Managing Automation - May 2008 - (Page 35)

lenging order on a certain date. The good news is that increasingly sophisticated software is available to help. But software alone is not the answer, experts say. To successfully implement ATP in a more complex world, many manufacturers will need to undergo a mind-set shift by entering into more collaborative relationships with their supply partners. ATP describes a process by which a manufacturer responds to an incoming order after assessing inventor y and prior commitments against production capacity, determines a date for delivery, and commits to that date. Manufacturers first looked to software to help manage their ATP efforts around the time advanced planning and scheduling systems became available, says Julie Fraser, an analyst with Industry Directions. The concept of ATP applies across industries, whenever manufacturers must fill ad hoc orders as opposed to pre-determined, blanket orders scheduled in advance, or in the absence of standard lead times. Michael Ball, a University of Maryland professor of management science at the Robert H. Smith School of Business, has worked directly with make-to-order manufacturers, using complex mathematical models to weigh such factors as production, material, and inventory costs against order denial and capacity underutilization penalties, all with an eye toward maximizing net revenue. These days, Ball says, companies are looking not just to answer the question, “When can I deliver that order?” but also to address issues such as how to strike the right balance between customer service and production efficiency, how and when to choose between two or more customers, and when it makes sense to push production into overtime to meet certain orders. Gone are the days when most companies had a planned amount of goods to produce and every product was standard. Today, in the age of outsourcing and tangled supply webs, Ball says, “even if you own all the components, they might be in different locations, and you have different products competing for those components, so it’s a more complicated decision.” BEYOND ATP Building on the principles of ATP are two concepts meant to help address some of the inherent complexities in modern manufacturing. Capable-to-promise (CTP) processes look at all the resources needed to create a delivery promise date for a certain quantity, including materials, both planned and in-house; production capacity and requirements; and any potential bottlenecks. (Sometimes the terms ATP and CTP are used in- terchangeably.) Most robust ERP suites today offer CTP functionality. If an order was promised to a customer and a traditional ATP calculation says the required materials aren’t available, a modern CTP process can drill down into supply chain planning, materials, production, and distribution systems, as well as detailed production scheduling to help determine the earliest practical date for delivery. CTP systems often pull data from the CRM MIND-SET SHIFT system or order entry screen in Despite the availability of sophisticated, modern software tools, fostering collaborative the ERP system used by the cusrelationships with trading partners is essential tomer service or sales staff takto successful ATP implementations. Here are ing the order, and sometimes some guidelines to consider: from a product configurator to ● Form critical relationships based on mutual access details such as sales price trust, from top to top, down the ranks, and information. with executive commitment. In complex or high-volume ● Develop a joint business case, starting with a production environments, CTP value stream map and pilot. helps provide a realistic due date ● Implement a structured mechanism for based on feasibility of producaligned two-way communication, internally tion capability, factoring in exand externally. isting orders and those currently ● Foster long-term partnerships through in production. shared metrics and accountability. “Before you take the order, ● Use data-sharing techniques based on transyou could call the shop superviparency and confidentiality. sor before you book the date, ● Clear problem-solving and escalation paths. but as orders increase, it becomes impossible for the super● Instill joint culture of continuous improvement on all sides. visor to know off the top of his head,” says Frank O’Nell, prod● Unite IT and the business to orchestrate the processes. uct manager for Consona’s ERP business. “The trick is to find a Source: AMR Research report, “Multi-Enterprise Collaboration: Are You Creating Collaborative Relationships way to do a complex analysis of or Developing Collaborative Practices?” December 2007 what’s happening on the shop and purchasing side, and do it in a short enough time frame to be able to provide a delivery answer while the order is being taken,” he says. Although many ERP systems have long contained some type of CTP functionality, O’Nell says, one thing that’s changing is the robustness of functionality in these systems. The latest version of Consona’s Intuitive ERP software, for example, incorporates advanced functionality based on theory of constraint scheduling, and provides analysis of various shop floor variables, such as the number of available machines, machine capacity, and labor, to help determine delivery dates for full orders as well as partial quantities that may be available sooner. A newer concept known as profitable-to-promise goes a step further to help manufacturers determine the financial practicality of over-promising on delivery. Supply chain management software check list 35 May 2008

Table of Contents Feed for the Digital Edition of Managing Automation - May 2008

Managing Automation - May 2008 Contents Take 1 Award-Winning Shoe-Maker Otabo Alters Course, Shifts Production to China IBM Partners with Universities for Cloud Computing Getting Noise in Production Under Control Incuity Embarks on a Vertical Market Strategy Foundation Intensifies OPC Standard Testing Mailbox Notes PM Roundtable Cover Story: The Business of Going Green Special Report: Night and Day Delivering on Promises Finding the Right Fit for Wireless Driving RFID Product Scan Advertiser Index Next

Managing Automation - May 2008

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