Why APS is more critical today than a decade ago
APS solutions have been increasingly requested by industries in recent years compared to the early 2000s. This isn't only about the natural commercial growth a product has as it becomes established in the market. We could even say this kind of growth is held back by the declining weight of Brazilian industry over recent decades and the consequent shrinkage of this consumer market. It's more than that.Perhaps the biggest factor in this equation is the increase in supply chain volatility, caused both by extraordinary events such as the pandemic and by the more globalized market profile, with greater interdependence between economic actors — meaning a small swing on one side generates a big wave at other levels of the Supply Chain. Despite collaboration moves like CPFR or technologies that bring chain visibility, the bullwhip effect is a hard reality. So this isn't an isolated case caused by the pandemic. We're talking about a basic law of physics applied to markets. A system that grows and heats up over the long term brings with it that entropic feature of greater disorder and randomness. And that entropy increase is a headache for those who need to plan production and inventory. Boy, does it!As if that weren't enough, we also see a substantial increase in the volume of SKUs companies keep active, mass customization strategies and shorter product life cycles (see fast fashion in apparel and the ever more frequent launches in tech, just to give easy examples).This makes one industry trait stand out more and more as a competitive advantage: agility. And here we have a term that's hard to measure financially. An owner can't compare apples to apples the attractiveness of an investment in machinery with an investment in agility. Yet at the same time, we know it produces better service levels, a lead time reduction that improves the company's cash-to-cash cycle (the gap between cash outflow to purchase raw materials and inflow from customer revenue), because we'll be delivering to customers faster and probably collecting sooner. Being more on-time and faster than the competition may not show up directly in the income statement, but it's a competitive advantage in most industries. APS solutions (Advanced Planning & Scheduling) were made not only to create efficient plans (with setup and wait-time reductions), but also to update those plans and reschedule very quickly in the face of changes, showing the impacts across production processes in a future horizon that can be months long.These changes can be on supply, production or demand. On the supply side, our suppliers may miss their delivery dates or deliver insufficient material volumes. Production can also go through pace variations, labor shortages, maintenance and several other factors.Finally, demand can also vary a lot. It's very common for a PPCP area to receive an urgent demand from sales and make short-term plan changes — without identifying the real medium-term impacts of those changes on other products and processes. So at the end of the month, targets aren't met and no one knows why, because PPCP couldn't establish causal relationships between events while there was still time, and now it's too late.A robust APS solution will let you see that causality and quickly decide what to do, simulating and comparing scenarios.If on one hand good demand planning can reduce surprises and bring more stability, on the other we have a stark truth: events and unpredictable products (low-forecastability items) will exist and, in many cases, will grow. As Mike Tyson said: “Everybody has a plan until they get punched in the face.” The good fighter is the one who quickly reacts with a new plan, before getting knocked out.
And how can NEO help your industry?
NEO Engenharia de Produção is a Siemens Smart Expert Partner and offers solutions with business analysis and implementation of APS software. We've built a new concept that values technological vanguard and technical excellence at the same time that we believe in human sensitivity, creative work and personalized, committed relationships.Get in touch through the form below or via our WhatsApp to learn more about our solutions and schedule a tailored analysis for your business needs.Sequence your production with someone who specializes in technological solutions.