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 deployment generates significant effort, so a motivation to get out of inertia is needed. Depending on the area and the position of those seeking, whether in the area of ​​tubes and connections , plastic packaging , food and the like, we see distinct motivations that still converge on the ultimate goal of organizations: greater profitability.

Cost reduction and increase in revenue

From the perspective of industrial executives, cost reduction and increased revenue are the main drivers in the search for an APS . Some directors have a keen eye for identifying the importance of production planning and its challenges, becoming pioneers of these initiatives within companies. However, this is not a common reality, as these positions tend to combine multiple functions and concerns across multiple areas, preventing them from proactively seeking final solutions to problems. Generally, in line with the board of directors is the management team, which must find ways to achieve the business's ultimate goals. The challenges facing management in the Supply Chain, Industrial, and even IT areas range from service levels, with delivery delays and stockouts, to production efficiency issues, impacted by long setup and waiting times, as well as long lead times mes high inventories, both in process and of raw materials and finished products. In all these areas, companies always experience losses (some more than others in each area), and many see opportunities to reduce them through better production planning and scheduling. However, the initiative most commonly comes from those who experience the usual limitations we've seen so far: analysts and coordinators in the PPC . For them, the time spent programming, and especially reprogramming, is exorbitant, and they're rarely satisfied with the results achieved, since they can see the losses and understand the oversimplifications in their processes and systems. In practice, they are also held accountable for all their superiors' objectives and often find themselves "tied."[caption id="attachment_2670" align="aligncenter" width="401"]

Stakeholder Objectives[/caption] Just a little reflection is enough to understand that defining what, when, and how to produce (the function of PPC , 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 address the gains in improving the Planning processes and then the Scheduling processes to clarify the approaches.

Gains through better production planning

At the level of planning, to define well what to produce with each period, as well as what it will not be possible to produce because there is no capacity, avoids spare and ruptures. The lack of analysis of capacity aspects with a good level of detail ends up generating fats on one side and cutting the meat on the other. That is, high stocks of some products and lack of others. The APS considers this capacity, generating better inventory health, thereby reducing storage and loss of sales costs (the latter often immeasurable). In addition, medium and long term adjustments can be performed to reduce the costs needed to meet a particular demand. An increase of 20% demand does not mean a need of 20% more capacity. Seeing the behavior of demand and capacity over time through external factors such as seasonality and product mix changes, as well as internal factors such as vacation, shifts, or changes in production processes, may change decision -making about, for example, the purchase of a machine that can cost millions of reais and that will be idle, or make a sub -dimensioned acquisition that will not meet demand. That is, both cost reduction and improvement in delivery performance can be the result of better planning, the one that sees capacity properly.

Gains through a better production programming

waiting times, achieved through advanced scheduling rules, leads to increased productivity (see the Bartira and Credeal cases as examples), as well as reduced production lead times mes in-process inventory, resulting from better synchronization between operations (see the Lunelli case as an example). This lead time reduction, in turn, impacts finished product inventory 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 inventory policy methodology used. And it makes sense: if we can replenish inventory more quickly, the need for large volumes mes it mes . Production Scheduling via APS also provides visibility into what is expected to be produced over a horizon that can range from weeks to a few mes with considerable accuracy. This allows us to see not only production orders that are currently delayed, but also those expected to be delayed over the future, enabling us to react in advance to minimize or even eliminate such delays. Furthermore, 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 assumes, production lead times mes not always fixed and the same, so knowing the actual dates of raw material requirements allows us to improve the purchasing process so that replenishments occur as close as possible to production needs, thus improving the company's cash flow ( cash-to-cash flow ).

APS gains linked to Lean's losses

In short, if we go to a classic concept of production engineering such as Lean Manufacturing's 7 production losses, APS helps in reducing and eliminating 5 of them, and quite significantly. They are:

• Overproduction;
• Stocks;
• Transport;
• Processing;
• Wait.

Finally, we note that the consideration of finite capacity and synchronization between processes generates much more assertive scenarios, which in turn provide decision making with greater basis and safety, which will bring better results to the industry.

NEO PRODUCTION ENGINEERING

Do you want to know how to measure these loss gains and reductions to understand how an APS project brings financial returns in your company? Keep an eye on Neo's blog as we'll talk more about it. You can also sign our newsletter and receive relevant email content. Contact us to make an assessment of your case. [NOPTIN-Form ID = 2822]