Achieving Competitive Advantage Through Supply Chain ManagementAdvanced Planning andScheduling SystemsMay 25, 2000,Agenda,1.The Evolution of the Supply Chain 2.Advanced Planning and SchedulingSystems 2.1How They Work 2.2The Vendors,The Supply Chain encompasses a number of key business processes involved in managing the flow of materials, information, and funds from the initial suppliers to the ultimate consumer., the concept of supply chain managementis relatively simple.,However, in the real world, multiple suppliers, multiple plants, multiple distribution points and multiple customers significantly complicate material and information flows., And, given that supply chains cross multiple companies, walls have been builtthat prevent full and timely information flow.,Breaking down these walls and integrating the supply chain is critical. However, to date, most supply chain initiatives have been inwardly focused. Only recently, manufacturers are beginning to embrace the total supply chain as a means to achieving competitive advantage.,Phase 1 - Process Integration (e.g., reengineering the order-to-cash process). Phase 2 - Intra-Enterprise Integration (e.g., sales strategies coordinated with supply chain capabilities). Phase 3 - Inter-Enterprise Integration (e.g., collaborativeforecasting & replenishment between retailers and suppliers),Stage 1: Separate best of breed applications dedicated to specific business processes (1970s),Enterprise Resource Planning (ERP),Supply Chain Technology has evolved over the past several decades.,Todays ERP systems are transaction-basedapplications with limited decision-support capability.,Stage 3: Enterprise-wide applications (early to mid 1990s andstill ongoing),Stage 2: Suites of integrated applications for functional processes (1980s),APS Definition ERP or legacy interfaced decision support technology which uses advanced algorithms, (e.g., LPs, IPs, mixed IPs, heuristics, theory-of-constraints, etc.) to model supply chain constraints and enable intelligent supply chain planning/decision making. APS Characteristics Allows complex supply chain representation and rapid SC model reconfiguration Enables concurrent, dynamic planning, and “what-if” simulations usingmemory resident processing Possess scaleable object architectures capable of running largedata-intensive models,Advanced Planning and Scheduling Systems (APS) Are the Next Step of the Evolution for Providing Decision Support Capabilities.,While we tend to draw all supply chains the same, there are many types of supply chains - each with their own unique challenges.,E.g., Pulp & Paper,E.g., High-Tech,E.g., Consumer Products,How Do You Know If You Have Supply Chain Management Problems?,Customer Service Concerns - Customer complaints, loss of share, delivery problems, customer surprises Materials Management Difficulties - High inventory buffers/obsolescence, high transportation costs, supplier shortages, lost purchasing discounts Manufacturing Process Problems - Production inefficiencies, overcapacity, undercapacity, cost growth Planning Difficulties - Inaccurate forecasts, high stockouts, growing overhead costs Obsolete Technology - Incompatible systems linkages, inaccurate/inaccessible information Revenue Cycle Concerns - Lengthy time to market, long order cycle, distribution delays, conflicting channel demands Vendor Management Problems - Poor response levels, lostgrowth, lack of commitment,The Importance of Supply Chain Management Has Increased Significantly Over the Past Few Years.,The Response: Approximately 60% of Manufacturers Currently Have a Major Supply Chain Initiative Underway.,However, 42% are “less than satisfied” with theoutcome of their previous improvement efforts.,As the Pace of Business Continues to Increase, a Key Challenge for Todays Supply Chain Managers Is to Make Good Business Decisions, Using All the Information That Is Available, Within a Short Time Period.,The Supply Planning (SP),Distribution Planning,Master Planning,Factory Planning & Scheduling,Inventory Planning,SP - Inventory Planning,Inventory Planning Goal: Determine optimal inventory levels and location to protect desired customer service goals,Trade off between inventory and service not understood Limited ability to know how much inventory, when and where Inability to plan at a sufficient level of detail Inability to quantify the impact of demand and supply variability,Challenges,SP Master Planning,Master Planning Goal: Globally optimize production plan considering tradeoffs of available capacity, materials, costs, time,Lack of visibility Disjointed planning Inability to reconcile demand priorities with supply constraints Inability to globally optimize production plan considering multiple constraints Planning doesnt support corporate objectives,Challenges,Distribution Planning,Master Planning,Factory Planning & Scheduling,Inventory Planning,SP Factory Planning & Scheduling,FP & Scheduling Goal: Optimal execution of the Master Plan to min