Businesses are tying up working capital and limiting improvements to service levels by relying on dated planning tools which simply can't account for the complex decisions and trade-offs in today's supply chains, according to research carried out by global supply chain consultancy Crimson & Co.
The findings originated from an in-depth review of the APS (Advanced Planning & Scheduling) market comprised of assessments of 600 planning processes across 100 companies and 20 countries, 50 interviews with global supply chain leaders to get first-hand insight into their views on planning and an independent review of all the leading APS solutions.
According to the data, over two-thirds of those surveyed have not implemented an APS system and are instead putting their faith in legacy approaches to planning such as ERP systems bolstered by an array of spreadsheets. However, the proven business benefits of an effective APS system and associated processes are significant, as much as a 20 per cent reduction in working capital, 5 per cent increase in service level, 6 per cent reduction in logistics costs and 3 per cent reduction in the cost of goods sold.
There were three core functionalities identified that supply chain leaders wanted to see provided in an APS system:
- Support for better Sales and Operating Planning (S&OP) including the need for integrated 'what-if' scenario planning and financial analysis (32 per cent)
- Improved ability to support the use of planning hubs/control towers and tighter integration between planning and scheduling (26 per cent)
- Rapid detect and respond approaches to adjust to events in the supply chain (19 per cent)
The processes assessed fell into one of four categories – Not Competent, Competent, Proficient and Mastery. Only 10 per cent of planning processes achieved mastery level (proven best practice performance) with the others at 15 per cent (Not Competent), 25 per cent (Competent) and 50 per cent (Proficient) respectively.
According to Dave Alberts, Director at Crimson & Co, clients are viewing APS implementations as an opportunity to not only improve supply chain processes across their organisation but also to look at how they are structured locally, regionally and globally. Such projects are increasingly managed as an overarching change management programme to ensure that the right people, processes, technology and organisational structures are in place.
"In the past, APS systems had significant shortcomings regarding functionality with many pieced together by vendors from disparate products. The fallout from this is that most systems only had real strength in a few specialised areas. However, dramatic improvements in constraint-based planning, optimisation, simulation and 'what-if' capabilities and an increasingly competitive market have seen companies start to embrace the potential of APS systems."
"When looking at the findings from an end-user perspective, the research shows that the APS market is reaching a tipping point. The traditional view of planning with MRP and its evolution into ERP is no longer suitable when it comes to meeting the more advanced needs of global supply chains."
"For those companies whose planning processes are still ranked at a 'competency' maturity level, more can be achieved by process improvement actions. However, for those firms looking to achieve a 'proficiency' or 'mastery' level of planning maturity they will need to deploy the advanced functionalities available in most APS systems. Ultimately, what we are seeing is a direct correlation between process maturity and the deployment of ASP systems, which in turn is leading to a significant competitive advantage. As this trend continues, we expect to see demand increase further as more companies clamour for the right system to suit their needs."