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Logistic Planning and Control Systems (LPCS) — Fundamentals and future directions
Computers and Industrial Engineering Vol. 25, Nos 1-4, pp. 537-540, 1993
0360-8352/9356.00+0.00 Copyright © 1993 Pergamon Press Ltd
Printed in Great Britain. All rights reserved
Logistic Planning and Control Systems (LPCS) Directions
- Fundamentals
and Future
Robert M. Cowdrick American Software Inc. Atlanta, GA
ABSTRACT Logistic Planning and Control Systems (LPCS) are becoming the primary focus in today's materials management environment. This paper reviews the fundamentals of LPCS and discusses the future directions of these types of systems in the 1990's, with an emphasis on solving engineering logistic problems with computer solutions. INTRODUCTION American organizations are in the process of a massive reengineering process. Information executives are especially looking at new ways systems can be used to accomplish or assist in the reengineering process. Many applications undergoing a reengineering processes will end up not on mainframe computers but on smaller platforms. Downsizing computer applications from mainframe to client/server architecture and/or PC's is the most popular downsizing project. A survey of 224 US and Canadian firms by CSC/Index found that reengineering business processes to be the number one goal of the corporations, followed by aligning company goals, and improving systems development. Controlling logistics and planning inventory is one area most corporations initially focus upon as a key area for potential reengineering. A LPCS is the means to define, control, and monitor the enterprise wide logistics for an organization. This includes elements of Forecasting, Inventory Planning, and Warehouse Control. This function is most commonly performed by a combination of systems on a myriad of mainframe computer systems. With the emphasis on reengineering, a significant effort is being made by software suppliers to put this functionality onto a client/server or pc environment. The focus in the 1990's will be on improving the functionality and integration of LPCS into one unified system. This ensures the total integration of what has been up to this time islands of automation. The driving forces behind this movement are: the demands from customers for quick response, the demands from management for cost reductions, and the requirements from the users for better tools for logistics scheduling and planning. Why use this type of system? Of it's many advantages a LPCS provides the user with greater control at his/her own workstation. There is no waiting for host based batch cycle processes. What's more the workstation provides tools to give a planner the most up-to-date information available to use in making crucial business decisions in a real-time mode.
537
Proceedings of the 15th Annual Conference on Computers and Industrial Engineering
538
ELEMENTS A LPCS is made up of three elements: Forecasting Demand, Planning Inventories and Planning Warehouse Replenishment. The objectives of each element are as follows: Forecasting Demand: i. Collect History 2. Analyze History 3. Compute Forecast 4. Conduct Forecast Review and Revisions Inventory Planning: 1. Establish Inventory Policies A. Customer Service goals B. Inventory Turns C. Safety Stock Levels 2. Calculate Time-Phased Inventory Targets Plan Warehouse Replenishments: 1. Net Replenishments Against Requirements 2. Deploy Inventory Available Based On Fair Share Method 3. Release Transfer Orders Some key features that users require include: I. Multiple levels of consolidation for demand analysis. 2. Simulation capability for what-if analysis. 3. Promotion analysis for price changes and other nonperiodic events. TECHNOLOGY REQUIREMENTS A LPCS usually operates in a multiple computer environment, this requirement is usually dictated by a functional or geographic dispersion of an organization's warehouse or distribution sites. The connection of computers is achieved through a communication network with the intent of dispersing logistics planning and control information to multiple locations of an enterprise. The computer software that serves as the backbone of a LCS; must be able to recognize and easily be configured to this type of environment. The reasons for establishing a LPCS based upon a multicomputer environment include the ability to reduce costs, improve response times, improve user control and provide backup capability. A LPCS can become extremely complex due to the inherit nature of the desired functionality and configuration. Data bases need to be managed, communications established, and data accessing methods initiated to achieve the desired results. Synchronization of the entire process is of paramount importance to management. The key issue is whether the LPCS is providing the correct synchronization throughout the entire process; from forecasting customer demand to shipping and invoicing product. Multiple methods of configuring a LPCS exist today. The most commonly use methods are: A. LAN Host-dependent. Select historical data from the host and place it in the workstation. The data is then isolated from the host's production data files allowing nondestructive simulation and minimal disruption to the ongoing use of the host systems. A user can manipulate data, reforecast and plan items, build promotions, and apply management overrides without altering the files contained in the host system. After decisions are finalized, the results can be automatically uploaded to the host system. B. LAN/Host Independent. Files can be maintained in a LAN environment performing the same function but independent of a host system.
COWDRICK: Logistic Planning
539
CASE STUDIES Future d e v e l o p m e n t in hardware, software and network c o m m u n i c a t i o n s have made e n t e r p r i s e wide multi-computer LPCS processing systems increasingly a p p e a l i n g . T h e following three case studies exemplify the type of r e e n g i n e e r i n g p r o c e s s e s organizations are undertaking in the area of logistics p l a n n i n g and control: Wal-Mart Stores Inc., the nation's largest retailer, already leads in the implementation of logistics planning and control. Wal-Mart links point of sale data from its stores via a satellite link to its c o r p o r a t e h e a d q u a r t e r s in Bentonville, Ark. Sale data is feed into a f o r e c a s t i n g system for p l a n n i n g new replenishment orders from their regional d i s t r i b u t i o n centers to the store locations. Caterpillar Inc, the number 1 maker of earth-moving equipment is taking a bulldozer to its m a i n f r a m e computing strategy. In a business r e e n g i n e e r i n g process, C a t e r p i l l a r is developing a new network to link IBM AS/400 m i n i c o m p u t e r s with IBM PS/2 PC's at 75 North American dealers to enable dealers to access product and repair data along with letting dealers order parts and process invoices and warranties. Toys 'R' Us Inc. has a $15 million satellite network that links 850 stores worldwide. The network handles such applications as point-of-sale, inventory management, and credit verification. FUTURE D I R E C T I O N S Two major c h a l l e n g e s emerge: building the technology infrastructure required to do r e e n g i n e e r i n g work, and shifting resources from traditional to a c c e l e r a t e d modes of systems development. The first requires investing in information technology and the second call for more innovative approached for development. IMPLEMENTATION Even with a strong technological commitment and a totally r e e n g i n e e r e d business process implementating a new planning and control system requires some basic fundamentals. The five steps to implementation a LPCS system are: 1. P r e p a r a t i o n perform the tasks.
- Mobilize,
organize
and energize
2. I d e n t i f i c a t i o n - Develop and understand Prepare a current business analysis. 3. V i s i o n - Develop b r e a k t h r o u g h performance. 4. T e c h n o l o g y process.
the planning
who will
process.
a process vision capable of a c h i e v i n g Prepare a future business plan.
- Define and specify the technical
5. T r a n s f o r m a t i o n change mechanisms.
the people
- Embark on a pilot project
dimensions
and employ
of the
continual
As a complete, valuable inventory planning tool, LPCS provides features to help an o r g a n i z a t i o n make solid business decisions faster, more logically, and with less risk. Communication is the key to success. C o o p e r a t i o n among different d e p a r t m e n t s is essential to the successful e x e c u t i o n of a total business plan. A LPCS facilitates this cooperation.
540
Proceedings of the 15th Annual Conference on Computers and Industrial Engineering
SUMMARY The results are clear that if an organization is to achieve and maintain a high level of competitiveness in the 1990's, then Logistic Planning and Control Systems are of a paramount importance. The realization is evident that individual users at the distribution sites will be given accurate information more quickly enabling them to take control and manage the logistic process more effectively.
References: 1. CSC/Index, Cambridge Mass, CIO Magazine, January 1993, pg 26. BIOGRAPHY Robert M. Cowdrick is an Application Consultant with American Software in Atlanta, Georgia. Bob works with customers in developing and implementing distributed systems. He has previously been employed by Xerox Corporation and Deere and Company in the areas of systems design and implementation. He holds a BS from the University of Maine and a MSIE from Purdue University.
0360-8352/9356.00+0.00 Copyright © 1993 Pergamon Press Ltd
Printed in Great Britain. All rights reserved
Logistic Planning and Control Systems (LPCS) Directions
- Fundamentals
and Future
Robert M. Cowdrick American Software Inc. Atlanta, GA
ABSTRACT Logistic Planning and Control Systems (LPCS) are becoming the primary focus in today's materials management environment. This paper reviews the fundamentals of LPCS and discusses the future directions of these types of systems in the 1990's, with an emphasis on solving engineering logistic problems with computer solutions. INTRODUCTION American organizations are in the process of a massive reengineering process. Information executives are especially looking at new ways systems can be used to accomplish or assist in the reengineering process. Many applications undergoing a reengineering processes will end up not on mainframe computers but on smaller platforms. Downsizing computer applications from mainframe to client/server architecture and/or PC's is the most popular downsizing project. A survey of 224 US and Canadian firms by CSC/Index found that reengineering business processes to be the number one goal of the corporations, followed by aligning company goals, and improving systems development. Controlling logistics and planning inventory is one area most corporations initially focus upon as a key area for potential reengineering. A LPCS is the means to define, control, and monitor the enterprise wide logistics for an organization. This includes elements of Forecasting, Inventory Planning, and Warehouse Control. This function is most commonly performed by a combination of systems on a myriad of mainframe computer systems. With the emphasis on reengineering, a significant effort is being made by software suppliers to put this functionality onto a client/server or pc environment. The focus in the 1990's will be on improving the functionality and integration of LPCS into one unified system. This ensures the total integration of what has been up to this time islands of automation. The driving forces behind this movement are: the demands from customers for quick response, the demands from management for cost reductions, and the requirements from the users for better tools for logistics scheduling and planning. Why use this type of system? Of it's many advantages a LPCS provides the user with greater control at his/her own workstation. There is no waiting for host based batch cycle processes. What's more the workstation provides tools to give a planner the most up-to-date information available to use in making crucial business decisions in a real-time mode.
537
Proceedings of the 15th Annual Conference on Computers and Industrial Engineering
538
ELEMENTS A LPCS is made up of three elements: Forecasting Demand, Planning Inventories and Planning Warehouse Replenishment. The objectives of each element are as follows: Forecasting Demand: i. Collect History 2. Analyze History 3. Compute Forecast 4. Conduct Forecast Review and Revisions Inventory Planning: 1. Establish Inventory Policies A. Customer Service goals B. Inventory Turns C. Safety Stock Levels 2. Calculate Time-Phased Inventory Targets Plan Warehouse Replenishments: 1. Net Replenishments Against Requirements 2. Deploy Inventory Available Based On Fair Share Method 3. Release Transfer Orders Some key features that users require include: I. Multiple levels of consolidation for demand analysis. 2. Simulation capability for what-if analysis. 3. Promotion analysis for price changes and other nonperiodic events. TECHNOLOGY REQUIREMENTS A LPCS usually operates in a multiple computer environment, this requirement is usually dictated by a functional or geographic dispersion of an organization's warehouse or distribution sites. The connection of computers is achieved through a communication network with the intent of dispersing logistics planning and control information to multiple locations of an enterprise. The computer software that serves as the backbone of a LCS; must be able to recognize and easily be configured to this type of environment. The reasons for establishing a LPCS based upon a multicomputer environment include the ability to reduce costs, improve response times, improve user control and provide backup capability. A LPCS can become extremely complex due to the inherit nature of the desired functionality and configuration. Data bases need to be managed, communications established, and data accessing methods initiated to achieve the desired results. Synchronization of the entire process is of paramount importance to management. The key issue is whether the LPCS is providing the correct synchronization throughout the entire process; from forecasting customer demand to shipping and invoicing product. Multiple methods of configuring a LPCS exist today. The most commonly use methods are: A. LAN Host-dependent. Select historical data from the host and place it in the workstation. The data is then isolated from the host's production data files allowing nondestructive simulation and minimal disruption to the ongoing use of the host systems. A user can manipulate data, reforecast and plan items, build promotions, and apply management overrides without altering the files contained in the host system. After decisions are finalized, the results can be automatically uploaded to the host system. B. LAN/Host Independent. Files can be maintained in a LAN environment performing the same function but independent of a host system.
COWDRICK: Logistic Planning
539
CASE STUDIES Future d e v e l o p m e n t in hardware, software and network c o m m u n i c a t i o n s have made e n t e r p r i s e wide multi-computer LPCS processing systems increasingly a p p e a l i n g . T h e following three case studies exemplify the type of r e e n g i n e e r i n g p r o c e s s e s organizations are undertaking in the area of logistics p l a n n i n g and control: Wal-Mart Stores Inc., the nation's largest retailer, already leads in the implementation of logistics planning and control. Wal-Mart links point of sale data from its stores via a satellite link to its c o r p o r a t e h e a d q u a r t e r s in Bentonville, Ark. Sale data is feed into a f o r e c a s t i n g system for p l a n n i n g new replenishment orders from their regional d i s t r i b u t i o n centers to the store locations. Caterpillar Inc, the number 1 maker of earth-moving equipment is taking a bulldozer to its m a i n f r a m e computing strategy. In a business r e e n g i n e e r i n g process, C a t e r p i l l a r is developing a new network to link IBM AS/400 m i n i c o m p u t e r s with IBM PS/2 PC's at 75 North American dealers to enable dealers to access product and repair data along with letting dealers order parts and process invoices and warranties. Toys 'R' Us Inc. has a $15 million satellite network that links 850 stores worldwide. The network handles such applications as point-of-sale, inventory management, and credit verification. FUTURE D I R E C T I O N S Two major c h a l l e n g e s emerge: building the technology infrastructure required to do r e e n g i n e e r i n g work, and shifting resources from traditional to a c c e l e r a t e d modes of systems development. The first requires investing in information technology and the second call for more innovative approached for development. IMPLEMENTATION Even with a strong technological commitment and a totally r e e n g i n e e r e d business process implementating a new planning and control system requires some basic fundamentals. The five steps to implementation a LPCS system are: 1. P r e p a r a t i o n perform the tasks.
- Mobilize,
organize
and energize
2. I d e n t i f i c a t i o n - Develop and understand Prepare a current business analysis. 3. V i s i o n - Develop b r e a k t h r o u g h performance. 4. T e c h n o l o g y process.
the planning
who will
process.
a process vision capable of a c h i e v i n g Prepare a future business plan.
- Define and specify the technical
5. T r a n s f o r m a t i o n change mechanisms.
the people
- Embark on a pilot project
dimensions
and employ
of the
continual
As a complete, valuable inventory planning tool, LPCS provides features to help an o r g a n i z a t i o n make solid business decisions faster, more logically, and with less risk. Communication is the key to success. C o o p e r a t i o n among different d e p a r t m e n t s is essential to the successful e x e c u t i o n of a total business plan. A LPCS facilitates this cooperation.
540
Proceedings of the 15th Annual Conference on Computers and Industrial Engineering
SUMMARY The results are clear that if an organization is to achieve and maintain a high level of competitiveness in the 1990's, then Logistic Planning and Control Systems are of a paramount importance. The realization is evident that individual users at the distribution sites will be given accurate information more quickly enabling them to take control and manage the logistic process more effectively.
References: 1. CSC/Index, Cambridge Mass, CIO Magazine, January 1993, pg 26. BIOGRAPHY Robert M. Cowdrick is an Application Consultant with American Software in Atlanta, Georgia. Bob works with customers in developing and implementing distributed systems. He has previously been employed by Xerox Corporation and Deere and Company in the areas of systems design and implementation. He holds a BS from the University of Maine and a MSIE from Purdue University.