Open Source ERP Guru

We already domed the interactive ATP (Available To Promise) viewer, which is very useful in identifying and preventing stock level problems of specific products, that can lead to unhappy customers. It can also be used to provide reliable answer to your customers’ stock related inquiries.

ATP can be also used in a more proactive manner. This post will demo how ATP can identify possible future stock availability problems within a specified time period, without requiring any user interactivity.

Batch ATP

Unlike the ATP viewer, which is an interactive application, the ATP Notifier works in batch mode. Using a scheduler, a  Talend job, connected to an Openbravo ERP system, is submitted. The job  examines the ATP vector of a list of products. Based on current stock levels, predicted demand (as explained in here) and supply transactions (either manufacturing or procurement orders), the job will indicate which products from the list might have their stock go below their designated safety stock levels, within a specific time period (a horizon), measured in weeks.

The user does not have to submit the actual job – it is run by an automatic scheduler at any given interval (once a day, once an hour etc.). The output of the job is an RSS feed, that can be read by any RSS reader.

Business RSS

A word about RSS – the RSS protocol was invented for people (like myself) who found themselves wasting too much valuable time browsing through numerous websites, looking for interesting things to read. With RSS, you don’t have to surf all those sites – you just register to their RSS feed, and check your RSS reader occasionally, to see if anything interesting is published.

Business users are similar – there are so many business events happening, it is almost impossible to track all of them. Going through endless screens, looking for possible issues with products or customers can be a huge time sink. And this is where RSS can help business users.

ATP Notifier

In the demo below, we run the ATP Notifier on one product (‘Wine United states’), although we could do the same for as many products as we want. We run the Talend ATP Notifier job through a web service call, passing the number of weeks (horizon) as a parameter.

When we pass 6 or 7 weeks, there is no result – that means that within 7 weeks, stock will remain above safety stock levels for our product. But if we change the horizon to 8 weeks, we get an RSS reply, indicating there might be a problem with that product within that time period.

In production environment, though, you would not have to constantly change your horizon-we do that only for demo purposes. The idea is that for every product (or product category), you will define the horizon once. At any given interval (once a day, twice a day etc.), the batch job will run automatically, check all products, and reply with an RSS containing all the product that might have a problem with stock levels within the given horizon. It is up to the planner to solve the issues indicated by the ATP runner, by either creating new production order or purchasing order.

ATP Notifier Recorded Flash Demo – click image to view demo

Our last post introduced an A.T.P. (Available To Promise) flash gadget under development, running on top of an Openbravo system. This post will demonstrate a new feature of the ATP viewer – predictive ATP.

Predictive ATP  is based on a prediction of future demand for a product, rather than on actual demand.

There are many ways to predict future demand. Actually, there are quite a few applications who’s sole purpose is to predict demand . One of the most simple, yet useful techniques is to use time series. By using time series, you examine all of your past demand transactions (sales orders, internal orders etc), and try to predict future demand for a specific product based on these past transactions.

For our purposes, we want to calculate past demand for a certain period, let’s say a month, or  week. So we need to come up with some kind of ‘average’ for that specific time period.

Some of the techniques used to calculate that average are:

1. Simple Average – you could just calculate (by summing all period quantities and divide that number by the number of periods) the average demand quantity for a given item at a given period, let’s say month, and predict that future sales will behave in a similar fashion. This is the most basic and simple method, but also highly unreliable.
2. Weighted Average- in most scenarios, you want to give higher weight to demand transactions that are more recent. for example, when you calculate your new  monthly average, you  could give a weight of 0.6 to the month that just ended and 0.4 to the last calculated average. That way, the impact of the last month on the average is much higher than previous months.
3. Weighted Exponential Average – a more sophisticated version of weighted average, exponential smoothing is a technique in which each month demand figures are multiplied by a factor that decreases exponentially.

The open source ATP viewer now supports all 3 methods of calculating demand. It also features a new ATP vector, that takes into account only the predicted future demand (instead of actual demand).

The way the predicted ATP works is by first calculating average monthly demand for a specific product, based on historical data, and then using that figure to reduce the amount of stock that will be available in the future for a specific time period. The predictive ATP is calculated weekly, so for any future week, the amount of available to promise stock decrease by the calculated monthly average demand, divided by 4.3 , the number of weeks in a month. Similar to the actual ATP, production or purchasing orders increase the amount of stock available to promise.

I highly recommend that you watch the first ATP viewer demo along with this one to understand the business value of the ATP viewer.

Open source ATP for Openrbavo – Recorded demo (click image below to view demo)

We plan to release the ATP viewer as open source, and also provide content that will make it work with several open source ERP systems. If you are interested in using the ATP viewer, please let us know.

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