By-ANKUSH SETHI (01)AVANISH KACHHAWAHA (03)NIREN ATHAWALE (02)

ERP Assignment Group 1PGDIE-37

NITIE, MUMBAI

Presentation on Paper on“Advanced Planning and

Scheduling from SCM perspective”

•Traditional planning and scheduling systems

originated in the 1960s

•The principle objective of planning was to synchronize

all levels of production.

•In an ERP system, a Master Production Schedule (MPS)

is used to establish a plan for the factory, balancing off

sales demand (orders, forecasts or some combination

of the two) with inventory and planned supply.

•The planning processes of MPS, RCCP, MRP and CRP

are all separate, sequential and iterative.

Today manufacturers must contend with globalization.

Manufacturers are responding by moving increasingly to demand-driven production strategies

Lean manufacturing Six sigma Just-in-time Theory of constraints Agile manufacturing , etc.

But even the leanest operations still need to plan ahead and schedule production resources and associated activities.

Advanced Planning and Scheduling (APS) is a software system that uses intelligent analytical tools to perform finite scheduling and produce realistic plans.

As the manufacturing world pushes As the manufacturing world pushes toward new business standards, demand toward new business standards, demand is increasing for an integrated system is increasing for an integrated system that can support shifting decisions in that can support shifting decisions in supply chain management. Fortunately, supply chain management. Fortunately, APS could be the answer.APS could be the answer.

Capacity of machines and labor Labor skills Special tools Material availability Production sequence

Execution SystemsShipment SchedulingProduction Scheduling

Transportation PlanningPlanning Manufacturing PlanningDetail Distribution Planning

Inventory PlanningSupply Chain Planning

Sales and Operation PlanningDemand Planning

Supply Chain Network DesignStrategic Planning

Seconds/ Hours/ Weeks/ Quarters YearsMinutes Days Months

Time Horizon

1. Supply Chain Planning“SCP determines what should be made given the available

resources to achieve business goals.”

2. Manufacturing Planning“Manufacturing Planning determines how and when it should

be made based on material and resource constraints to meet customer demand.”

3. Production Scheduling“Goal of this group is to translate the output of the supply

chain planning to an operational plan and work orders.”

Advanced Planning Advanced Scheduling

The role of planning in APS is to determine what demands on the production system will be met over a given planning horizon.

The input to the planning process includes information on manufacturing capacity and demand data

The output from the planning process is a feasible plan, which provides release and completion times for every demand.

The role of the scheduler module in APS is to produce a detailed list of operations specifying which orders are to be worked on at which work centres and at what times.

The input to this module includes all demands to be satisfied, including the internal orders.

Detailed information used by the scheduler module that is not pertinent to the planner.

Concurrent planning In this demand, material and capacity are considered

simultaneously.

Constraint-based planning Material availability Available capacity Enterprise policy Cost Distribution requirements Sequencing for set-up efficiency Speed

Improvements in computer processing power and software design have lead to good response times. As a result, a customer can be informed about the delivery possibilities within a few seconds.

Preferences• It is possible to indicate preferences in APS for purposes of

strategic decision making. It is possible to regard certain customers as strategically important. In APS this is interpreted as a customer with a higher priority.

What if simulation• One of the first, and still most common applications for APS

products, is decision support using the facility for what-if simulation. It is possible for various alternatives to be entered into the system and for the system to maximize company profit and/or minimize costs,

ATP• APS can be used to obtain a better insight into ATP.

Optimization

CTP (Capable to Promise)CTP derives from the real-time APS engine a delivery date by adding a customer order in the system

PTP (Profitable to promise)PTP you can assure that the right customer gets the right order at the right time, which is most profitable to the organization.

Reliability Optimization

Optimization means generating the best solution to a specific problem. APS can be used to optimize both tactical and strategic business issues.

Supply chain executionFrom the moment a shipment to a customer leaves your organization’s shipping docks, transactional data is being gathered through the use of enterprise requirements planning solutions, such as mySAP ERP. The combination of SAP’s real-time Core Interface Functionality (CIF) and liveCache planning model allows for continuous planning updates of this transactional and master data throughout the day.

Supply Chain coordinationUsing tools like SAP Event Management, updates to plans can be triggered by key events, such as a supplier’s production lot passing final quality inspection.

Supply Chain Collaboration : Using Web collaboration capabilities, SAP APO enables organizations to share demand and promotional plans in real time with customers. SAP APO supports intercompany collaborative processes, such as vendor-managed inventory (VMI)

Generally, optimization problems seek a solution where decisions need to be made in a constrained or limited resource environment. Following factors are involved in optimization problem.

1. Decision Variables are within the planner’s span of control. 2. Constraints are limitations placed upon the supply chain3. Objectives and implicit objectives4. The following penalty cost factors are used explicit in relation to

decision variables:Late demandExceeding resource capacityExceeding material capacityExceeding transportation resource capacity

1 2 3 4 5

Dem

and

Dem

and

Dem

and

Dem

and

Dem

and

Production

Production

Production

Production

Production

Machine constraint

Labor constraint

Optimisation - Max On-time Delivery

In the optimization the cost of labour overtime in the fourth period is balanced against the cost of carrying the backorder into period 5. If the backorder quantity is large, and if the customer is likely to accept a two period delay, and if the cost of overtime is relatively low, then optimization would suggest the solution in figure

There are different techniques that can be used for optimization:

Linear programming – Genetic Algorithms – Theory of Constraints- Heuristics

Supply chain cockpitAn intuitive and configurable graphical user interface to manage and optimise the supply chain. It consists of a highly intuitive, graphical interface that acts as the top enterprise planning layer covering all planning areas.

Demand planning:It Provides advanced forecasting and demand planning tools

Supply network planning and deploymentSAP APO Supply Network Planning integrates purchasing, manufacturing, distribution, and transportation so that comprehensive tactical planning and sourcing decisions can be simulated and implemented on the basis of a single, global consistent model.

Production planning and detailed schedulingProduction planning enables the planner to create feasible production plans across the different production locations (also with subcontractors) to fulfill the (customer) demand in time and to the standard expected by the customer.Detailed scheduling delivers optimized order sequences that can be released for production. Solvers simultaneously take into account constraints and costs to schedule the optimized order sequence.

Transportation planning• Collaborative Shipment Forecasting: • Load consolidation: • Mode and route optimization: • Carrier Selection: • Collaborative Shipment Tendering

Reduced costs Improved customer service Increased responsiveness Improved productivity Improved efficiency Increased return on assets

(ROA) Increased revenues, Faster return on investment

(ROI),

APO Utilises a global, multi-level, rule-based strategy to match supply with customer demand. It also performs multi-level bill-of-materials and capacity checks in both real-time and simulation mode to enable delivery commitments for customer orders.

By-ANKUSH SETHI (01)AVANISH KACHHAWAHA (03)NIREN ATHAWALE (02)

ERP Assignment Group 1PGDIE-37

NITIE, MUMBAI

Dr. Karl-Heinz RauProfessor

FB 10 Betriebswirtschaft/WirtschaftsinformatikDepartment of Business Information Systems at the

Business School of the Pforzheim University ofApplied Sciences

Tiefenbronner Str. 6575175 Pforzheim, GermanyPh.: ++49-7231/28-6314

1Fax: ++49-7231/28-6090Email: rau@fh-pforzheim.de

And

Chetan S. Sankar, Ph.D.Professor

Department of Management415 W. Magnolia Avenue

Auburn University, AL 36849Ph: 334-844-6504Fax: 334-844-5159

Email: sankar@business.auburn.edu

This case study presents the strategic issues faced by the CIO’s of the information technology division of the corporation, Robert Bosch GmbH, and its US subsidiary, Robert Bosch USA.

The corporation has traditionally followed an international/multidomestic strategy and used multiple information systems at its plants/divisions/business sectors.

Due to higher pressures to cut costs, increase interchangeability of products among the many plants worldwide, and fulfill customer requirements, the corporation was moving to a global strategy.

The global operations were organized using business sectors under which product divisions operated.

Automotive Technology

Industrial Technology

Consumer Goods and Building Technology

Automotive Technology Industrial Technology

Consumer Goods and Building Technology

Gasoline Systems Automation Technology

Power ToolsThermotechnology

Diesel Systems Packaging Technology

Household Appliances

Chassis Systems Control Security Systems

Chassis Systems Brakes

Electrical Drives

Starter Motors and Generators

Car Multimedia

Automotive Electronics

Automotive Aftermarket

Steering Systems

Division Area

K1 Antilock Braking Systems (ABS)

K2 Automotive Lighting business

K3 Gasoline Engine Management

K4 windshields, headlamps,wiper and washer systems, engine-cooling-systems and climate-control components`

K5 Diesel Fuel Injection

K6 Cockpits, vehicle electrical system (PowerNet), display systems, locking and closure systems, vehicle security systems, multimedia systems, climate control

K7 Mobile Communication systems

K8 Semiconductor for Internal supply

K9 starters and alternators

KH Aftermarket Products Division (for Trading )

The products produced in the plants differed since governments imposed their own standards.

There were significant differences in distribution channels among the countries necessitating the delegation of marketing functions to national subsidiaries.

Need of integration was felt among the different divisions Dr. Scholl, the chairman of Robert Bosch GmbH emphasized on the need to increase efficiency, global purchasing program, use of Internet, and electronic marketing systems within the organization

Corporate IT division was mandated to make significant changes in its strategies, operations, and implementations of information systems so as to meet customer needs and reliably fulfill all agreed upon work and services.

Strategies of QI, Corporate IT Division

Mission Objectives

1. Operate like an external IT provider and meet or exceed benchmarks of these providers.

2. Be a leader setting policies, procedures, and standards for IT throughout the Bosch Group.

Goal 1. Customer orientation,2. Standardization,3. Efficiency, and4. Planning for the future.5. Support the applications and IT units

for all companies and joint ventures around the world.

Focus Efficiency not cost or no. of employees

The top management decided that implementation of an SAP system across the organization

Teams initiated SAP R/3 implementation in different plants and locations.

In all, 17,500 end users were served by more than 50 systems across Europe by 1998.

QI's Decision to Implement SAP R/3-Strategy throughout the Global Corporation

In Europe systems were not implemented uniformly. The non-uniform information systems met the current requirements but were costly and used more resources.

The current IT implementation of QI management team was not acceptable to Board of Management since it didn’t meet business requirements like:

• International co-operation• Electronic link for customers and suppliers (E-

Business),• Flexibility in assigning business units• Modern, easy reporting. • Close the books for all Bosch operations and

report the results within 5 days.

A top-down approach to implementation and was developing a common product for use in every plant location.

Establishing measurements. For example, we have set goals for the ERP project that every process is 30% faster, or has 30% fewer steps.

We want to establish a very formal process with SAP to establish KPI (key process indicators).

Standardization means getting together with the experts to determine and introduce the best process for a certain procedure (e.g. the kanban system) or the best system for a certain product (e.g. document management).

Three Options:1. Standardize ERP approach within

the total Bosch group.2. Implement product-division based

ERP approaches within the global operation.

3. Implement domestic ERP approach for each country.

Software supplier will support only AS/400 system by 2001

PeopleSoft would be their choice to address the payroll/human resource needs

Changes Required

The software was running on a mainframe for which the source code was not available. Therefore, the IT organization was not able to add or change any of the source code to make it compliant for Y2K.

As a result of the SAP R/3 project, data centers were consolidated, Y2K issues were resolved, and seven modules were installed at 11 sites.

These modules covered materials management, sales and distribution, production planning, quality management, and parts of financial accounting and controlling functions.

A total of 1,200 users were impacted. Decisions were made quickly since time pressure to

meet Y2K deadline was high and the plant management strongly supported the conversion to SAP R/3.

This was the first successful implementation of SAP R/3 modules in the USA.

Function Software/IS Implemented

Manufacturing Operations PRMS

Financial Systems Braoadview

Shipping, billing and invoicing functions

Inhouse Developed System

Customer and Supplier link EDI

Order Entry EVA system

The UO division had two lines of business, with about 60 % being produced in its factories and 40 % imported from Bosch plants in other countries.

Because of the current non-integrated system solution, we have created pockets of implementation gaps between the functional departments, sales, engineering, manufacturing, distribution, logistics and financials.

The software does not accommodate the growing and changing business requirements and we have to tell our customers that the system can’t deliver the information they want.

Don created a strategic plan to implement SAP R/3 in the Financials (FI), Human Relations/Payroll (HR), and Logistics at the plants

The NAOC reviewed the plan during August and put it on hold. The committee was reluctant to commit millions of dollars for an implementation of SAP R/3 without additional information regarding the project cost drivers.

This directive seemed to be in contrast to QI’s message to Don that “It is efficiency that is essential for QI not the total costs nor the number of employees.”

Don pondered whether he should continue maintaining the current multiple information systems or champion implementing SAP R/3 across all product-divisions of RBUS.

“We have all read in the Wall Street Journal about the large project failures in implementing SAP. SAP R/3 is a data hungry system. It is conceivable that without user backing, the implementation will flounder – the users need to be involved and establish the process requirements. And overall, the business strategy needs to drive the systems direction. We need to ensure that the users and management appreciate the complexity of SAP and its future implications. The implementation can have substantial impact, particularly if we don’t do it right.”

Systems. IT projects instituted more recently are based on products in SAP's New Dimension initiative, namely the SAP Advanced Planner and Optimizer (SAP APO), SAP Business Information Warehouse (SAP BW) and SAP Business-to-Business Procurement (SAP BBP) in conjunction with R/3.

Besides carrying out project work and safeguarding Bosch's process knowledge, the team employees ensure a continuous know-how transfer between projects, locations, and business areas and between Bosch and SAP.

Importance of the alignment of business strategy and the IT strategy in a company at both corporate level and country level.

To identify the issues faced by RBUS in moving to a standardized corporate-wide information system such as SAP R/3.

  How a ERP system can be implemented in many ways

with resulting benefits and problems.  If an ERP package is not implemented correctly, it

might lead to many different ERP systems existing within an organization that do not communicate with each other.

THANK YOU