Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

9.3.1 Limitations of the IT Support of Planning & Control

Intended learning outcomes: Explain the influence of ERP or SCM software on the extent to which corporate objectives are fulfilled.

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“There is no satisfactory ERP or SCM software package.” Within companies, this type of view is generally expressed in departments involved in the strategic or overall management of the company, rather than operational management. The problem is often that such people have the wrong expectations of what ERP or SCM software can and cannot do.

These unrealistic expectations may be explained by the abbreviation PPC, which stands for Production Planning & Control, and by the term PPC system. These are used to describe both the actual task of planning & control and the software used to support this task. The same is true for the abbreviations, or the terms

  • ERP (Enterprise Resource Planning), or ERP system,
  • SCM (Supply Chain Management), or SCM system,
  • APS (Advanced Planning and Scheduling), or APS system.

An opinion about one cannot be applied to the other. The mistake is still made, however, often unintentionally but sometimes intentionally, as well (for both positive and negative purposes). The term software is therefore used below in association with IT support.

The acronyms PPC, SCM, or APS can nevertheless be misleading when used in association with the software. This mis­under­stan­ding may even be encouraged by the software vendors, but unfortu­na­tely, it leaves a large area open to attack by anyone looking for an argument.

  • The first letters in PPC and in SCM have exten­ded meanings. PPC software packages no longer relate solely to production or supply, but rather as ERP software to the entire logistics chain from sales, production, and procure­ment, through distribution and maintenance. In addition, new require­ments have arisen in associa­tion with return and recycling. It is also no longer possible to equate PPC software with MRP II packages since it incorporates the just-in-time, the variant-oriented, and the processor-oriented concept and with varying levels of quality, just like the MRP II concept. Similarly, SCM software is as useful for demand chain planning.
  • The letter “P” in PPC or APS for “planning”: Neither a PPC soft­ware nor an ERP software nor an SCM software nor an APS software does planning in the strict sense of the word. It simply supports the planning function, for example, by showing the availability of components and capacity along the time axis. Then comes the planning, e.g., action to change stocks, capacity, or order dates. Every attempt to hand this planning step over to the computer, e.g., through the use of simulation software, has ultimately failed, be­cause the software is unable to cope with the day-to-day problems of decision making, either because the relevant parameters were not all known or because they could not be reliably shown along the time axis.
  • The letter “C” in PPC for “control” or “S” in APS for “sche­duling”: Neither PPC nor ERP nor SCM nor APS software controls or schedules any­thing in the strict sense of the word. In the best-case scenario, it merely provides a snapshot of the current status of order processing in the various domains in the company and recommends options for control or regulation. The actual control or scheduling task still has to be carried out by people. Production and procurement in the manufacturing and service industries cannot be compared to the control of a machine or production system, since the equation inevitably includes people whose behavior finally cannot be predicted or simulated. On the other hand, although the inclusion of people as a produc­tion factor appears to be a disadvantage, it is also an advantage: No automated control system will ever be able to match the capabilities and potential of a human in control or scheduling, however flexible and autonomous it might be.

Continuation in next subsection (9.3.1b).

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Course section 9.3: Subsections and their intended learning outcomes

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