APS & ERP: A Winning Combination

Without finite scheduling, ERP is unable to reduce stock and cycle times

Mike Liddell, CEO of Lean Scheduling International and Author of “The Little Blue Book On Scheduling”

I would imagine that many readers of this article have been through the acquisition and implementation of one or more ERP systems. ERP vendors will confidently assert that their system will do anything and everything except maybe, make the coffee. I know this first hand because I was one of those making that presentation. In fairness, I should tell you that these claims are usually not made with the intention of misleading anyone but with honest, if somewhat misguided belief, that they are accurate.

The premise of this article is simple. Manufacturers who use ERP based planning tools will not be able to compete with manufacturers who have invested in newer, more powerful finite scheduling software which is sometimes referred to as APS (Advanced Planning and Scheduling) software.

My “Ah Ha” Moment

That moment came a long time ago back in late 1990. This is when I finally realized that there was no way on God´s green earth that an ERP system could do everything that managers and executives assumed it could. Specifically. ERP systems had no way to create an accurate and synchronized schedule.

This was a revelation and I must admit that I just assumed the rest of the world would be eternally grateful to me once I explained it to them.

I immediately resigned from the ERP software company I was working for and started my own business and I was ready to change the world! But I had made three assumptions all of which proved to be dead wrong.

First, no matter how hard I tried to explain it, very few people agreed with me and ERP vendors, manufacturing consultants and APICS members took great pleasure in loudly denouncing me as a heretic.

My second assumption was because I knew what the problem was, I should be able to quickly solve it. But this wasn´t true just as it wasn´t true for other pioneers such as Eli Goldratt. Early software was unproven and only partially effective, and it was hard to convince people to take a chance. Today this is no longer true because there are many proven companies that specialize in helping companies implement APS systems.

The third assumption I made was that implementing a finite scheduling module would be like implementing any other software.  But that was not true either. It took years to get it right and what it boiled down to was, unlike other software modules, finite scheduling software must be able to model each company’s capacity and material constraints and no two companies were alike. If you are unable to create a schedule that makes sense it will never work.

ERP Systems are still needed

Just in case there is any confusion, there is something I want to clarify: All manufacturers need an ERP System. ERP systems do a fantastic job of creating transactions, storing data and instantly sharing information. Companies who are smart enough to adapt them by building smart customized processes around them achieve excellent results.

What usually happens is managers and executives become frustrated because their ERP systems are unable to plan accurately or create any kind of valid schedule. They have no way of being able to connect cause and effect and get frustrated. Many companies end up throwing out their current ERP system and replacing them only to find themselves in the same position a few years later.

But there are better alternatives. If business problems are related to poor customer service, poor on-time deliveries and efficiency, the loss of key clients, and the frustrations of long lead times there is another path that is much simpler, much less expensive, and much more likely to produce results.

For those who want to know more about this subject, read my recent book, “The Little Blue Book on Scheduling” where I goes into much more detail about some of the surprising limitations of ERP systems and what to do about it.

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