Quintiq Business Thought
The dot on the horizon
Most consultants will recognize that in implementation projects, getting to a go-live can be a struggle. Of course, a project is started by making projections on the benefits of the new planning system. The new system will help the customer to deliver business benefits and a competitive advantage, such as a higher delivery reliability, shorter leadtimes or lower inventories. The advanced planning & scheduling (APS) system will enable the customer to achieve the goal, as supply chains get increasingly complex - too complex to be managed efficiently by human planners alone, without decision support. This means that the objectives that are defined before the startup of the project, should guide - and motivate - the team towards a go-live.
Projects can be a struggle
Let's face it: some projects can be very complex and a team could gradually move their focus from the project benefits towards getting the APS system live. This means that the much needed focus on objectives fades, in favor of meeting project deadlines. A project plan should be a means to an end, not the objective in itself, but this is sometimes forgotten as timelines get challenging. And then, when the go-live is finally achieved, a sigh of relief is heard, the project team disbands, or is decimated, and the newly developed system is left to the ones still standing.
Continuous improvement
Not all projects end like that fortunately, but we see a lack of continuous improvement activity after a go live in many cases. I like to compare this to being subscribed to a fitness club – a fancy and hence expensive one. When buying the subscription, there are great expectations on the benefits. However, the subscription alone will not help in losing weight, building strength or improving health – there is the unquestionable need to exercise. Only when you exercise, the fitness club will enable you to get health benefits. But it is very well possible to spend much money on gyms without getting any benefit at all – by simply not exercising or using the facilities in the wrong way.
For an APS system, the same principle applies: it needs to be used in the right way in order to get benefits. APS systems are able to generate a wide array of plans - some good, some bad. Of course, the system should support the user in making the distinction. But it is only one element of the process, which further involves planning, operations, purchasing, sales, etc. This principle also applies to ERP (enterprise resource planning) systems, as described by Markus and Tanis (2000). They claim that the continuous improvement phase is the one most often neglected.
What is needed to improve?
At least the following activities should be carried out in continuous improvement using APS:
- Define/update KPI’s. At the start of the APS project, objectives and KPI’s (key performance indicators) should have been defined that measure the quality of the plan and link towards the higher level objectives.
- Generate a plan using KPI’s. For APSs that generate a plan automatically using an objective function, the KPI’s should drive the plan generation. When heuristics are used, they should be designed such that they generate a plan with reasonable KPI values. When manual planning is done using the APS, the user should be able to monitor the KPI values in executing planning actions.
- Review KPI values. When the plan is released, sent to operations and feedback is received about its execution, it should be reviewed. Depending on the frequency of planning, this can be done daily for operational plans or schedules and weekly or several times per month for higher-level plans. When evaluating the plan, the KPI’s should be reviewed. When a KPI value is not in line with what is expected – e.g., the planned delivery performance is below 85% – the reason for this should be further analyzed. For example, the planners might analyze the delivery performance per product group or review delays occurring on bottleneck resources.
- Define improvement actions. Based on the review of KPI values, actions for further improvements should be defined. These improvements can apply to the planning and scheduling process or to the execution of the physical chain. For example, the company might discover that their previous assumptions on where the bottlenecks were positioned are wrong and that they should focus on the real sources of waiting for material and lost volume.
- Evaluate the effect of improvement actions. As part of the review of the KPI values, planners should evaluate whether improvement actions have been taken and whether these have been successful. For example, they might have fine-tuned the processing times on an overloaded resource, and it should be reviewed whether, after replanning, the capacity load has improved.
Indeed, quite similar to the standard plan-do-check-act cycle.
Brains are needed to improve
To follow such a process of continuous improvement, skilled employees are needed who are able to think conceptually and engage in problem solving activities. In some cases, such people are taken away from the team after the system goes live. Or a customer has failed to make sure such people are present in the own organization, and depends fully on consultants. And as consultants can be regarded as expensive, it might not be sustainable to keep them engaged for a prolonged time. A lack of human resources is one of the main reasons for continuous improvement not taking off. Organizations have to realize that having a live APS system only marks the start of the journey and not the end, and plan for this from the beginning.
Reference
Markus L, Tanis C (2000) The enterprise systems experience: from adoption to success. In Robert WZ, Michael FP (eds), Framing the domains of IT management: projecting the future through the past. Pinnaflex Educational Resources, Inc., Cincinnati, OH, pp 173–207
