APS vs. ERP – How to Strengthen Your Supply Chain Resilience

With supply chains becoming increasingly complex, having the right tools is essential. Solely relying on ERPs and spreadsheets can leave you trailing your competition in forecasting accuracy and planning efficiency.

Through conversations with our customers, we've identified the challenges they face when trying to maintain visibility and control over their supply chains. In this blog, you can explore when and why you should consider an APS (Advanced Planning and Scheduling) system to strengthen your supply chain resilience. Read on to gain valuable insights and make informed decisions that will keep your business agile and competitive.

Introduction to ERP and APS

Let's start by explaining what companies typically do in ERP systems for supply chain planning and how these systems compare to APS.

On the one hand, ERP systems are traditionally used for transactional processes like sales orders, procurement, and financial consolidation. ERP systems originate from Material Requirements Planning (MRP), and while they can handle planning, they primarily focus on shorter-term, operational tasks. They are useful for managing routine transactional processes and short-term material planning (MRP), while ensuring alignment between sales, manufacturing, and procurement.

APS systems, on the other hand are designed for strategic, long-term, and mid-term planning, which often go beyond the capabilities of ERP systems, especially when it comes to flexibility and scenario-based planning. APS systems have their roots in academic research and were designed to handle complex supply chain challenges. The early APS systems were built to be more advanced than traditional ERP systems, offering integrated planning capabilities that could account for a wide array of supply chain constraints.

The Key Differences Between ERP and APS

While ERP systems excel in managing transactional data and calculating material requirements, they struggle to handle real-life complexities in supply chain planning.
APS systems go beyond basic planning by integrating demand, supply, and inventory management. They offer advanced capabilities for:

• Scenario management: APS enables businesses to simulate various planning scenarios and make data-driven decisions, which is nearly impossible with ERP alone.
• Constraint modelling: APS systems account for detailed constraints like supplier reliability, raw material availability, and labour-specific skills. These constraints are often overlooked or cannot be easily modelled in ERP systems.
• And capacity planning: ERP systems are typically capacity-unconstrained, which can lead to scheduling conflicts when demand exceeds production capacity. APS ensures a feasible plan by considering real capacity limitations.
  

APS also excels at transforming Sales and Operations Planning (S&OP) meetings from static reporting sessions into active decision-making forums. APS systems can drive this shift by offering:

• Aggregation and disaggregation: Planners can view the impact of decisions at both detailed and aggregated levels, making it easier to evaluate changes in service, cost, and inventory.
• And value-based planning: APS systems allow companies to assess scenarios not only in terms of volume (e.g., units, square meters) but also in value (e.g., euros), leading to more financially sound decisions.
  

Even though APS and ERP might differ from one another on many points, it is key to have a seamless integration between the two. That’s why we always emphasize to our customers the importance of good connectors to move data between systems efficiently. The APS can forecast and plan, but it needs to push this data back into the ERP for execution (e.g. triggering MRP or production orders).

The Business Case for Implementing APS: Key Considerations

Implementing an APS system is a major project, and success depends not only on technology but also on choosing the right implementation partner. Many companies mistakenly focus too much on the technical capabilities of the tool and not enough on the experience and expertise of the implementation team. That’s why we advise starting the implementation process with a data quality assessment to ensure that the master data is clean and reliable, as this can make or break the effectiveness of an APS.

In many ways this blog is a clear endorsement for implementing APS systems, especially when you can expect a payback period of 6 to 12 months. Unlike ERP systems, which can be seen as a "license to operate," APS systems generate significant business value by driving improvements in service, cost, and inventory. This is exactly the reason why I frequently urge supply chain leaders to be more courageous in pitching APS to executives and to consider running proof of concepts (POCs) rather than relying on lengthy RFP processes to evaluate different tools.

Final Thoughts

In this blog, we provided a comprehensive look at how APS systems are revolutionizing supply chain planning. In contrast to ERP systems, APS offers the flexibility, advanced algorithms, and scenario management needed to navigate today’s increasingly complex supply chains. As companies face more disruptions and capacity constraints, investing in an APS system is no longer optional—it’s essential for maintaining agility and staying competitive.