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How can advanced planning and scheduling software help meet demand?

MRP can be a great tool for estimating lead times and other critical information, but its logic rests on averages. Here's how a different option provides more nuanced estimates.

Advanced planning and scheduling software is a significant departure from the traditional material requirements...

planning calculations that have been with us since the earliest days of ERP and its predecessor, manufacturing resource planning (MRPII), which dates back to the 1960s.

The material requirements planning (MRP) calculation, still at the core of nearly every ERP system on the market, uses straightforward math, such as multiplication and subtraction, on data from inventory and bills of materials. The problem is that the system has to assume that the data is correct and stable. In other words, if the stated lead time is six days, the logic uses six days in its calculations. But we all know that six days may just be the average, and it is unlikely to be exactly six days every time we make that particular item.

The same issue applies to scheduling. We tell the system that jobs are expected to wait two days at a particular work center. That may be the average, but the length of time a particular job waits depends on what other work is waiting, relative priorities related to that work, how fast the machine or operator is working that particular day, and many other factors. But ERP's scheduling logic doesn't know anything about that; it just uses the lead times that are in the database.

Advanced planning and scheduling software does not just accept standard lead times; it uses advanced math, such as heuristics and optimization logic, to better estimate what actual lead times are likely to be based on those factors mentioned above, including information about all the other jobs that are contending for the same resources on the same days.

On the scheduling side, the program develops a finite schedule, meaning that it will only assign as much work to a resource as it has the capacity to complete. This is opposed to conventional infinite scheduling, which cannot recognize capacity constraints.

On the planning side, traditional MRP is materials-driven, meaning that it only cares about having parts and products available on the dates and in the quantities needed; it assumes that sufficient capacity is always available. Additional applications, like resource planning (RP) and capacity requirements planning (CRP), are used to work through any capacity issues after each material planning stage. Advanced planning resolves any capacity issues using that finite capacity logic at the same time as it plans material availability, producing a balanced plan that does not need further resolution with RP or CRP.

The end result is a plan and a schedule that is likely to be more realistic and more accurate. Links to other applications can provide capable-to-promise (CTP), which enables customer service to quote accurate availability dates to customers and avoid over-promising, and any resultant disappointment. CTP may also be able to identify the cost and impact of forcing an additional requirement (order) into the schedule ahead of other existing work.

As great as the benefits of advanced planning and scheduling are, many companies simply do not need these advanced capabilities. The advanced software can be expensive, and it is difficult to implement and use successfully because of its reliance on accurate data, including timely production reporting and the need for knowledgeable and well-trained users to operate it. 

Next Steps

Why demand-driven MRP should be on your radar

Lessen the bullwhip effect with demand-driven MRP

How to get lean with MRP and ERP

This was last published in June 2017

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