Imagine you are having an important meeting with your customer’s planning department. After much discussion, you take a break. While sipping your coffees, you ask them “off the record” what they consider to be their main problem with supply chain planning. Instead of giving you a detailed answer about specific planning issues, they often surprisingly admit that there is simply too much planning and way too often.
Although many people don’t like to hear it, it is important to remember that planning is NOT the purpose – business is! Planning is the means to maximize quality of service for customers, now and for the future, and to execute the plan. It is also, of course, making sure the necessary steps to make it happen are taken in a timely fashion.
Across the different planning hierarchies, repeat requests for the same time slots are planned and checked on confirmation – often with increasing frequency up to the time of the final execution (production, delivery). The question that must be asked here is “Does the end result business wise justify the planning effort taken to get there?”
During S&OP with planning time ranges from 12 to 18 months in most cases, customer demands on finished product level are sequentially planned and wound down to resource requirements by sales > marketing > supply chain > operations. So the demand signal is already at the most detailed level and the availability check is carried out based on stocks, in-house and outsourced production capacity, material sourcing and personnel and feedback.
When planning for a time in a sufficiently distant future, most demands can be confirmed from a technical side. Provided, of course, that certain premises, such as CapEx and cost, are acknowledged and accepted. These are entrepreneurial decisions, and an efficient S&OP process can help in the decision-making process.
Another example, though fabricated, is the case of a narrow product portfolio and/or a large flexibility between the products (with respect to the resources), where only the quantity has to be checked and the mix doesn’t matter.
The effort involved in both cases, however, in terms of time and manpower should not be underestimated, so it’s advisable to procure a maximum amount of information out of each planning run. And don’t forget to always challenge and review your processes!
The final sprint in operational planning/ execution for a specific time frame that has run through the rolling forecast cycles many times only begins after many months. At this point, final decisions must be made: material calls have to be turned into production programs and shift schedules.
All the while, last minute changes still come in. Sometimes even only days before production or delivery dates are stipulated. This places a considerable work load on the daily cycles of the operational supply chain.
Now let’s take a minute to ask ourselves honestly if that all really pays off. Do we get better by jumping to the left and then to the right? And what is really causing all the frenzy? Customer requests that keep getting changed? Or an in-house organizational setup that is “churning the figures”?
Planning is not about keeping busy, it’s about using our time intelligently. How can we streamline our processes to get the best possible results with the least effort possible?
Established organizations that work according to the pull principle and have managed to reduce their inventory buffers over time had to learn how to preserve their agility. But they have also asked themselves some fundamental questions:
- How often have we revised planning figures for a certain time slot, on the finished product level or the customer level?
- Did all these planning phases really help us with delivery performance, and could we have achieved the same result with less effort?
- What can we do to free up resources involved in the planning process so that they don’t waste time executing the process but can instead help shape the process?
The answers will differ in each company, of course. Whether a strict “frozen fence” that doesn’t allow any changes for planning figures is introduced, or the effort involved is reduced by creating product flexibilities depends on technical limitations and the requirements for the supply chain in the company.
However, a “back door” is needed for real, last minute, customer-driven changes, which must be strictly regulated so they don’t become excessive.
Always keep in mind what the purpose of planning is, and take the time to analyze whether the amount of effort you use is really worthwhile.