Unformatted text preview: Springer Texts in Business and Economics Hartmut Stadtler
Herbert Meyr Editors Supply Chain
Concepts, Models, Software,
and Case Studies
Fifth Edition Springer Texts in Business and Economics For further volumes:
Hartmut Stadtler • Christoph Kilger •
Editors Supply Chain
and Advanced Planning
Concepts, Models, Software,
and Case Studies
5th Edition 123 Editors
Institute for Logistics and Transport
University of Hamburg
Germany Christoph Kilger
Ernst & Young GmbH
Germany Herbert Meyr
Department of Supply Chain Management
University of Hohenheim
Germany ISSN 2192-4333
ISSN 2192-4341 (electronic)
ISBN 978-3-642-55309-7 (eBook)
Springer Heidelberg New York Dordrecht London
Library of Congress Control Number: 2014955737
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Printed on acid-free paper
Springer is part of Springer Science+Business Media ( ) Preface Preface to the Fifth Edition
More than 15 years have passed since we started working on the first edition of
this book. A lot has happened in the meantime. A dot-com bubble has grown and
burst. Another wave of lean management has rolled over the planning landscape.
Some people still seem to think that Advanced Planning and Lean Management
are exclusive philosophies although the automotive industry—as the prime father
to Lean—is the best example that both can and should complement each other
in a fruitful co-existence and synergy. New buzz words like profit velocity,
demand sensing and service oriented architecture have come and gone. Often they
disappeared even faster than they have risen.
During the 7 years since publishing our fourth edition consolidation on the
Advanced Planning Systems’ (APS) software market continued at an unabated pace.
Thus, we decided to do some historical research and inserted a sort of genealogical
tree of APS in Chap. 16—in addition to our traditionally updated and extended
overview of selected software systems in Chap. 18. The term “Sales & Operations
Planning” is actually known for more than 25 years in the scientific literature.
Nevertheless, during recent years it came up as a renewed concept on the software
and consulting market. We will discuss how this old idea is interpreted in a modern
software world within several chapters.
Chapters 6 on Strategic Network Design, 8 on Master Planning and 12 on
Transport Planning partly show new authors. This gave reason to restructure and
revise their contents substantially. With a new case study of the specialty chemicals
industry (Chap. 26), we do not only welcome another new author, but also will have
a closer look at a “new” software suite and software vendor (at least as this book
is concerned). Of course a lot of further updates have been made—by far too many
to be mentioned in this preface. Finally, a new editor has been affiliated. He not
only was an author since the first edition, but also acted as an editor of the German
translation of “our” book in 2011. Thus, do not be surprised to find a third signature
below this preface.
We are grateful to Christian Seipl, who spent hours over hours of his spare time in
typesetting and debugging this fifth edition. Also, we are indebted to the authors of
this book, who contributed their written knowledge and also to all unnamed advisers, v vi Preface who contributed their unwritten knowledge. Last but not least, we would like to
thank the readers—the familiar ones, who are faithful since the first edition, but
also all new ones, who are warmly welcomed to dive into the world of Advanced
February 2014 Hartmut Stadtler
Herbert Meyr Preface to the Fourth Edition
The hype is over—and this is fine!
Advanced Planning Systems (APS) have become a mature technology in the past
years. Investments in APS have to undergo the same standard software evaluation
and financial appraisal process as any other investment. It no longer suffices to argue
that “we have to be at the front edge of technology”.
And still there is a large number of rewarding applications for APS. Three of
these have become new case studies in this fourth edition. Unfortunately, a fourth
case study has been withdrawn in the last minute because the client company regards
its APS solution a key element of becoming the leader in its sector—expertise which
they do not want to share with their competitors.
A second development to mention is the tendency to avoid the term “System”
in AP“S”. Instead some prefer the term Advanced Planning Modules which better
reflects the capability to combine some of its modules with other software components (e.g. for Supply Chain Event Management) to form an individual Supply
Chain (SC) solution. However, the information flows among modules described
in this book now even become more important for the quality of the SC solution
generated. Hence, there is no reason for us to refrain from the term APS or to change
the concept of our book.
Readers familiar with the third edition will realize that not only chapters have
been reorganized and updated to the state of the art but also that there has been much
fine-tuning of technical issues like for the index and the references. This is due to
Christian Seipl who took over the “burden” of administering the chapters. Many
thanks to him! We are also indebted to a number of consultants and practitioners for
providing advice and proofreading parts of the book, especially with respect to the
description of selected APS.
Now it is up to you, dear reader, to make the best use of this fourth edition!
June 2007 Hartmut Stadtler
Christoph Kilger Preface vii Preface to the Third Edition
Four years have passed since the first edition of our book—and still its readership is
growing rapidly: You may even be able to buy a Chinese translation soon!
The field of Supply Chain Management (SCM) and Advanced Planning has
evolved tremendously since the first edition was published in 2000. SCM concepts
have conquered industry—most industry firms appointed supply chain managers
and are “managing their supply chain”. Impressive improvements have resulted
from the application of SCM concepts and the implementation of Advanced
Planning Systems (APS). However, in the last years many SCM projects and APS
implementations failed or at least did not fully meet expectations. Many firms are
just “floating with the current” and are applying SCM concepts without considering
all aspects and fully understanding the preconditions and consequences. This book
provides comprehensive insights into the fundamentals of SCM and APS and
practical guidance for their application.
What makes this book different from others in the field? First, the material
presented is based on our experiences gained by actually using and implementing
APS. Furthermore, we have tried to extract the essence from three leading APS and
to generalize the results—instead of merely reporting what is possible in a single
APS. Second, this book is not just a collection of papers from researchers who
have come together at a single conference and published the resultant conference
proceedings. Instead we have structured the area of SCM and Advanced Planning
into those topics relevant for turning APS successfully into practice. Then we have
asked prominent researchers, experienced consultants and practitioners from large
industry firms involved in SCM to join our group of authors. As a result, this
edition (product) should be the most valuable source of knowledge for our readers
You may have observed that creating our team of authors has much in common
with forming a supply chain in industrial practice. This story can be expanded
even further: Several authors are also partners (contributors) in other supply chains
(author groups). It is the task of the steering committee (editors) to make our supply
chain work and make it profitable for every partner. This model not only worked for
the lifetime of a product’s life cycle but also twice for its relaunch. We hope that
our supply chain will stick together for some time in the future for the best of our
What is new in this third edition, apart from the usual update of chapters?
• A section on strategic issues in SCM has been added as a subsection of Chap. 1.
• The contents of Chaps. 2 and 3 are restructured with a greater emphasis on Supply
• Latest issues and recommendations in Strategic Network Planning now have been
prepared by two authors (Chap. 6).
• A new chapter has been added showing how to generate production and
purchasing orders for uncritical items by utilizing the well-known MRP logic
(Chap. 11). viii Preface • The chapters on the Definition of a Supply Chain Project (Chap. 15) and the
Selection Process of an APS (Chap. 16) have been rewritten in light of new
experiences and research results.
• Demand Fulfilment and ATP (Chap. 9) now is based on several APS and thus
presents our findings in a more generalized form.
• There are two new case studies, one from the pharmaceutical industry (Chap. 25)
and one from the chemical industry (Chap. 20). Also, all case studies now follow
a common structure.
This edition would not have been possible without the advice from industry
partners and software vendors. Many thanks to all of them for their most valuable
help. This is also the last edition, where Jens Rohde has administered all the papers
and prepared the files to be sent to the publisher. Thank you very much, Jens, for
this great and perfect service and all the best for the future!
April 2004 Hartmut Stadtler
Christoph Kilger Preface to the Second Edition
This also holds true when the first edition of a book is sold out quickly. So, we have
created this second edition of our book with great enthusiasm.
Attentive readers of the first edition will have realized an obvious gap between
the scope of Supply Chain Management (SCM), namely integrating legally separated companies along the supply chain and the focus of Advanced Planning
Systems (APS) which, due to the principles of hierarchical planning, are best suited
for coordinating intra-organizational flows. Now, collaborative planning is a new
feature of APS which aims at bridging this gap. Consequently, this new topic is the
most apparent addition to the second edition (Chap. 14).
But there are also many other additions which are the result of greater experience
of the authors—both in industrial practice and research—as well as latest APS
software developments. Examples of new materials included are:
• The different types of inventories and its analysis are presented in Chap. 2.
• The description of the SCOR-model and the supply chain typology have been
enlarged and now form a separate chapter (Chap. 3).
• There is now a comparison of planning tasks and planning concepts for the
consumer goods and computer assembly industry (Chap. 4).
• New developments in distribution and transport planning have been added
• Enterprise Application Integration is explained in Chap. 13.
• Chapter 17 now presents implementation issues of APS in greater detail.
• Some case studies have been updated and extended (Part IV). Preface ix • Rules of thumb have been introduced to allow users and consultants to better
estimate and control computational times for solving their decision models
Like in the first edition we have concentrated on the three most popular APS
because we have realized that keeping up-to-date with its latest developments is a
very time-consuming and challenging task.
SCM continues to be a top management theme, thus we expect our readers to
profit from this update and wish them great success when implementing their SCM
Many thanks to all who contributed to the first and second edition!
January 2002 Hartmut Stadtler
Christoph Kilger Preface to the First Edition
During the late 1980s and throughout the 1990s information technology changed
modern manufacturing organizations dramatically. Enterprise Resource Planning
(ERP) systems became the major backbone technology for nearly every type of
transaction. Customer orders, purchase orders, receipts, invoices etc. are maintained and processed by ERP systems provided by software vendors—like Baan,
J. D. Edwards, Oracle, SAP AG and many more. ERP systems integrate many
processes, even those that span multiple functional areas in an organization, and
provide a consistent database for corporate wide data. By that ERP systems help to
integrate internal processes in an organization.
Mid of the 1990s it became apparent that focussing on the integration of
internal processes alone does not lead to a drastic improvement of business
performance. While ERP systems are supporting the standard business workflows,
the biggest impact on business performance is created by exceptions and variability,
e.g. customers order more than expected, suppliers deliver later than promised,
production capacity is reduced by an unforeseen breakdown of equipment, etc. The
correct reaction to exceptions like these can save a lot of money and increase the
service level and will help to improve sales and profits. Furthermore, state-of-theart planning procedures—for planning sales, internal operations and supply from the
vendors well in advance—reduce the amount of exceptional situations, helping to
keep business in a standard mode of operation and turning out to be more profitable
than constantly dealing with exceptional situations.
This functionality—powerful planning procedures and methodologies as well as
quick reactions to exceptions and variability—is provided by Advanced Planning
Systems. An Advanced Planning System (APS) exploits the consistent database and
integrated standard workflows provided by ERP systems to leverage high velocity in
industry. Due to these recent developments, software vendors of APS boost a major x Preface breakthrough in enterprise wide planning and even collaborative planning between
the partners along a supply chain.
Do APS hold the promises? What are the concepts underlying these new planning
systems? How do APS and ERP systems interact, and how do APS supplement ERP
systems? What are the current limits of APS and what is required to introduce an
APS in a manufacturing organization successfully?
These were the questions we asked ourselves when we started our project on
“Supply Chain Management and Advanced Planning” in summer 1998. Since we
realized that there were many more interested in this new challenging field, the idea
of publishing this book was born.
This book is the result of collaborative work done by members of four consultancy companies—aconis, j & m Management Consulting, KPMG and PRTM—and
three universities—University of Augsburg, Darmstadt University of Technology
and Georgia Institute of Technology. Our experiences stem from insights gained by
utilizing, testing and implementing several modules of APS from i2 Technologies,
J. D. Edwards and SAP AG. Tests and evaluations of modules have been conducted
within several projects including students conducting their final thesis.
On the other hand, some members of the working group have been (and still are)
involved in actual APS implementation projects in several European enterprises.
The real-world experience gained from these projects has been merged with the
results from the internal evaluation projects and provided valuable insights into the
current performance of APS as well as guidelines how to set up and conduct an APS
Since summer 1998 our group has spent much time gaining insights into this
new fascinating field, working closely together with colleagues from academic
research, vendors of APS and customers of APS vendors. However, we are aware
of the fact that APS vendors are constantly improving their systems, that new
areas come into focus—like supplier collaboration, Internet fulfilment, customer
relationship management—and that, because of the speed of developments, a final
documentation will not be possible. Hence, we decided to publish this book as a
report on the current state of APS, based on our current knowledge and findings,
covering the major principles and concepts underlying state-of-the-art APS.
This book will be a valuable source for managers and consultants alike, initiating
and conducting projects aiming at introducing an APS in industry. Furthermore, it
will help actual users of an APS to understand and broaden their view of how an
APS really works. Also, students attending postgraduate courses in Supply Chain
Management and related fields will profit from the material provided.
Many people have contributed to this book. In fact, it is a “Joint Venture” of
the academic world and consultancy firms, both being at the forefront of APS
technology. Hans Kühn gave valuable input to Chap. 2, especially to the section on
the SCOR-model. Daniel Fischer was involved in the writing of Chap. 9 on Demand
Fulfilment and ATP. The ideas of the KPI profile and the Enabler-KPI-Value
Network, described in Chap. 15, were strongly influenced by many discussions with
Dr. Rupert Deger. Dr. Hans-Christian Humprecht and Christian Manß were so kind
as to review our view of software modules of APS (Chap. 18). Dr. Uli Kalex was Preface xi the main contributor to the design of the project solutions, on which the computer
assembly case study (Chap. 23) and the semiconductor case study are based. Marja
Blomqvist, Dr. Susanne Gröner, Bindu Kochugovindan, Helle Skott and Heinz
Korbelius read parts of the book and helped to improve the style and contents.
Furthermore, we profited a lot from several unnamed students who prepared their
master thesis in the area of APS—most of them now being employed by companies
implementing APS. Last but not least, we would like to mention Ulrich Höfling as
well as the authors Jens Rohde and Christopher Sürie who took care of assembling
the 24 chapters and preparing the index in a tireles...
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