A Comparative Analysis of Advanced Planning and Scheduling and Supply

Chain Management Practices in India and Ethiopia

Prof.Kameswara Rao PorankiMBA.,PhD.,

Professor in Department of Management, College of Business & Economics,
Dire Dawa University, Dire Dawa City, Ethiopia
Email: kamesh_p2001@rediffmail.com
&
Prof.N.R.V.Prabhu MBA.,PhD.,PDF

Abstract

In India as well as Ethiopia many companies now a days are more and more moving to low
wage regions as they are highly economical for cost of production. Compared to the cost
reduction is good for any company but effective use of resources are more efficient for and
appropriate for any company. Many organizations are involving on Advanced planning and
Technical Scheduling along with suitable Supply Change Management techniques. The
researchers in this study has found out that the India as well as Ethiopia are following resource
saving concept with major improvements in delivery performance, responsiveness, supply chain
costs, and asset management can be achieved. There are several barriers to a success in India as
well as Ethiopia due to lack of managerial commitment and hierarchies as well as outsourced IT
departments in many companies. We have offered some recommendations to overcome these
barriers by using APS and SCM techniques in both the countries by stressing the importance of
committed managers.

Keywords: Advanced Planning and Scheduling, Material Requirements Planning,

Manufacturing Resource Planning, Enterprise Resource Planning, Financial Costs

Originality/value: The researchers of this paper has conducted a study on A Comparative

Analysis of Advanced Planning and Scheduling and Supply Chain Management Practices in
India and Ethiopia. This is to ascertain the connection between the Advanced Planning and
Scheduling and Engineering concept and the Supply Chain Management, a management concept
by comparing the industrial situation both in India as well as in Ethiopia a Eastern African
country. This is possible as once researcher is living in India and the other is living in Ethiopia as
to make this research possible.
1. Introduction
In India and Ethiopia harsh business climate prevails and many companies are fighting for their
survival. In order to stay competitive companies in the manufacturing industry decide to place
production facilities in these low wage regions (Kinnander,2004). To gain competitive advantage
in their home countries many companies that have chosen to move some of their capacity abroad
during the last years are Volvo, Ericsson, Electrolux, Alfa Laval, and others to India as well as
Ethiopia. The Strategy of moving production to low wage regions is a part of globalization,
which together with shorter product life cycles and focus on core competencies are identified as
some of the biggest challenges for companies today (Christopher, 1998; Alvord III, 1999), and
this indeed seems to be the case for both the countries. India has a distinctive advantage over
Ethiopia in terms of well trained and educated population. Therefore, many MNCs are looking

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India is the best location for their expansion compared to Ethiopia. Whereas in Ethiopia there is a
lack to trained manpower and the Industrial and infrastructural facilities are very less and in
sufficient for many industries. The main purpose of this paper is to investigate the effects of
Technical Scheduling like APS(Advanced Planning and Scheduling) and its effects on Supply
Chain Management, what the prerequisites to reach best practice are, and how the concept needs
to be changed when implementing it in many companies. This paper focuses both on the
concepts of Engineering as well as Supply Chain Management.

Review of Literature
As per the available literature review, the Advanced planning and scheduling (APS, also known
as advanced manufacturing) refers to a manufacturing management process by which raw
materials and production capacity are optimally allocated to meet demand in the industry. APS is
especially well-suited to environments where simpler planning methods cannot adequately
address complex trade-offs between competing priorities related to production. Whereas
production scheduling is intrinsically very difficult due to the factorial dependence of the size of
the solution space on the number of products to be manufactured (Hartmut Stadtler; Christoph
Kilger, eds.2000) in the manufacturing industry. Whereas the concept of supply chain
management (SCM), the management of the flow of goods and services(www.aelp.org.uk)
involves the movement and storage of raw materials, of work-in-process inventory, and of
finished goods from point of origin to point of consumption in the market. However, the
interconnected or interlinked networks, channels and node businesses combine in the provision
of products and services required by end customers in a supply chain (Harland, C.M. (1996) in
the Industry. Originally, the Supply-chain management has been defined(www.orie.cornell.edu)
as the "design, planning, execution, control, and monitoring of supply chain activities with the
objective of creating net value, building a competitive infrastructure, leveraging worldwide
logistics, synchronizing supply with demand and measuring performance globally (Kozlenkova,
Irina V.; Hult, G. Tomas M.; Lund, Donald J.; Mena, Jeannette A.; Kekec, Pinar (2015-05-12)
according to the above authors. Finally the SCM practice draws heavily from the areas of
industrial engineering, systems engineering, operations management, logistics, procurement,
information technology, and marketing and strives for an integrated approach is imminent.
Figure-01

Source: http://www.scmsol-llc.com/solutions/aps-advanced-planning-and-scheduling/

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The above Figure-01 explains about Advanced Planning and Scheduling mainly focuses on
Planning, Scheduling and Execution at the center and remaining activities are interrelated in
order to maximize the efficiency of the engineering or manufacturing process.

Figure-02

Source: https://www.123rf.com/stock-photo/supply_chain_concept.html

The above Figure-02 tells us various activities of Supply Chain Management related to
upstream, downstream, value, distribution, logistics, information, inventory and cash-flow. This
kind of systematic arrangement of various activities related to the engineering or manufacturing
process would enhance the efficiency of the supply chain and thereby reduce the cost of
production. Thus, supply chain management no doubt would help to improve the profitability of
the industry through cost reduction.

Engineering Concepts
Material Requirements Planning (MRP): As per some authors, Material Requirements Planning
(MRP) started out as a computerized approach for planning the material procurement and
production is clearly evident. This has necessitates the requirements for these parts are then
compared with available inventory and open orders for the horizon of planning. (Brown et al.,
1996). As days passed many more functions were added to the software related to MRP. The
added new areas like accounting, forecasting, master scheduling, or purchasing has added
capacity from these new functions. Then, it was realized that this improved system could offer
an integrated approach to managing manufacturing resources (Klaus et al.,2000). This enhanced
MRP was termed manufacturing resource planning as per the Engineering Concept.

Manufacturing Resource Planning (MRP-2): Compared to the earlier concept of MRP this newer
MRP-2 offers a wider set of tools to manage many of the functions of a manufacturing enterprise
according to latest authors. Interestingly with this manufacturing or Engineering activities the
plans and inventories will always be kept valid even though something had been transported to
or from the plant and the resultant system offered an integrated approach to the management of
all manufacturing resources (Brown et al., 1996).

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Enterprise Resource Planning (ERP): Enterprise Resource Planning (ERP) systems are a class of
software for planning and managing not only manufacturing resources but, as the name reveals,
all aspects of an enterprise (www.cscmp.org) including planning, manufacturing, sales, and
marketing. Different writers like to lift up different functions but these in addition to financial,
human resource, distribution, and R&D planning functions are most common. (See e.g. Jacobs &
Whybark, 2000; Klaus et al., 2000; Langenwalter, 2000)

Advanced Planning and Scheduling (APS)

The APS system is according to Sadowski (1998) a natural extension to the IT systems already in
place. APS takes over the planning functions while the ERP system deals with the other
functions it supports, e.g. sales, human resources, order transaction, etc. (Stadtler and Kilger,
2000). Alvord III (1999) is of the opinion that the APS system is an enormous breakthrough in
the field of planning. The reason that this software has not been developed earlier is given by
Stadtler and Kilger (2000) as it is not until now we have the computer technology to realize it.

Supply Chain Management

Supply Chain Management is a very important department in the company which will give a
very good indication about the logistics and supplies available in the company. Out of the three
companies studied, all the three companies dont have a separate department or a concerned staff
for supply chain management.

Labor Costs
In these Industrial Component Manufacturers, there is often a fluctuation in the demand for
production of the products. Therefore, these industries either in India or in Ethiopia have only a
limited number of permanent laborers. This has forces the managements of these companies to
employ some casual laborers in order to meet the increase in demands of the customers when
necessary. So they have to train the casual laborers in the meantime to work, which results in
wastage of time and money for these Industries. These industries are not able to meet out the
demands of the laborers as they expect high salary which cannot be met out by these industries
either in India as well as in Ethiopia. These industries have to give allowances like rent, food etc.
which affects their profit very badly. They also need to satisfy the bonus demands made by the
workers. Thus labor cost is most important and it is having a dominant impact on the profitability
of these industries in both the countries.

Financial Costs
The Industrial Component Manufacturers and the suppliers are mutually independent on each
other. The Industrial Component Manufacturers can also be called as OEMs (Original Equipment
Manufacturers) demands for the continuous supply of materials from the suppliers so that the
production is not affected. In case of any financial instability the supplier will not be able to
manufacture the products in time. In case theirs is inventory stock or there are more than one
supplier for that product manufactured the production in the next level of the supplier or the
OEM will not get affected or else the production has to be stopped until the financial crisis is
solved. so every supplier is regularly audited every year. The audit conducted every year focuses
on the Turnover Growth, Dept Equity Ratio, Profitability, Assets, Quality Standards. In case the
supplier is a large scale manufacturer he is capable to handle the problem by himself. Or if the

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supplier is not financially strong he has to face financial instability (Constantin Blome and
Tobias Schoenherr, 2011 and Atanu Chaudhuri, Peter Koudal and Sridhar Seshadri, 2010).

Production Costs
Production costs are the most imporatant for any manufacturer. The probvlems of Industrial components
manufactures have problems like, repair, supplier production or raw material arrival delay, labour
problems, power cuts, tools ware, excess work load due to demands, quality problems etc. Therefore,
the companies in ethier in India are in Ethiopia has to maintain a regular production schedule for every
manufacturing or engineering activities. If the production fails for a day these OEMs (Orginal
Equipment Manufacturers) it will affect the supply to the manufacturing companies who are higly
depent on these OEMs. All the above are leads to the affect on the cost structue of any OEM.

Supplier Costs
The tier one companies are bigger companies get products from the tier 2 suppliers. The tier2
suppliers get raw materials or parts from the tier 3 suppliers. So there are various problems
involved in the selection of suppliers. As observed in all the supplier companies in all the levels
of suppliers. The OEMs have their own policy of purchasing a material from their suppliers. the
purchasing policies or the SSP (Supplier Service Policy) are similar for all the levels of the
suppliers

Logistics Cost
Logistics is an integral function of every MSE. It is a channel of supply chain which the value of
time and place utility. In India, few raw materials are cheaper in places like Hyderabad and
Bombay but it takes one month t deliver the raw materials whereas it takes only 10-12 days for
delivery in local surrounding area where the costs are at a higher rate (Stephan Vachon and
Robert D. Klassen, 2002). Another problem being faced by MSE is as most of the industries are
outside the city it is very difficult to transport the raw materials as well as to deliver the
finished products (Sezhiyan Tom Page, D.M. and Paivi Iskanius, 2011).

Research Methodology
We have Identified three Industrial components manufacturing companies located in Karnataka
in India and Addis Ababa in Ethiopia were studied and questionnaire was circulated to top
officials of all the three companies and around fifteen responses were collected for the purpose of
analyzing. Various outputs were gathered from the responses of the employee. Graphical
representation are given below for the better understanding and interpretations of the responses.

Variables
As per this research it was found out Technical performance is the quality of the production time
delivery, supply issues it is a very important factor as it shows the Capability of the company and
Financial Performance indicates the net profit or loss gained by the company as both are
dependent variables. It means without technical performance the financial performance is not
possible.

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Conclusion
After a thorough research, that the manufacturing industry especially Industrial Component
Manufacturers in India as well as Ethiopia. We have conducted the survey to limited number of
respondents in India as well as in Ethiopia. The respondents are top officials of various
Industries in India as well as in Ethiopia. These industries are midsized industries which are
practicing both Advanced Planning and Scheduling and Supply Chain Management concepts.
This research has found out that the Labor cost is high in India compared to Ethiopia whereas the
production cost, Financial cost, supplier cost and logistics costs are low in India. It means the
cost reduction with proper APS and SCM practices in India are good compared to Ethiopia.
Coming to the Technical performance in India is higher compared to Ethiopia and Financial
performance is higher in India but lower in Ethiopia. Finally the usage of Engineering techniques
like Advanced Planning and Scheduling is excellent in India compared to Ethiopia. Also the
Supply Chain Management also good in India compared to Ethiopia. We the researchers finally
conclude that both APS and SCM has perfect suitability and usage both in India as well as in
Ethiopia. The researchers recommend the future researchers that the scope of the study required
to be increased in order to get highly suitable results for managerial decision making.

References

1. Atanu Chaudhuri, Peter Koudal and Sridhar Seshadri, 2010. Productivity and capital
investments: An empirical study of three manufacturing industries in India, IIMB
Management Review, xx: 1e15.
2. Brown, J., J. Harhen, and J. Shivnan (1996) Production Management Systems An
Integrated Perspective. Harlow. Addison Wesley
3. Constantin Blome and Tobias Schoenherr, 2011, "Supply chain risk management in
financial crisesA multiple case-study approach", International Journal on Production
Economics, 134: 43-57.
4. Christopher, M. (1998) Logistics and Supply Chain Management. London. Financial
Times Prentice Hall
5. Hartmut Stadtler; Christoph Kilger, eds. (2000) (in German), Supply Chain Management
and Advanced Planning - Concepts, Models, Software and Case Studies, Heidelberg:
Springer-Verlag, ISBN 3-540-67682-1
6. Harland, C.M. (1996) Supply Chain Management, Purchasing and Supply Management,
Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics. In:
Slack, N (ed.) Blackwell Encyclopedic Dictionary of Operations Management. UK:
Blackwell.
7. Jacobs, F. R. and D. C. Whybark (2000) Why ERP? A Primer on SAP implementation.
Boston. McGraw-Hill.
8. Kinnander, A. (2004) Produktivitetsparadoxen Svensk industris produktivitetsutveckling
i vrldsklass, www.TCO.se
9. Klaus, H., M. Rosemann, and G. G. Gable (2000) What is ERP? Information Systems
Frontiers. Vol. 2, Issue 2
10. Kozlenkova, Irina V.; Hult, G. Tomas M.; Lund, Donald J.; Mena, Jeannette A.; Kekec,
Pinar (2015-05-12). "The Role of Marketing Channels in Supply Chain Management".
Journal of Retailing. 91 (4): 586609. doi:10.1016/j.jretai.2015.03.003. ISSN 0022-4359.

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11. Sadowski, R. (1998) Selecting Scheduling Software IIE Solutions. Vol. 30, Issue 10
12. Stadtler, H. and C. Kilger (ed.) (2000) Supply Chain Management and Advanced
Planning Concept, Models, Software and Case Studies. Heidelberg. Springer-Verlag
Berlin
13. Stephan Vachon and Robert D. Klassen, 2002. An Exploratory Investigation of the
Effects of SupplyChain Complexity on Delivery Performance, IEEE Transactions on
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14. Sezhiyan Tom Page, D.M. and Paivi Iskanius, 2011. The impact of supply effort
management, logistics capability and supply chain management strategies on firm
performance, International Journal on Electronic Transport, 1(1).
15. http://www.aelp.org.uk/supply/details/supply-chain-management-guide/,published2013,
accessed 31 March 2015
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 ANNEXURE

TABLE-01: Independent Variables(India & Ethiopia)

INDIA ETHIOPIA
S.N Factors Mean Factors Mean
o
1. Labor Cost 4.30 Labor Cost 3.72

2. Financial Cost 4.85 Financial Cost 5.12

3. Production Cost 4.25 Production 5.23

Cost
The 4. Supplier Cost 2.15 Supplier Cost 3.93 above
table tells us
that the Labor
5. Logistics Cost 2.17 Logistics Cost 3.2
cost is high in
India
compared to Ethiopia whereas the production cost, Financial cost, supplier cost and logistics
costs are low in India. It means the cost reduction with proper APS and SCM practices in India
are good compared to Ethiopia.

TABLE-02: Performance Mean with ratings(India& Ethiopia)

INDIA ETHIOPIA
S.N Factors Mean Factors Mean
o
1. Technical 4.14 Technical 3.27
Performance Performance
2. Financial 3.44 Financial 1.78
Performance Performance
The above
table explains that the Technical performance in India is higher compared to Ethiopia and
Financial performance is higher in India but lower in Ethiopia.

TABLE-03: APS & SCM Ratings(India Ethiopia)

INDIA ETHIOPIA
S.N Factors Mean Factors Mean
o
1. Advanced Planning 4.67 Advanced 2.11
and Scheduling Planning and
Scheduling
2. Supply Chain 5.14 Supply Chain 1.33
Management Management
Performance Performance
The above
table explains us the Advanced Planning and Scheduling is excellent in India compared to
Ethiopia. Also the Supply Chain Management also good in India compared to Ethiopia.

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