The evolution of Enterprise planning system: from ERP to APs to SCP

Planning is the brain of supply chain operation. For decades, planning has evolved from MRP development to ERP to APs to SCP, from part to overall, from static to dynamic, from enterprise to supply chain. The efficiency of the supply chain depends on planning. Planning is not in place, and any execution is afterwards saved.

This is an article by a friend of mine, Ms. Chen. Ms. Chen is Microsoft China's chief Solution architect (manufacturing, energy, retail logistics). He has served as Senior consultant and marketing director for IDs, I2 China, Compaq and SAP, and is familiar with the optimization of supply chain management and global supply chain network. This article outlines the evolution of planning. If you are interested, please read on.

Objective

From the 1960s onwards, the manufacturing enterprises began the application of management information, from MRP, Mrp-ii to ERP, and gradually realized the procurement, inventory, production, sales, finance and human resources and other business management, so that enterprise business processes and things to achieve automation, in the 80-90 years, ERP as a representative of Enterprise management information has experienced a very glorious period.

Although ERP for the enterprise's internal and vertical integration management has created indelible achievements, but in the 21st century economic globalization vigorous development today, ERP in the supply chain and horizontal integration management, from the scope of management, technology, basic and functional aspects are inadequate, the processing of many businesses is powerless, There have been many flaws.

Initially, in many enterprises, especially manufacturing enterprises, often faced with such problems, such as:
--How can a salesperson know when a sales order is received that the material and production capacity for certain orders is adequate for a given period?
-How to make a commitment to order delivery according to different customers in the case of single design or production, and in the pursuit of near-zero inventory of various materials and components?
-How to make reasonable arrangements for the existing materials/components and capacity, and organize the production?
--Can the planners quickly rearrange their plans and make adjustments according to the requirements of existing materials/components and capacity, when inserting urgent orders?
-Can you respond quickly after canceling an order and release the relevant resource requirements for these orders to other important orders as soon as possible? Then how to scheduling, sorting to make the next order with the resources of the hand to make the best match?
-Is it possible to adjust the plan in a timely manner, such as delays, production delays, equipment failures, shifts and changes in production personnel?
-How do you ensure that the most important and urgent orders are not accounted for by other secondary orders?

Secondly, it is in the outside of the enterprise, between the upstream and downstream of the supply chain and this supply chain provider, cannot realize
The effective and reasonable arrangement of business, often delaying business opportunities and business can not effectively connect, not only is the individual enterprise inefficient, delivery is missing, the cost is high and the benefit is damaged, and the entire supply chain has received a serious impact.

All these issues are within the scope of the scheme.

Next, let's examine the following several terms of management informatization:
1. MRP (Material Requirements Planning) for material requirements planning;
2. ERP (Enterprise Resource planning);
3. Advanced Planning and scheduling APS (planning and scheduling);
4. Supply chain Planning SCP (supply Chain planning).

It can be seen that they all have planning the English word, visible, are related to the plan. They are different planning systems in enterprise information management, and their development is evolving with the development of society, the demand of the market and the progress of technology. Among them, the MRP/ERP has already become the human ear detailed can ripe the noun, the ASP and the SCP these years also gradually for the people to know. However, the difference between them and the evolution of the process and still do not know much, the following from their planning system, logical relationship and other aspects to discuss their differences, development, change and application.

The logic of the MRP/ERP planning system

As we all know, ERP management enterprise internal resources, aside from other business management scope and function, on its core plan of the logic and model is still mrp-ii, or more precisely still with MRP as the core. MRP is based on the simplest logic, with the help of the computer by the Product Logistics list BOM (bill of materials) and the process of gradual deduction, the general smooth production conditions can be applied under the production planning method. In the the 1960s to 90 's, it is a good planning tool, if there is no MRP on the product requirements of the calculation capacity, to participate in the manual to calculate the material requirements of the product is very difficult, especially when the product structure is complex, more layers of the case, so at that time mrp/ The emergence of ERP has a great help to the enterprise management personnel.

The logic of MRP is very simple and straightforward. First of all, the MRP corresponds to the production of products, in the production process, regardless of the type of product, production scale, process conditions, it must answer 4 questions, namely:

1. What are we going to produce? According to the master production plan;
2. What materials are needed to produce these products? According to the bill of Materials;
3. What have we got? According to the inventory record;
4. What are we missing? When to buy? Calculated by MRP.

For example, we treat at home:

1. First of all, according to the number and taste of the guests to determine a menu (relative to the main production plan, what to do);
2. Then, according to the menu to determine the required raw materials, such as how much chicken and duck fish, vegetables, garnish, ingredients, staple food, etc. (relative to the bill of materials);
3. Next, inventory the raw materials (relative to the inventory) and see what is not at home;
4. Determine what is missing, what needs to be purchased, and when to go to the market (relative to the MRP calculation).

From this example we can see that the principle and computational logic of ERP/MRP is very simple. But this is a kind of "push" mode of production according to the stock, prepared food and other guests to eat, not according to demand and production by order, or a western restaurant in the fast food, basically make several kinds of fast food, "push" the way in inventory to produce, and other customers to buy.

Although ERP for the enterprise's internal and vertical integration management has created indelible achievements, but in the 21st century economic globalization vigorous development today, ERP from the scope of management, technology, foundation and function are inadequate, the processing of many businesses has been powerless, there have been many shortcomings.

Its calculation of material requirements is based on unlimited resources, is a static material structure, the algorithm assumes that the lead time is known fixed value, the estimated lead time can not meet the current production of changeable demand, the system requires a fixed route, production sequence is only based on the delivery cycle or date to arrange, The scheduling process is time-consuming, and the planned changes are difficult, often with the questions listed at the beginning of the article. Therefore, it is more suitable for the stable production of inventory-oriented.

In addition, MRP/ERP's plan lacks optimized functionality. The plan produced by the traditional mrp/erp is not considering the actual ability, that is, it produces the plan is based on the infinite ability model, does not consider the actual resources, the restriction and the ability, lacks the optimized model and the rule, the adjustment to the plan is also more difficult. However, in the real world, the production capacity of enterprises, the supply of raw materials will not be unlimited, to be subject to many practical conditions, and in the actual operation of the various changes are often difficult to anticipate, often encounter design changes, engineering changes, order changes, shortage of raw materials, critical parts shortage, insufficient capacity, delivery delay, Production equipment failure, customer requirements insert urgent orders, cancellations, exceptions and other cases, which requires enterprises to quickly adjust the original plan to meet customer and market demand changes.

The planning system, logic and model of APS

But for a variety of menus, such as a Chinese restaurant to receive a lot of different guests every day, these guests have different hobbies, but also have different priorities, at different times to the restaurant, the point of different meals, the order is not to comply with the first to first serve the principle. At the same time, restaurants have only the raw materials that are often considered "Da Lu Huo" (raw materials that require a large amount of consumption every day, basically no inventory loss), and require as little inventory as possible. In this case, the logic of mrp/erp a problem, because this restaurant can not be like a fast food restaurant, do a few meals and other guests to buy.

Over the years, although these defects continue to have some technical improvements, although the ERP system in the production planning to take into account the ability of the problem of resources, but still a serial process of calibration, there is no substantial change. At the end of 20th century, the production environment is becoming more and more complicated, the shortcomings of MRP/ERP planning system are more prominent, and the traditional ERP planning model is more and more unable to adapt to the change of enterprise. As a result, a number of foreign industry leading companies and important international manufacturers are looking for better solutions to meet their order-oriented, design-oriented production methods, as well as more rapid changes in demand, business model more complex management systems, especially planning systems.

To this end, in the early 90 's, the result of this demand was ushered in the advanced planning and scheduling technology, and the ASP can be well adapted to the above-mentioned restaurant operating mode, it on the basis of MRP made a variety of improvements. In addition to the basic calculation function of MRP, it is also equipped with many arithmetic models and algorithms to simulate and solve some complex problems, to realize the iterative operation of the plan or to evaluate and optimize the optional scheme until a feasible or basically profitable plan or schedule is obtained. Many of its theories and models are based on the constraints of operational research and other related disciplines, such as linear programming, restraint theory and artificial intelligence. The main algorithms used are optimization algorithm, precise algorithm and heuristic algorithm. It can pull all the material from the terminal of the supply chain according to the order request (the guest's order), instead of just the demand list as in Mrp/erp.

For example, a regular guest a first to and point to the X menu, and to indicate that the dish does not put Pepper; senior Guest B then ordered the Y menu, which has a very personalized red carp, and the restaurant Pianqiao no such fish, need to go to the market to buy immediately, and then, VIP guest C arrived, also ordered the Z menu, his level than a To arrange his menu making in front of the current queue; Suddenly, a guest's Dish has chili peppers that need to be re-made or changed, and so on.

In response to these situations, APS uses the pull logic and method of the automated answer proposal, starting with a single production (customizable production, or even design or procurement), followed by the ability to prioritize and optimize scheduling and sequencing, All the guests ' menus according to the existing raw materials in a preferred way to discharge production order, to ensure that the highest level of the guests can occupy a limited amount of raw materials and the fastest access to services; Again, it can be based on the resources already available to complete unlimited and limited resources planning, scheduling, and in accordance with the order of expulsion to buy the missing raw materials Ensure that follow-up work is carried out smoothly; Finally, when a problem occurs, the original order is destroyed or impossible to achieve, again according to the above logic immediately out of the new sequence, and so on, this is the APS planning mode and logic.

For these cases, APS uses the pull logic and method of the auto-answer proposal method:

1. It is produced on a single basis (can be customized for production, or even design or procurement);
2. It has the ability to judge priority and optimize scheduling, sorting, will all guests of the menu according to the existing raw materials in a preferred way to discharge production order, to ensure that high-level guests can first occupy a limited amount of raw materials and the fastest access to services;
3. It can be based on the resources available to complete unlimited and limited resources planning, scheduling, and in accordance with the order of expulsion as soon as possible to purchase the lack of raw materials to ensure that follow-up work smoothly;
4. When a problem occurs suddenly, the original order is destroyed or cannot be realized, and the new order is immediately discharged according to the above logic.
This is the planning mode and logic of APS.

It can be seen that APS ' planning system and logic are more advanced than MRP/ERP. At present, almost all manufacturing enterprises are in the direction of production by order, outsourcing business, more and more industry, has formed a trend.

However, when customized orders receive and change, especially when the order of a wide range, product structure is more complex, a lot of layers, and production load is not stable, volatility, the use of ERP planning system has been difficult to solve the above problems, in the actual business operations often occur pay Paul situation, There is no way to better leverage existing resources to respond to changes in many customers.

At the same time, all companies are trying to "zero inventory" to enter, to minimize the amount of raw materials and components, many purchases are made in the form of VMI and Jiti, once the order changes, or a raw material and parts supply sudden shortage, will inevitably upset the original plan and pull series. Therefore, there is a need for flexible, constraint-based models and optimization rules and scheduling systems that can be scheduled in a timely manner. As a result, APS will need more and more.

SCP's planning system

If the above-mentioned business expansion, such as: in order to buy the B guests on-site to Red Carp, the need to establish a long-term interaction with several fish shops, to buy this rare resources in time, even when all the fish shop is not in stock, but also to get in touch with fish farms, from where direct purchase, immediately sent to send people Or connect with other stores within your system, if any, or even other restaurants outside the system, sharing scarce resources with each other. Similarly, in order to better reduce inventory, with upstream, upstream upstream to maintain close contact, share business information, and timely and all upstream communication, so that they can better grasp their own needs, ensure supply, need SCP supply chain plan to achieve the supply chain planning across individual enterprises.

In order to better serve customers, we need to get in touch with customers in time, to know the tastes and habits of customers timely and accurately, and even predict the customer's needs and quantity, the time of arrival, to arrange their own equipment and raw materials; In order to optimally allocate resources and optimize supply and demand balance, we need to prioritize customers, prioritize dishes, As well as the rules for their service, and before the customer order, they arranged the required preparation and processing into semi-finished products, after the order to get the service soon, but also need to communicate with all customers, timely their communication, master their requirements and tastes, to arrange their own and upstream resources to meet their needs. Once someone has changed, notify the other party immediately, and so on.

This needs to be done with a joint optimization planning system SCP. APS is the initial prototype of SCM in supply chain management, the SCP developed on the basis of APS, just as ERP is developed by MRP, the SCP expands on the model, logic and function of APS, such as adding more predictive models and methods to demand management. The original prediction function and scope were improved, especially the coordination of prediction was strengthened and the error of prediction was reduced, and the optimized transportation model, algorithm, optimization rules and simulation methods and tools were added in planning modeling, such as enhanced nonlinear programming, artificial intelligence, decision theory, simulation and methodology, genetic algorithm, evolutionary programming, An immune algorithm, etc., expands the scope of the plan in a synergistic way, and adds the patterns, methodologies, and tools for developing collaborative planning, such as collaborative plan forecasting replenishment CPFR (collaborative planning, forecasting and replenishment), etc. Extend the plan to cross-plant, upstream and downstream, so that supply chain members can work together to develop collaborative plans that make business more cohesive and business processes smoother.

About the author

Chen: Senior engineer, China's early MBA. Microsoft China Chief Solution Architect (manufacturing, energy, retail logistics), IDS China chief consultant, I2 China chief consultant, Compaq, SAP and other companies as Senior consultant, marketing director and other positions. Worked on SCM and global Supply Chain network optimization in North America.

At home, long-term engaged in ERP, CRM, e-commerce, SRM, SCM and logistics management of supply chain management and other information management work, has provided dozens of large enterprises with ERP, CRM, e-commerce, SCM, SRM and logistics management, such as Information management consulting, program design, training and implementation, Due to outstanding contributions, some industries have been awarded the title of experts.

Long-term engaged in the field of information management theory research work, published more than 2 million words of the works, including: "Supply chain management" teaching materials (co-authored, NPC Press); 800,000 words of the "supply chain management-strategy, Technology and practice" (has been the China Logistics and Purchasing Federation Award), the electronic industry press; 2005 China Logistics Development Blue Book of supply chain Management, China Materials Publishing house, China Sourcing Development Report 2008, China Materials Publishing house, supply chain management and information technology (UF University teaching materials, completed); Supply chain management Teaching CD-ROM, China sound Image Publishing house; for " China Enterprise Federation "recorded ERP/BPR video teaching piece, broadcast nationwide. Scm-is preparing and writing the art of supply and demand balance, globalization of supply chain management and optimization, and supplier Relationship Management SRM.

And in the domestic and foreign famous media published about 90 ERP, CRM, e-commerce, knowledge management, SCM, SRM, logistics management and RFID and other aspects of the paper. Also for Peking University, Tsinghua University, the National People's Congress, North Engineering and other universities MBA, CIO teaching programs in the field of curriculum and dialogue programs, undertook many professional training, often attend large-scale conferences and keynote speeches.

The evolution of Enterprise planning system: from ERP to APs to SCP