Johannesburg, 29 Nov 2017
The company that stands still is the company that fails. When you are not able to fulfil orders and keep promises to your customers, your business effectively has a target on its back. Delays and bottlenecks poison the well, which is why businesses increasingly rely on planning systems to keep them on track.
"Business is always evolving, and that includes the core planning applications they rely on such as the ERP," says Lance Zikalala, MD of nCoded. "But too many companies believe that their planning applications aren't meant to evolve. They are afraid that changes there will bring instability. But that is exactly the part of the business that should always be moving forward."
Though the ERP (enterprise resource planning) has been a mainstay of business for a long time, back in the '80s it was barely even a concept. The MRP (material requirements planning) was the most evident example of uniting core business functions under a single concept, orchestrated through technology systems. The MRP appealed to manufacturing sectors, as it controlled production and inventory, and was most often relied upon by purchasing, production, and delivery departments.
The MRP still exists today, but rarely as a standalone. Its fate started changing in the 1990s, when the ERP began to offer broader business function support. ERPs touched practically every part of an organisation, usually through different modules that various departments interact with. MRP platforms first collaborated with sister ERP systems, then became closely integrated until they were eventually a part of the ERP itself. Thus, today's modern ERPs offer MRP as part of their modules.
To many, this is where the story ends. Most consider ERP as the be-all of business function coordination, hence the superstition to not change or adapt it beyond some modular additions. But such a notion soon falls to the wayside when you realise the potency of the landscape's newest rising star.
"There is a limitation to ERP that it shares with MRP," Zikalala explains. "Both are reactive. They deal with the here and now. APS is different. It's concerned about the future. APS stands for advanced planning and scheduling, which sometimes leads to confusion with MRP systems. But ERP/MRP looks at what has happened and should happen now, whereas APS is concerned with what will happen next."
ERP's here-and-now view renders it unable to reliably predict future capacity of resources. In contrast, APS concerns itself with that very challenge: can the future orders coming in be matched by the resources and capacity of the business? ERPs rely on stockpiling, whereas APS systems allow for more resources to be ordered as needed. An APS shines particularly brightly in complex environments where trade-offs need to be made to balance production demands. It helps avoid future bottlenecks or stoppages by using both current orders and forecasts, functions neither MRPs nor ERPs are particularly good at.
This may be why ERP systems have been struggling to absorb APS as it did with MRP. The most successful cases involve ERP vendors acquiring APS companies, but still offering them either as a separate system or packaged to appear as a module, even though it is actually a standalone application. Zikalala said this is because closing the gap between ERP and APS is not as simple as it seems:
"The ideal outcome is what we call a total planning and scheduling solution. This positions the strengths of the ERP with MRP functions alongside the APS. But you can't just push a button and make it happen. Businesses need to be at a certain level of digital and process maturity to accomplish such a combination. So while many are enchanted by what APS can do, they don't realise that it's not something you just add to the ERP."
Such a gap in knowledge is a real pity, he concluded, given how powerful and transformational a total planning and scheduling solution is:
"There are several things ERPs did that APS systems do better and those functions have been migrating to APS, including some MRP functions. Cooperation between ERP and APS is a watershed for companies in the manufacturing, mining and services spaces. Many companies may be avoiding that conversation due to the underlying complexity involved, not realising what they are actually doing is stunting their own evolution. And we all know what happens when a business stops evolving."
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