Why invest in the APS Solution?

Just like any decision you make in your personal life, an APS solution also needs a reason to exist. A software implementation generates significant effort, so you need motivation to get out of inertia. Depending on the area and position of the seeker, whether in the area of pipes and fittings, plastic packaging, food and the like, we see different motivations, which nevertheless converge towards the organizations' ultimate goal: greater profitability.

REDUCING COSTS AND INCREASING REVENUE

From the point of view of industry executives, reducing costs and increasing revenue are the main motivators in the search for an APS solution. APS. Some directors have a very sharp eye for identifying the importance of production planning and its challenges, making them the forerunners of these initiatives in companies. However, this is not a common reality, as these positions tend to accumulate many functions and concerns from different areas, meaning that they are unable to act proactively in the search for the final solutions to the problems. The challenges faced by managers in the Supply Chain, Industrial and even IT areas range from the level of service, with delays in deliveries and stock-outs, to issues of production efficiency, impacted by high setup and waiting times, as well as long lead times and high stocks, both in process and of raw materials and finished products. In all these areas, companies always have losses (some more and some less in each area) and many see opportunities to reduce them through better production planning and scheduling. However, the most common initiative comes from those who suffer the usual limitations we've seen so far: PPCP analysts and coordinators. For them, the time spent programming and, especially, reprogramming is very high, and they are hardly satisfied with the result achieved, since they are able to see the losses and understand the oversimplifications in their processes and systems. In practice, they are also held to account for all the objectives of their superiors and often have their hands tied."[caption id="attachment_2670" align="aligncenter" width="401"]

Stakeholders' objectives[/caption]You only have to reflect a little to understand that defining what, when and how to produce (the role of PPCP, one of the areas of the Supply Chain) influences the results of the motivations mentioned above. The limitations of traditional MRP/MRPII solutions show us that there are a number of gaps that can be filled to improve these processes. But now, how does APS generate results to meet these objectives? Well, we'll see below that the gains reach several areas, influencing each other. We'll look at the gains in improving the Planning processes and then the Scheduling processes, in order to make the approaches clearer.

GAINS THROUGH BETTER PRODUCTION PLANNING

At the planning level, defining well what to produce each period, as well as what cannot be produced because there is no capacity, avoids overstocking and disruptions. Failing to analyze capacity aspects with a good level of detail ends up generating fat on one side and cutting into the flesh on the other. In other words, high stocks of some products and shortages of others. APS takes this capacity into account, generating better stock health and therefore reducing storage costs and lost sales (the latter often immeasurable). In addition, medium and long-term capacity adjustments can be made to reduce the costs needed to meet a given demand. A 20% increase in demand does not necessarily mean a need for 20% more capacity. Seeing the behavior of demand and capacity over time, through external factors such as seasonality and changes in the product mix, as well as internal factors such as vacations, shifts or changes in production processes, can alter decision-making about, for example, buying a machine that could cost millions of reais and will remain idle, or making an undersized purchase that will not meet demand. In other words, both cost reductions and improved delivery performance can be the result of better planning - planning that sees capacity properly.

GAINS THROUGH BETTER PRODUCTION SCHEDULING

At the Programming level, the reduction in setup and waiting times, achieved through advanced programming rules, leads to an increase in productivity (see the Bartira and Credeal cases as an example), as well as a reduction in production lead times and stocks in process, as a result of better synchronization between operations (see the Lunelli case as an example).This reduction in lead time ends up, in turn, having an impact on finished product stock levels (see the Tigre case as an example). In general, a 30% reduction in lead time can indicate a 15% to 22% reduction in safety stock levels, for example, depending on the stock policy methodology used. And it makes sense: if we can replenish stock more quickly, the need for large volumes of stock decreases.Production Scheduling via APS also provides visibility into what is planned to be produced over a horizon that can vary from weeks to a few months with a great deal of accuracy. This allows us to see not only production orders that are delayed today, but also those that are expected to be delayed over this horizon, making it possible to react in advance to minimize or even eliminate such delays.In addition, production sequencing allows us to know when an operation should start, and consequently when its raw materials need to be available. Contrary to what MRP/MRII uses as a premise, production lead times are not always fixed and the same, so knowing the actual dates of raw material requirements allows us to improve the purchasing process so that supplies occur as close as possible to their need in production, thus improving the company'scash-to-cash flow.

APS GAINS LINKED TO LEAN LOSSES

In short, if we use a classic concept from Production Engineering such as the 7 Production Losses of Lean Manufacturing, APS helps to reduce and eliminate 5 of them, and quite significantly. These are

• Overproduction;
• Stocks;
• Transportation;
• Processing;
• Hold on.

In short, we can see that taking finite capacity into account and synchronizing processes generates much more assertive scenarios, which in turn lead to more informed and safer decision-making, which will bring better results for the industry.

NEO PRODUCTION ENGINEERING

Do you want to know how to measure these gains and reductions in losses in order to understand how an APS project brings financial returns to your company?Keep an eye on the NEO Blogwe'll be talking more about this. You can also subscribe to our newsletter and receive relevant content by email.Contact us for an assessment of your case.[noptin-form id=2822]