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Case Study APS Implementation

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35 views3 pages

Case Study APS Implementation

Uploaded by

Razeen Ameen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Case Study: Implementing APS at NextGen Devices

Company Background

NextGen Devices is a prominent smartphone manufacturer headquartered in Tokyo, Japan.


Serving Asia, North America, and Europe, the company focuses on rapid product development
cycles and meeting fluctuating customer demands. To maintain its competitive edge, NextGen
aims to enhance both its strategic and tactical decision-making across its supply chain.

The company has been facing various operational and strategic challenges, including demand
variability, resource constraints, inventory management issues, complex distribution logistics,
and prolonged lead times. To address these issues, NextGen’s CEO, Hiroshi Yamamoto, decides
to implement an Advanced Planning and Scheduling (APS) system.

Challenges Faced by NextGen Devices

Demand Variability: Customer demand fluctuates seasonally and with each new model release,
leading to inefficiencies in both short- and long-term planning.

Resource Constraints: The company’s facilities have capacity limits and labor shortages,
affecting both day-to-day operations and long-term production planning.

Inventory Management: Frequent stockouts and excess inventory create high storage costs and
missed sales opportunities, complicating both tactical inventory control and strategic inventory
policies.

Distribution Complexity: Multiple global distribution centers make it difficult to coordinate and
optimize logistics.

Extended Lead Times: Ineffective production scheduling has resulted in long lead times, which
hinder the company’s ability to respond quickly to market changes.

Strategic and Tactical Levels in APS Implementation

NextGen’s APS system implementation targets both strategic (long-term) and tactical (short- to
medium-term) decision-making:

Strategic Decisions Supported by APS

Network Design and Facility Location Decisions:

NextGen needs to optimize its production and distribution network to improve responsiveness to
global markets.By simulating different scenarios, the APS system helps determine the optimal
locations for future distribution centers to minimize logistics costs and improve lead times.
NextGen decides to open a new distribution center in Eastern Europe, reducing shipping times to
European customers by 30%.
Capacity Expansion and Investment:

 Strategic Objective: NextGen is considering long-term capacity expansions to handle


projected increases in demand.
 APS Role: Using demand forecasts, the APS system evaluates the return on investment
for expanding facilities or adding new production lines.
 Outcome: The APS system’s simulations reveal that expanding capacity at the existing
facility in Asia will yield the highest ROI, leading to an investment in new machinery and
workforce training for that location.

Supplier Collaboration and Sourcing Decisions:

 Strategic Objective: NextGen seeks to improve relationships with suppliers to secure


stable material availability.
 APS Role: The APS system helps NextGen identify critical suppliers for key components
and forecasts long-term material requirements.
 Outcome: NextGen establishes strategic partnerships with screen and semiconductor
suppliers, ensuring preferential treatment for high-demand periods.

Tactical Decisions Supported by APS

Demand Planning and Inventory Control:

 Tactical Objective: NextGen aims to maintain optimal inventory levels and reduce
carrying costs.
 APS Role: The APS system’s demand planning module generates accurate short- to
medium-term forecasts, allowing for improved inventory control.
 Outcome: The system reduces forecast errors by 15%, leading to a 25% decrease in
inventory holding costs while ensuring stock availability during peak seasons.

Production Scheduling and Order Fulfillment:

 Tactical Objective: NextGen needs to create detailed production schedules to meet


customer demand while maximizing resource utilization.
 APS Role: The APS system allocates production resources based on order priorities,
available labor, and machine capacity, improving scheduling efficiency.
 Outcome: By optimizing scheduling, NextGen cuts lead times by 20%, improving
customer satisfaction and reducing overtime costs.

Distribution and Transportation Planning:

 Tactical Objective: NextGen aims to minimize transportation costs while maintaining


reliable delivery times.
 APS Role: The APS system’s distribution module evaluates and optimizes transportation
routes and modes, considering regional demand and shipping costs.
 Outcome: NextGen consolidates shipments to reduce transportation costs by 12%,
prioritizing express delivery options only for high-demand products.

Short-Term Capacity Management:

 Tactical Objective: NextGen’s production team needs to balance current demand with
available resources and production line constraints.
 APS Role: The APS system dynamically adjusts production schedules to prevent
bottlenecks, maximizing line efficiency based on available capacity.
 Outcome: By reallocating tasks and shifting production across lines, NextGen achieves
an 18% increase in resource utilization, reducing reliance on costly outsourcing.

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