Assessing factors affecting results of APS
implementations
Ola Cederborg
Department of Management and Engineering
Linköping University
SE-581 83 Linköping, Sweden
[email protected]
Abstract
Purpose
The purpose is to find out which factors, during APS implementations, that affects the
effects of the implementation.
Methodology
A multiple case study is conducted where Critical Success Factors (CSFs) from ERP
literature and effects from APS implementations are studied.
Findings
Findings show that several ERP CSFs most likely are applicable in APS
implementations.
Practical implications
CSFs and expected effects in APS implementations are of use to managers that consider
using APS.
Originality/value
Studies on CSFs in APS implementations are lacking. The findings here fill some of
that gap.
Keywords: advanced planning systems, critical success factors, multiple case study
Background
Manufacturing companies of today are facing everyday challenges in making their
production as efficient as possible. Now, with the resent recession, this has become
even more apparent, as companies strive for advantages over their competitors. The
evolution of planning has led to many vendors offering complete suites of planning
systems which use advanced mathematical algorithms and optimization methods to
solve planning problems with multiple sites, multiple products, dynamic bills of
materials and multiple resources with capacity constraints. To conduct this kind of
planning without the use of any supporting system would be virtually impossible,
especially within a reasonable time frame, which is why many companies chose to
implement Advanced Planning Systems (APS). By doing this they want to provide their
planners with tools to improve the planning and hence make the company as a whole
1
more efficient. For an overview about the underlying concept of APS, the suggestion is
to read Stadtler and Kilger (2008).
Looking at the literature there are accounts on both successful and unsuccessful APS
implementations, which is why the question arises: How do you make an APS
implementation a successful one? The question of successful implementations has been
examined by several researchers in the Enerprise Resource Planning (ERP) systems
area, but this has not been done in the area of APS. Also, a survey by Olhager and
Selldin (2003) reveals that about 45 percent of the responding companies are planning,
or considering, to extend their ERP system with a APS module. Five percent already
had a APS module implemented in the study, which makes APS an emerging area
where research is needed. This study intends to derive and verify a number of factors
which affect the effects of APS implementations.
Research goals
The overall purpose of this study is to find out which factors, during an APS
implementation, that affect the outcome of the implementation. This is important
knowledge since the question of outcome both affects the decisions to be made before a
possible implementation and it also affects the expectations that can be made on the
effects of the implementation. During a possible implementation phase the importance
of this study lies in the knowledge of which factors to put extra focus on, during the
implementation, to make it a successful one.
Methodology
Looking at the stated purpose, it directly leads to the first aim of the study, which is to
derive a set of factors and a set of effects concerning APS implementations. The factors
and effects are derived in a similar way, by reviewing literature in the fields of APS and
ERP Systems, focusing on research on system implementations in these areas. Second, a
multiple case study at five companies is conducted, where the chosen factors and effects
are studied. The selection of case companies are based on discussions with consultants,
who suggested the five companies, grounded on the facts that all companies have used
the same consultant firm and they have implemented APS modules from the same APS
vendor. Also, the implementations have concerned tactical planning with use of the
Supply Chain Planner (SCP) module at all case companies.
The collection of data was done by semi-structured interviews at the case companies
and with people working in the implementation projects. Typically the interviewed
persons were supply chain managers, production managers or the like. Also interviews
have been conducted with consultants involved in the implementation projects.
Frame of reference
The implementation of an ERP system is a complex process that affects an entire
company (Davenport, 1998). An APS is a decision support system that, in most cases,
adds functionality to an ERP system, as it extracts, treats and returns data to the ERP
system. Still, many IT systems implementations present similarities, but there have been
no studies trying to pinpoint the applicability of ERP success factors on APS
implementations, which is what this study will do.
Critical success factors
Concerning ERP systems there are several studies trying to explain why ERP projects
are successful or not. A recent literature review by Dezdar and Sulaiman (2009) points
to 17 Critical Success Factors (CSF) derived from ERP implementation studies ranging
2
from 1999 to 2008. Another review, by (Ngai et al., 2008) condenses 18 CSFs from the
ERP literature. A comparison between these two (see Table 1) shows that the
differences mostly concern definitions of factors. Still, three factors are mentioned by
Ngai et al., which are not mentioned by Dezdar and Sulaiman. Two of these concern
geographical attributes, which are not applicable in our study, as all companies are
based in Scandinavia. But the third factor, data quality, is surprisingly not found in
Dezdar and Sulaimans study. The conclusion is that this factor is incorporated in one of
the other factors, since the data quality is crucial for any IT system success.
Table 1 Comparison between two CSF reviews
Dezdar and Sulaiman (2009)
Top management support and commitment
Ngai, Law and Wat (2008)
Top management support
Project management and evaluation
Monitoring and evaluation of performance
Project management
Business process reengineering and minimum customization
Careful selection of ERP software
System quality
Business process reengineering
ERP strategy and implementation methodology
Fit between ERP and business/process
ERP team composition, competence and compensation
Use of consultant
ERP teamwork and composition
Change management programme
User training and education
User involvement
Change management culture and programme
Business plan and vision
Enterprise-wide communication and cooperation
Business plan/vision/goals/justification
Communication
Organizational culture
Vendor support
Organizational characteristics
ERP vendor
Software analysis, testing and troubleshooting
Project champion
Appropriate business and IT legacy systems
Software development, testing and troubleshooting
Project champion
Appropriate business and IT legacy systems
Data management
Country related functional requirements
National culture
Grabski and Leech (2007) uses the results from a survey, with answers from 58 firms
(27% response rate), to derive five important control factors (Figure 1) concerning ERP
implementations. These factors, they conclude, are crucial for a successful ERP
implementation and their most important conclusion is that all five factors are
important, as there is interaction between them, which is illustrated by the arrows in
Figure 1.
3
Project Management
Change Management
Allignment of the Business &
the New Information System
Successful ERP
implementation
Internal Audit Activities
Consultant and Planning
Activities
Figure 1: Model of control factors (Grabski and Leech, 2007)
The factors derived in the studies are similar, Grabski and Leech has constructed five
control factors consisting of several sub-factors, which in turn coincides with the results
presented earlier. The results also coincide with similar published studies (Al-Mashari
et al., 2003, Umble et al., 2003), which is why the CSFs from the study by Ngai et al.,
without the two geographical factors, is appropriate to use when addressing the APS
implementation cases. The factor concerning vendor selection will also be excluded, as
all cases concern the same vendor.
APS results
When looking at experienced results of implementations, there are several so-called
success stories concerning APS implementations with focus on benefits for the
companies. Some of the results are presented in several studies, such as inventory level
reduction, and some are just presented in one study, such as the reduction of non value
added activities. The results found have been incorporated in this study, no matter how
common they are in the APS literature as a whole. The found effects, with references,
are:
•
•
•
•
•
•
•
Real time overview of the Supply Chain (Gruat La Forme et al., 2009)
Reduced total cost (Gruat La Forme et al., 2005, Bixby et al., 2006, Rudberg
and Thulin, 2009)
Improved forecast accuracy (Bixby et al., 2006, Kilger, 2008, Gruat La
Forme et al., 2009)
Reduced inventory levels (Tang et al., 2001, Schultz, 2002, Gruat La Forme
et al., 2005, Lütke Entrup, 2005, Bixby et al., 2006, Jonsson et al., 2007,
Kilger, 2008, Wagner and Meyr, 2008, Gruat La Forme et al., 2009, Rudberg
and Thulin, 2009)
Production more synchronized with demand (Schultz, 2002, Bixby et al.,
2006, Tinham, 2006, Kilger and Meyr, 2008, Gruat La Forme et al., 2009)
More optimized product mix with regard to resources (Bixby et al., 2006)
Reduction in non value added activities in production (Bixby et al., 2006,
Richter and Stockrahm, 2008, Gruat La Forme et al., 2009)
4
•
•
•
•
•
•
•
Increase of customer service level (Gruat La Forme et al., 2005, Tinham,
2006, Jonsson et al., 2007, Kilger, 2008, Gruat La Forme et al., 2009)
Improve the on-time-delivery (Tang et al., 2001, Schultz, 2002, Lütke
Entrup, 2005, Bixby et al., 2006, Kilger, 2008, Kilger and Meyr, 2008)
Increase the average sales price (Bixby et al., 2006, Kilger and Meyr, 2008)
More stable system with less IT problems (Bixby et al., 2006)
Increase of planning (and replanning) speed (Tang et al., 2001, Richter and
Stockrahm, 2008, Wagner and Meyr, 2008)
Reduced overtime in production (Wagner and Meyr, 2008)
Less emergency transports between DC:s (Wagner and Meyr, 2008)
Since there are several studies on the effects, or benefits, of APS implementations there
is no need to draw conclusions from ERP implementation results, which is why we
focus on APS effects described in literature when studying the selected cases.
Case descriptions
The five studied cases all concern companies based in Scandinavia, all with a vast
majority of their production in a make to stock (MTS) setting. The reason for choosing
these companies is that they have gone through APS implementation projects and all of
these projects have concerned implementation of a SCP module for tactical planning.
Four of the companies have also implemented a Demand Planner (DP) module, where
the fifth company already had such a module in use. Four of the companies are active in
the food and beverage sector and the fifth is a manufacturing company. All companies
have implemented the same APS system and all have used the same consultant firm.
Further details about the companies are given in Table 2 below.
Table 2 - General description of the studied companies
Alpha
Beta
Gamma
Delta
Epsilon
General
Sector
Food & Beverage
Turnover [EUR]
40,000,000
Number of employees
100
Physical structure
Number of production sites
1
Number of production lines
7
Number of warehouses
1
Products and production
Number of SKUs
200
Type of production
MTS
Manufacturing
60,000,000
300
1
Food & Beverage Food & Beverage Food & Beverage
250,000,000
350,000,000
125,000,000
1,000
600
450
1
3
16
4
4
7
9
3
9
15
450
MTS/MTO
400
MTS
500
MTS
200
MTS
Company Alpha
Before the implementation of an APS suite Alpha used an ERP system and several
spreadsheets to conduct planning and inventory control. Concerning forecasting, they
used an APS DP module, but the forecasting was not seen as important by the company.
The decision to implement a SCP module was based on the fact that a lot of time was
spent on planning and the plans were changed frequently. Also, the planner, who had all
the knowledge about how to use the planning solutions, was leaving the company,
which meant that no one in Alpha would have the knowledge to conduct the planning.
The goal of the project was hence to reduce the dependence on one person, to spend less
5
time on planning and to conduct replannings less often. Also, a goal was to decrease the
inventory levels and have fresher products, with more shelf life left, in store.
Company Beta
Before implementing an APS Beta used the functionality in their ERP system for
planning. The forecasting was done by their one and only customer, who sent forecasts
to them on a regular basis. The main reason for the APS implementation project was to
increase the service level, increase the productivity and decrease the capital tied up in
inventory. The SCP model was created to induce very few changes of the operations at
the company.
Company Gamma
Before the APS implementation Gamma used their ERP system, with aid from some
proprietary systems and spreadsheets, when conducting the tactical planning. The
decision to implement a SCP module and a DP module were part of the decision to
change the entire ERP system. The APS project, concerning tactical planning, was just a
small part of the large ERP project. Because of this, Gamma did not have any specific
goals for the APS project, it was just a part of the bigger goal, which was to simplify the
systems settings and get homogeneity among the different IT functions. The SCP model
uses many restraints to fit into the company processes, so that the system behaves as
Gamma is used to.
Company Delta
Before the APS project, the planning at Delta was done by one person on each of their
production facilities. This planning was done either using spreadsheets or with pen and
paper. The reason for initiating an APS implementation was that there was no
communication about plans at Delta. Also, there was no central planning, which also
meant that thoughts about balancing the production over their production sites did not
exist. The, goals for the project was to utilize their warehouse capacity better, to
improve the on-time delivery and to get a better overview over the processes.
Company Epsilon
Before implementing an APS, the planning at Epsilon was based on the yearly budget
and conducted on spreadsheets. The reason for implementing an APS was partly
because the production results were bad the previous years and the production manager
felt that “something has to be done”. This coincided with promotional activities from
their ERP vendor, concerning APS, which led to the decision to run an APS project.
The goals were to get an overview over the processes and improve the on-time delivery.
Effects from Epsilons APS implementation are somewhat preliminary, as they just
recently has begun to notice them.
Comparison concerning critical success factors
The CSFs were tested at the interviews. A company with a positive result concerning a
factor is marked with a plus sign (+) and a company with a negative result is marked
with minus (-). Empty fields state that there is no evidence to either a positive or a
negative fulfillment of the CSF in question.
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Table 3 Fulfilment of CSFs
Appropriate business and IT legacy systems
Business plan/vision/goals/justification
Business process reengineering
Change management culture and programme
Communication
Data management
APS strategy and implementation methodology
APS teamwork and composition
Monitoring and evaluation of performance
Organizational characteristics
Project champion
Project management
Software development, testing and troubleshooting
Top management support
Fit between APS and business/process
Alpha
+
+
+
+
Beta
+
-
Gamma
+
+
+
+
+
+
+
+
+
-
-
+
+
Delta
+
+
+
+
+
+
+
+
+
+
Epsilon
+
-
+
+
+
In the following section, a brief description of the 15 studied CSFs will be made
together with a short explanation of the cases fulfillment of the factors.
Looking at the appropriate business and IT legacy system, this factor states that the
systems already present should fit the chosen APS. Since all companies implemented
APSs from the same vendor as their ERP system and they did not have any complex
legacy systems, this factor is present in all cases.
The business goals and an investment justification should be clearly stated at the start
of the project, none of the cases had this clearly stated. All companies had some goals
with their projects, but they didn´t exist in writing.
Some business process reengineering should be involved for the company to be able
to utilize the functions that the system provides. Only two companies has changed their
organizations in order to be more efficient as part of, or in relation to, the APS project.
The change management factor concerns the company´s ability to get employees to
favor the change, it also concerns the training conducted. Three companies have had
this factor present.
Communication is a factor looking at the clear and effective communication at all
concerned levels in the organization. This is difficult to verify, but two companies seem
to have had good communication throughout their projects.
Data management concerns the quality of data, as well as the data structure. The
negative fulfillments of this factor at two companies concern the quality of the data.
APS strategy and implementation methodology concerns the existence of a strategy
for the implementation, stating if changes should be made to the company or to the
system. Three companies has had such a strategy.
APS teamwork is about getting a project team together that possesses all necessary
competences. This has been the case at two companies, where the other three has had
teams lacking competence in some area.
Monitoring performance is a factor where all companies have a negative value, this
because none of them has had any structured revision concerning the performance of the
APS during or after the project.
The organizational factor concerns the experience of other IT or organizational
projects of the same scale and focus, which none of the companies has had.
Project champion is someone who has sufficient power and ability to promote the
project throughout the organization. Four of the cases has had such a person present.
The project management factor is often related to the consultants, as they often run
the project. At two companies, the project management has shown negative
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characteristics, at Delta because of the lack of structure and at Epsilon because of
frequent changes of project members, due to employees leaving the company.
Software tests, troubleshooting and problem solving before going live has been done
sufficiently at two companies and insufficiently at two companies.
Top management support has been present at three of the companies.
The fit between system and process has shown to be good in four cases, where the
system has been, or is, able to incorporate the crucial business processes.
Effects of APS implementations
As in the case of CSFs, the companies has been assigned a plus (+) if there are evidence
that they have achieved an effect and they would have been given a minus sign if the
effect had shown negative results, like for instance that the inventory levels have
increased. This has not been the case, since no company has experienced any negative
results in these areas. The lack of signs shows that there is no evidence regarding that
effect at the specific company.
Table 4 Achieved effects
Alpha
Real time overview of the Supply Chain
Reduced total cost
Improved forecast accuracy
Reduced inventory levels
Production more synchronized with demand
More optimized product mix with regard to resources
Reduction in non value added activities in production
Increase of customer service level
Improve the on-time-delivery
Increase the average sales price
More stable system with less IT problems
Increase of planning (and replanning) speed
Reduced overtime in production
Less emergency transports between DC:s
Beta
Gamma
Delta
Epsilon
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Looking at the achieved effects, two companies stand out from the rest with positive
effects, Alpha and Epsilon. These companies have achieved several positive results
from their APSs and they are very satisfied with both the systems and the consultants.
Beta and Gamma have the least positive effects of the five studied companies. The
project at Beta is a disaster and the company is thinking about closing down the system,
as it is not able to incorporate the processes at Beta. Gamma, on the other hand, is very
satisfied with the system and with the consultants. The reason for them not achieving
many positive results is their reluctance to change the internal processes. The system at
Gamma has been modeled to behave as the company always has, which is what they
wanted from the start.
Delta has achieved some positive results, but their opinion is that the system was sold
on the premises that it would deliver more. This is why they don´t accept the project as
finished yet and they are not satisfied with the system. Still, the project as such has
forced them to change their internal processes, which has given several positive results.
This is not primarily because of the APS, but according to interviews the changes had
never been made without the APS project.
Discussion
A general overview of the five cases gives that more positive CSFs seem to lead to
more positive effects, which is expected. The exception is Epsilon, where the CSFs are
8
not present to any great extent. An interview with the consultant revealed that although
the system solution in the Epsilon project was good the project wasn´t. This explains the
CSF situation, but it also shows the possibility to get a good solution even with a bad
project. Still, Epsilon had chosen an APS to fit with their internal processes and their
existing systems, they had a project champion, promoting the system and they had
support from the top management, which seem to be important factors.
Concerning the two factors “business plans/visions/goals/justification” and
“monitoring and evaluation of performance” none of the studied companies had these
factors present. The lacking of structured goals and justification, together with the nonexistent monitoring of performance is not surprising as many companies tend to
measure a projects success based on the cost in relation to the budget. The cost of the
project has been monitored in all cases, but this is not a CSF and should not affect the
projects´ success in terms of APS effects. Still, it reveals that projects as these should be
monitored more carefully by other than financial standards, as this would most likely
improve the final result.
The two companies with most CSFs present, Alpha and Delta, has also shown many
positive results. Concerning Delta, they are not satisfied with the system and the project,
but still they have some positive results. The inventory levels have not decreased at
Delta, but their warehouse capacity is scarce, which means that their goal is not to
decrease inventory, but to have the right products in their warehouses. Also, they are not
finished with the project and therefore more effects could show in the future.
The effects that none of the cases have verified, “increased sales price”, “more stable
system” and “less emergency transports” is not surprising. Only one of the companies,
Epsilon, experiences such extreme seasonal variations that they have to sell products
with large discounts in the after season. Since they have not gone through an entire
seasonal cycle with their APS, they have yet to discover if the average sales price might
be affected. The system stability has never been an issue prior to the APS projects, since
all companies used spreadsheets or similar solutions. Also, the emergency transports are
not a crucial factor, since none of the companies did operate that way before their APS
implementations.
Three of the companies´ APS implementations can be classified as overall
successful; Alpha, Gamma and Epsilon. The two CSFs they all have in common
concern the APS system as such; “appropriate business and IT legacy system” and “fit
between APS and business/process”. An APS to fit both the existing systems and the
company processes hence seem to be an important factor, and logically it should be.
The two companies with unsuccessful implementations, Beta and Delta, both had
negative achievements concerning the CSF data management. The importance of
correct data can never be exaggerated and these two companies had severe faults in their
data, for instance Delta tried for several months to implement the SCP module upon
incorrect data. This issue could be solved with better project management, since the data
should be in order before implementation, which is what Grabski and Leech (2007) did
show (see Figure 1), that there is interaction between factors. But none of the two
companies had any good project management either.
Conclusions
Some ERP success factors seem to be applicable even concerning APS
implementations, which the cases studied have shown. This study is a first step in
finding a relevant base of CSFs to pay attention to during APS implementations.
Practitioners and managers will get support from this study in their decisions
concerning APS implementations, as they will be able to use the results in conducting
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the preliminary calculations on benefits. Once a decision is made to implement an APS
the importance of this study lies in knowing which factors to put extra focus on, during
the implementation, to make the APS implementation a successful one.
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