Benefits of APO

Automate many manual tasks
Reduce planning cycle to 1 week
Develop constraints based plans by including critical Contract Manufacturer capacity and component information
Lower inventory buffer via shorter planning cycles
Provide customers with more accurate delivery commitments by having more accurate ATP

Obstacle to an efficient and effective supply chain

A major obstacle to accomplishing these goals for many companies has been the lack of visibility into their data across the supply chain, causing them to make daily business decisions without accurate, actionable information. Companies now recognize that to achieve their goals, detect issues before they become major problems, and run an optimized supply chain, they must have visibility into the data throughout their organization. Accurate and timely data is essential for:

• analyzing and monitoring procurement spend and sourcing opportunities;
• conducting advanced inventory analysis;
• understanding reasons for stock-outs;
• optimizing transportation operations and reducing fuel costs;
• managing the cost and quality of manufacturing operations.

about MRP

Automated procurement process:
Purch. req. -> Purch. order-> Goods receipt->Invoice receipt

MRP process starts from sales and distribution receive requirements from customer and demand mgmt will plan sales via a sales forecast. It results a Independent requirement(it is also called demand planning in APO) to trigger the Material Planning. To satisfy the demand in both given quantity and time, Procurement has to be made. The procurement elements include Planned orders for in-house production or Purchase requisitions for external procurement. For materials produced in-house, the dependent requirements are determined by BOM explosion(to determine the quantity of components for producing the finished product or an assembly). Finally, planned order for in-house production has to be converted to production order; and purchase requisition has to be converted to purchase order.

In MRP, the requirement elements include sales orders, planned independent requirements, material reservations and as well as the dependent requirements that are created by BOM explosion.