SLIDE 1: Last time, Ms. Rivera and Ms.

Quiestas discussed about ERP (Enterprise

Resource Planning) and Information Networks, they both help organizations in the
supply chain management and logistics process. And they both require proper planning
and decision making so that they can be utilized efficiently. Decision support is
becoming more critical with the increasing scope and complexity of supply chain
decisions. Decision Support Systems (DSS) guide managers and planners in the
understanding and evaluation of complex supply chain alternatives. So, in this chapter,
we will tackle about what Advanced Planning and Scheduling (APS) is all about and
how it can help managers efficiently and effectively utilize key supply chain resources.

SLIDE 2 + 3: Prayer at learning objectives eme.

SLIDE 4: Rationale for Advance Planning and Scheduling- APS systems seek to
integrate information and coordinate overall logistics and supply chain decisions while
recognizing the dynamics between functions and processes. The four factors driving
APS development and implementation are (1) planning horizon recognition - The first
consideration is the movement to a shorter and shorter planning horizon for operations
decisions. In the past, supply chain activities were planned months in advance with
limited flexibility for change within the current month and typically no flexibility for
change within the current week. This lock-in time was often termed the freeze period for
production and supply chain planning decisions. (2) supply chain visibility, - While
ERP systems can provide resource visibility within the firm, external visibility and
effective management capability require more sophistication. An effective APS system
integrates with information provided by other supply chain partners to provide such
visibility. (3) simultaneous resource consideration, - third APS consideration is the
need to develop a plan that incorporates combined supply chain demand, capacity,
material requirements, and constraints. Supply chain requirements reflect the customer
demand for product quantity, delivery timing. and location. While some of these
customer requirements may be negotiable, logistics must execute to the agreed-to
requirements and standards. and (4) resource utilization - With functional resource
trade-offs in mind, the final consideration driving APS system development and
implementation is the need to implement an integrated planning approach that
minimizes combined supply chain resources. This is a critical capability when supply
chain and firm performance place a strong emphasis on overall asset utilization.

SLIDE 5: There are a growing number of APS applications. New applications are
evolving by the need to consider a broader range of activities and resources within the
scope of supply chain planning.
1. Demand Planning- Demand planning develops the forecast that drives
anticipatory supply chain processes. The forecasts are the projections of
monthly, weekly, or daily demand that determine production and inventory
requirements. For instance, requirements for existing products may have to be
reduced to reflect the market's reaction to a new product introduction or one
item's requirements may need to be adjusted during the promotion of a
substitutable item.
 2. Production Planning - Production planning uses the statement of requirements
obtained from demand planning in conjunction with manufacturing resources and
constraints to develop a workable manufacturing plan
3. Requirements Planning - Requirements planning APS extends the planning
process beyond the plant walls. While it is important to achieve economical plant
performance, effective supply chain management requires consideration of the
impact production decisions have on downstream performance. For example,
production plans may suggest a long run of a single item. This will build up
finished inventory requiring storage and transport capacity.
4. Transportation Planning - This system's objective is to plan transportation
requirements throughout the supply chain. Transportation APS integrates
transportation requirements, transportation resources, and relevant costs into a
common tactical decision support system that seeks to minimize overall freight
expense. The analysis suggests ways that freight can be shifted among carriers
or consolidated to achieve scale economies. It also facilitates information sharing
with carriers and other service providers to enable better asset utilization.

As we've seen, logistics and supply chain planning are essential for effective
resource utilization. Lack of accurate and comprehensive logistics and supply chain
planning tools historically resulted in poor utilization of production, storage, and
transportation capacity. The increasingly strong focus on improved asset utilization in
conjunction with improved information management and decision analysis capabilities
and techniques has brought comprehensive APS to reality.

SLIDE 6: The APS system in Figure 9-1 is a simplified network including plank,
distribution centers, and customers as well as transportation flows. This network, a
simplified version or that illustrated in Chapter 1, reflects the resource status and
allocation at a point in time, for example, on the first day of the month. Effective
planning requires a process that can time phase and coordinate resource requirements
and constraints over time. For example, if product X is needed by the customer in
period 3, its movement through the supply chain must be time phased for arrival by
period 3. Assuming a one period performance cycle between each stage in the supply
chain, this means that the APS must plan for the shipment of X from the plant during
period I and shipment from the distribution center during period 2.

SLIDE 7: Customers require 200 units of product during each of the next five periods
with the exception of period 4, when a special promotion will spike demand to 600 units.
The firm's production capacity is 300 units per week. On the extremes, the firm can
select
between two approaches to satisfy customer requirements given the production
constraints. Alternative I is to wait until the fourth time period and then run production
overtime to meet customer requirements. This alternative results in higher production
cost but no cost to carry or warehouse inventory. Alternative 2 is to build ahead using
the extra 100-unit capacity in the time prior to period 4. With this alternative, an extra
100 units is built and added to inventory each period until it is required during period 4.
This alternative will not require overtime production but will require increased inventory
carrying and storage costs. There are, of course, intermediate alternatives to these two
extremes. The ideal option is to select the combination resulting in the lowest combined
cost of manufacturing and storage.' Using linear optimization techniques, APS can
identify the most cost-effective trade-offs considering all relevant costs. While firms
have attempted to evaluate these trade-offs in the past, analysis capabilities only
allowed for considerations of two or three major trade-offs to minimize problem
complexity. APS offers the ability to thoroughly evaluate complex trade-offs involving a
large number of alternatives.

SLIDE 8: Figure 9-2 illustrates how these modules relate to each other and to the
corporate ERP or legacy system. In this figure, we can see that this starts with the
ERP/Legacy System, of course a company should know what ERP system they can
utilize, whether yung Customer Relationships Management ba, Transportation
Management System or the Warehouse Management System. After that they would
move forward with the components of APS which is the demand management, resource
management, resource optimization and resource allocation.

SLIDE 9: First, we’ll go to the DEMAND MANAGEMENT- The demand management

module develops the requirement projections for the planning horizon. In effect, it
generates the sales forecasts based on sales history, currently scheduled orders,
scheduled marketing activities, and customer information. Ideally, demand management
works colIaboratively and interactively both internally across the firm's functional
components and externally with supply chain partners to develop a common and
consistent forecast for each time period, location, and item. This must integrate.
Historical Forecast- a company must have a track of previous demands and sales
because that’s where historical forecaset cam from. And then dapat din iintegrate yung
Promotional Plans- since nakadepende ito sa demand forecast kung paano
iaadvertise ni company yung certain product para mameet anf target. Next would be the
Pricing Changes, dapat a company would always be ware of the price changes
because it can affect the demand of a product and lastly the New Product
Introductions, which could also greatly affect the managements forecast because not
every product is welcomed by the customers so dapat aralin talaga ni company yung
movement ng demands ng product/service nila so they can successfully cope with this
phase. Another component would be the RESOURCE MANAGEMENT, siyempre
paano ba makakabuo ng isang product ang company if wala siyang resources. The
resource management module coordinates and records supply chain system resources
and constraints. Because APS systems use the resource and constraint information to
evaluate the trade-offs associated with supply chain decisions, information accuracy
and integrity are critical to provide optimal decisions and enhance planning system
credibility. But there are some constraints in resource management, like Capacity
Limitations- Hindi porket pag mataas yung demand ng product is mag ooperate kayo
overtime to make additional products kasi baka mamaya for example, ang capacity lang
pala ng machine niyo is 500 units a day, pero pinilit niyo mag produce ng 600 units, so
possible masira yung machine at yung buong process is nabulilyaso. Same with the
Storage and Movement, since sobra sobra yung ginawa niyong product wala na
palang paglalagyan sa warehouse niyo so additional storage and transportation cost if
nagrent kayo ng other warehouse just to store the product. So dapat the company must
have proper resource management to avoid problems.

SLIDE 10: The third component is the RESOURCE OPTIMIZATION . considered as

the BLACK BOX of APS System. The resource optimization module output is a supply
chain plan projected into future time periods that minimizes overall costs while
attempting to operate within major resource constraints. The plan specifies which
products should be produced when and determines movement and storage
requirements across the supply chain. And the Last component is the RESOURCE
ALLOCATION- The resource allocation module also provides information regarding
when product is available to promise (ATP) or capable to promise (CTP). ATP is used
to designate that even though actual inventory is not currently available, it will be
available for shipment (or promise) at a specific date in the future. In effect, the ATP
designation allows firms to commit scheduled production to customers. CTP is used to
designate when requested product can be promised for future delivery. CTP requires a
much broader analysis as it determines whether there is future specific capacity or
capability, given current and projected supply chain demands. ATP and CTP can
dramatically enhance supply chain performance and effectiveness by allowing
commitments against future production and capacity. The result is more rapid
commitments to customers, fewer customer surprises, and enhanced resource
utilization.

SLIDE 11: APS CHARACTERISTICS:

Driven by forecast and order requirements- meaning it relies on the data that we
collected
Constrained resource planning
Integrated supply chain decision making
Time phased
Requires high data integrity and accuracy
APS KEY FEATURES:
Constraint management ( By Advance Planning and scheduling, maiiwasan natin
yung mga constraints like capacity limitations, storage and movement, Concurrent
planning (allows teams with different functions to share data, making informed changes
that all other teams can see and understand the impacts of immediately, and adjust
accordingly. Concurrent planning allows for lower risks, less waste, and better overall
visibility.)
Synchronized planning (real time updates with other teams), Modeling (vision of what
your plans and target are), Optimization (utilizing the resources efficiently with the
promise of lowest cost and high profit) Simulation (the production of a computer model
of something, especially for the purpose of study.)
Available-to-promise capability (available for shipment (or promise) at a specific date
in the future.)

SLIDE 12: EME OF FORECASTING. The forecast defines the requirements that
the supply chain must schedule the inventory and resources to fulfill. Since there are
still many logistics and supply chain activities that must be completed in anticipation of a
sale, forecasting remains as a critical capability for planning.
FORECASTING process is crucial since forecast will serve as the basis of your
operations. You have to balance your calculations so that there wont be any waste in
the process.

SLIDE 13: First, the base demand is the quantity that remains after the remaining
components (seasonality, trend, cyclic, promotion and irregular) have been removed. It
is a calculated demand normalized from actual demand corrected for seasonal and
period length variations. Next is the seasonal component which is the recurring
demand for a particular product. For example, the products that the customer want in
Christmas Season or in Summer Season. Since this season occurs yearly, companies
are able to forecast their demand based on the actual and previous demands of
customers from the previous years. Another is the trend component which is the long-
range general movement in periodic sales over an extended period of time. The
demand or need for certain product is high at a given time and eventually falls when a
new product is introduced or new demand arises. For example, in this pandemic, the
trend is the order for face mask and face shield. We are not sure on how long the trend
will last. The cyclic component, on the other hand, is characterized by swings in the
demand pattern lasting more than a year. The demand for major appliances is an
example of this cyclic demand. Next is the promotional component which characterizes
demand swings initiated by the firm's marketing activities, such as advertising, deals, or
promotions. The forecast with this component is often difficult since demand only comes
as long as the product is advertised well in the market. Last but not the least, the
irregular component which includes the random or unpredictable quantities that do not
fit within the other categories. Due to its random nature, this component is impossible to
predict and forecasting may be done inaccurately.

SLIDE 14: The top-down or decomposition approach, as illustrated in Figure, it

develops a national level SKU (Stock Keeping Unit) forecast and then spreads the
volume across locations based on historical sales patterns. As an example, suppose the
aggregate monthly forecast for the entire country is 10,000 units. Assuming the firm
uses four distribution centers to service the demand with a historical demand split of 40,
30, 20, and 10 percent, respectively, then forecasts for individual distribution centers are
projected to be 4000, 3000,2000, and 1000. Forecast management must select the best
approach for each particular situation. The top-down approach is centralized and
appropriate for stable demand situations or when the demand levels change uniformly
throughout the market. For example, yung nasa figure kanina, if yung historical data na
ginamit is constant through number of periods, they can use it as basis of splitting the
units. The use of the top-down approach facilitates development of new detailed
forecasts since all changes are relative. On the other hand, the bottom-up approach is
decentralized since each distribution center forecast is developed independently. As a
result, each forecast can more accurately track and consider demand fluctuations within
specific markets. However, the bottom-up approach requires more detailed record
keeping and makes it more difficult to incorporate systematic demand factors, such as
the impact of major promotions or new product introductions.

SLIDE 15: Logistics planning and coordination require the best possible estimate of
SKU/location demand. This is where forecast management process come in. First we
must have the Forecast Database, this database includes past sales and forecast
history as well as a record of activities such as price changes or promotions that
occurred concurrently with the sales activity. The forecast database is ideally part of the
ERP central data warehouse although some firms maintain independent forecast
databases. Eme na yung sunod na boxes. Forecast Techniques- which will be
discussed later. Forecast support systems- which supports the maintenance and
manipulation of data, example ay external factors like promotion, pricing changes,
product line changes, competitive activity and economic conditions.

SLIDE 16: applicability of a technique: (1) accuracy, (2) forecast time horizon, (3) the
value of forecasting, (4) data availability, (5) type of data pattern, and (6) experience of
the forecaster. Each alternative forecast technique must be evaluated both qualitatively
and quantitatively with respect to these six criteria.

SLIDE 17: Time Series- Using historical sales data, time series analysis is used to
identify seasonality, cyclical patterns, and trends
CAUSAL- example, soft drinks can be related to the temperature . cause and effect
relationship. So siyempre pag summer, mataas ang forecasted demand ng softdrinks.

SLIDE 18: BASA NA LANG AT KONTING EME.

SLIDE 19 plus 20: Although moving averages are easy to calculate, there are
several limitalions. Most significantly, they are unresponsive or sluggish to change and
a great amount of historical data must be maintained and updated Lo calculate
forecasts. If the historical sales variations are large, average or mean value cannot be
relied upon to render useful forecasts. Other than the base component, moving
averages do not consider the forecast components discussed earlier .

SLIDE 21: Exponential smoothing bases the estimate of future sales on the weighted
average of the previous demand and forecast Ievels. The weight places emphasis on
recent observations. The new forecast is a function of the old forecast incremented by
some fraction of the differential between the old forecast and actual sales realized. The
increment of adjustment is called the alpha factor.

SLIDE 22: Exponential smoothing permits rapid calculation of a new

forecast without substantial historical records and updating. Thus, exponential
smoothing is highly adaptable to computerized forecasting.
SLIDE 23+24: (pasolve sa qm solver) The first case illustrates a 100 percent
error, which demonstrates relatively poor forecasting. For the second case, however,
the relative forecast error is 1 percent, which demonstrates very accurate forecasting.
To compare forecasts across SKUs and locations with different mean demands, error
percentages are usually calculated. Percentage error is calculated by dividing a mean
error measure by mean demand.

SLIDE 25: Assuming that individual SKU detail is recorded, forecast error can be
calculated for individual SKU location combinations, groups of SKUs or locations, and
nationally. Generally, more aggregation results in lower relative forecast errors. The
figure illustrates the minimum, maximum, and mean relative forecast error for a sample
of firms marketing consumer products. As Figure 9-6 illustrates, while a relative error of
40 percent is average for a SKU/location level of aggregation, it would reflect very poor
forecasting if measured at the national level.

SLIDE 26-27: eme lang keri mo yan queen

SLIDE 28: benefits of aps. RESPONSIVENESS TO CHANGES- Today's
customer requires more responsiveness to market needs, and demand for lower
inventory levels rules out long cycle times. Marketplace and firm changes can be quickly
made in the demand management and resource management modules, allowing for the
planning process to use the most current and accurate information. The requirements
optimization module then solves the allocation, allowing daily and single week planning
cycles rather than multiple weeks or months. APS thus results in a planning process
that can be much more responsive to marketplace or firm changes. Second,
COMPREHENSIVE PERESPECTIVE- effective supply chain management requires
planning and coordination across the firm and between firms. The process must
consider the trade-offs associated with shifting activities and resources across functions
and organizations. THIRD RESOURCE UTILIZATION- the major APS benefit is
enhanced resource utilization. More effective and responsive planning allows a more
even assignment of requirements to existing sourcing, production, storage, and
transportation capacity. The result is that existing capacity is used more effectively.
Firms also report that APS has significantly reduced asset requirements by smoothing
resource demands.
OVERALL, APS can take a comprehensive and dynamic perspective of the entire
supply chain and focus on reducing the supply chain asset requirements as demanded
by financial markets.

SLIDE 29: CONSIDERATIONS

INTEGRATED VS. BOLT ON APPLICATIONS
An integrated option, is ERP brand specific, for example, SAP, and therefore matches
the core system’s interface while complementing its features. These systems are so
seamless that many users can’t tell where the core ERP ends and the integrated
solution begins. As far as they can tell, it is a consistent, unified platform supporting all
the functionality users require. On the other hand, Bolt-on solutions for ERP are
modules that work side-by-side with the core ERP system and provide supplementary
functionality. Typical bolt-on features include customer relationship management,
product lifecycle management, resource planning, supply chain optimization and more.
In conclusion, although bolt-on systems can support customization and wider
functionality, the complications that come along with this ERP style often outweigh the
benefits. Integrated solutions enable a smooth experience, top-notch performance, and
enhanced usability.

DATA INTEGRITY- Data integrity is the second major consideration cited as an

issue for APS implementation. APS systems rely on absolute data integrity for effective
decision making. While data integrity has always been important, APS makes it more
critical as missing and inaccurate data can dramatically impact decision reliability and
stability.

APPLICATION EDUCATION - Education regarding APS application is the third

major consideration for APS implementation. User training for supply chain execution
and planning systems has usually focused on the mechanics to initiate the transactions.
So, the user would be trained in data or parameter entry where the system would
provide quick feedback regarding the acceptability of the entry. Supply chain planning
systems are relatively more complex as the feedback is not immediate and the impact
may be extensive. For example, changing the requirements or forecast for one item in a
time period may shift production schedules for related items on the other side of the
world. Understanding APS system dynamics is critical to successful application.