In today's fast-paced business environment, efficiency is key to maintaining a competitive edge. Enterprise Resource Planning (ERP) systems have been a cornerstone of business operations since their inception in the 1960s. These platforms consist of various modules that support different functions within an organization, such as finance, sales, manufacturing, and inventory management. The goal of ERP is to integrate these functions into a single, cohesive system.
However, while ERP systems have revolutionized business operations, they have primarily evolved in terms of technology rather than functionality. Today, they essentially perform the same tasks as they did 20 years ago, albeit with updated technology stacks and cloud integration. That’s why I’ll discuss the case for Advanced Planning Systems (APS) below in favour to ERP as the preferred option to handle sophisticated planning tasks in the future.
Different from ERP, APS 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. I’ve explained this in detail in my previous blog on this topic.
One of the key differences between ERP and APS is their approach to planning. ERP systems typically perform capacity-unconstrained calculations, which can lead to inefficiencies when dealing with large product portfolios. APS platforms, on the other hand, take into account various constraints, such as raw material availability and production capacity, to create feasible and efficient plans.
APS also excel in handling real-life complexities. For example, if a supplier fails to deliver raw materials, an ERP system may struggle to calculate the impact on demand and production schedules. APS platforms, with their advanced algorithms, can easily adjust plans based on such constraints, ensuring smoother operations.
APS have evolved significantly over the years. From their early days in the 1980s, when companies like i2 Technologies and Manugistics introduced the first best-of-breed APS solutions, to today's integrated and sophisticated systems offering features like concurrent planning and real-time data analysis.
Especially from an algorithmic perspective APS can now account for all kinds of constraints in capacity, production frequency, raw materials or in specific tools, operators... APS forecasting algorithms use extrapolation and regression methods, alongside automatic model selection, to predict market evolutions on the long-term, while inventory algorithms are used to accurately calculate safety stock and optimize multi-echelon safety stock, for instance.
In the current uncertain, and at times volatile, global market you want to make decisions based on different scenarios, which is the strong suit of APS when compared to ERP. Find out more on the key differences between ERP and APS in this blog.
Selecting the right APS for your business involves avoiding formal RFP processes, which often focus on functionality lists rather than practical implementation. Instead, conducting proof-of-concept pilots can help evaluate the tool's capabilities, the implementation partner's expertise, and the quality of your data (see image below). This way you can familiarize yourself with the APS in detail and get to know the implementation team and their way of working.
One critical piece of advice we can give is to choose for a best-of-breed APS, instead of opting for an ERP system which also incorporates advanced planning modules (i.e. ‘ERP Expansionist’ in the comparison below by Lora Cecere). You will get more ‘bang for your buck’, as best-of-breed APS providers will focus solely on their core planning competences, while ERP companies will often cut corners as APS is only a side-business to their more profitable core-ERP solutions.
By adopting an APS for your advanced planning needs, you can achieve greater efficiency, better manage complexities, and stay ahead in today's competitive landscape and volatile market environment. APS platforms provide the necessary tools to handle sophisticated planning tasks, optimize processes, and ensure smoother operations, making them an essential component of modern supply chain management.
At Solventure, we have the know-how and practical experience with implementing these best-of-breed APS, and connecting them to your existing supply chain or ERP systems. Our wide-spanning software portfolio also incorporates data optimization and harmonization solutions, and offers support for portfolio optimization and corporate performance monitoring.
Want to learn more on how we think APS can support your company’s supply chain? Make sure to take a look at our webinar on this topic,
