Everything you wanted to know about Attribute Based Planning (ABP) and were afraid to ask.
Why do we need Attribute Based Planning? Attributes are properties specific to an object. In a supply chain, like anything else, everything that you deal with has attributes. Some examples of supply chain objects with Attributes are:
- Customers: priorities, size, repeat business potential
- Products, raw materials, and WIP: speed, texture, grade, quality, taste, shade, color, size
- Equipment: Precision, Maintenance, cost, speed, output quality, carbon emission
- Suppliers: qualification, quality, service level, cost, region
- Processes: Customer approved, Output quality, yield
- Regions: Labor laws, stability, price, regulations, import/export restrictions, transportation, earthquake prone
There is more, objects such as tools, cost restrictions, packaging skill levels, and storage temperatures.
Such Attributes are required in order to plan and peg products to the right order. Unlike what is commonly believed, Attributes are not just for the finished goods! Attributes appear at every stage of sourcing, making and delivery. For example, one needs to use a specific qualified supplier, process and product specifications for an end customer. In the absence of Attributes, to perform the above task, most supply chain vendors create every single combination of the bill of materials or substitute items to ensure the right product is made for each demand item. The problem with this approach is that even if you have 20 different attributes (In reality there are many more when you consider the entire supply chain), the number of combinations of SKU’s and bills of materials will be in the order of 20! which is around 2.5 quadrillion! Now you know, why some systems run so slowly even if they use In-Memory computation. So, in order to partially avoid such explosion of SKUs, they limit attributes only to the finished goods; and pegging is done as post processing after the plans are made rather than during the planning runs. In reality, attributes are constraints that help the planning search engine to match the right demand to the right supply, method of production and process.
With Attribute Based Planning (ABP) capability, a generic product (BOM) is defined and then all the attributes are dynamically attached to the generic BOM, based on the specifics of the demand. This reduces the complexity of the model and memory requirement by orders of magnitude and keeps the SKUs to the minimum. It also reduces the size of master data significantly and its maintenance.
One other very important use of Attributes is that, as the structure of your supply chain changes (e.g. acquisition of new companies, new products, new customers, or new suppliers), users can simply add or delete attributes as needed. The system would then automatically take into account the new attributes into its search strategy every time it runs. In other words, Attributes take the role of dynamic constraints that can be added or removed, by the users, as the business changes. Thus, the system is constantly adapting itself to its environment. The latter is done by using machine learning algorithms that can understand the changing patterns in the supply chain and update the attributes accordingly. For example, efficiency of an equipment going down over time, then its attributes are adjusted accordingly. This is what we refer to as self-correcting models of the supply chain in order to maintain a true digital twin of the supply chain.
In summary, attributes make the system flexible, adaptable, minimize memory requirements, make the maintenance of master data much easier and most importantly enable representation of the supply chain accurately. They represent the behavior of the supply chain and not just the structure thereof. For more information on ABP and its use click Here.