing rules Manage commitments to key customers Re-schedule and re-sequence your backlog

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Strategic Network Optimization (SNO) Strategic Planning Decisions


Capacity Planning vs. Outside Supply Planning

Driven by sales forecast - plan for long term capacity requirements Make vs. Buy decisions: analyze supplier availability & costs vs. utilizing own manufacturing capacity to know when & who to utilize Rationalize the re-location, expansion & removal of production capacity Rationalize distribution center / warehouse location and capacity Analyze focused factory production strategies Integration of new business supply chains from mergers & acquisitions Evaluate scenarios against various market conditions Contingency planning and what-if analysis

Supply Chain Network Design


What-if Scenario Management

?
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SNO Solver Finds the lowest overall cost (or maximum profit) of a model by using:

Linear Programming (LP) to find the optimal solution while considering costs and constraints. MIP and Heuristics to find a feasible solution if a LP solve does not suit certain business processes (e.g. batch sizes, minimum run lengths, etc.).

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Optimization of Costs & Constraints


C/$
C/$

C/$

C/$

C/$ C/$ C/$

C/$

Manufacturer C/$ C/$ C/$ C/$ Transportation

C/$

C/$

$ $ $
Customer

Manufacturer Distributor Costs ($) Real & Penalty Variable & Fixed Supply costs Storage / Inventory costs Transportation costs Manufacturing costs Opportunity costs Fixed costs (startup, shutdown, operating costs) Capacity Constraints (C) Manufacturing constraints Material handling constraints Transportation constraints Target Service levels Supply constraints Storage / Inventory constraints

Supplier

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Advanced Planning Production Scheduling (PS)


Graphical reports and schedule analysis Considers material, labor, machine, tooling and storage capacity constraints Self-configuring solver reduces implementation time and expense Constraint-Directed Search Technology delivers: No requirement for customized rules Dynamic detection and adjustment to floating bottlenecks Maximize throughput of bottleneck resources by sequencing activities to minimize setup times Reduce COGS by eliminating unnecessary overtime and expediting charges Improve fixed asset utilization, supporting increased revenue growth from existing assets Improve decision support by evaluating what-if scenarios Increase productivity by evaluating alternative schedules based on KPI impact

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Agenda

Business Challenges Advanced Planning Concepts Oracle APS vs. Oracle MRP Additional APS Capability Q&A

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Q & A