Planning processes drive many key activities in supply chain, whether we’re talking about demand forecasting, production scheduling, etc. But is your process effective?
Based on my experience, here are five key characteristics of a good planning process:
- It is consistent and repeatable. Supply chain planning processes affect many people in your organization. If your process is ad-hoc, it’s likely that it will turn out differently every time you execute. Formalizing your process steps will bring the consistency that avoids costly errors and omissions. If you automate your process or parts of your process, then that effort will help formalize your process because it will require you to think through and define the steps carefully.
- The data driving the process is accurate. This is a big one, and for obvious reasons. We’ve all heard the expression, “garbage in, garbage out.” It’s impossible to make a good plan if the underlying data driving the process is shaky. For example, if planners are not confident in the on-hand inventory numbers, or production run rates, or customer sales order quantities, the decisions they make are going to be suspect. Many organizations already do a good job on their own data, but what if you are working with a third party? In the case of co-manufacturing, daily communication is absolutely critical to ensure that you have accurate, up-to-date information on the current schedule and what was made in the previous days.
- It provides a clear view of the current situation. The picture of where things stand in the supply chain is key to understanding and evaluating what to make, what to order, what to move, etc. Does your planning process create views that allow the planner and others to easily see what’s going on? Or does the planner need to flip through tables of numbers to piece together an understanding of the current status? Graphical views and exception filtering are particularly helpful in accelerating the understanding of the state of your supply chain.
- Recommendations for future actions are achievable. If you have capacity constraints in your network — whether they are production-related, warehousing-related, or transportation-related — then any plan that doesn’t take them into account is not realistic. The traditional DRP and MRP processes created in the 1970s are notorious for generating unconstrained plans that show all needs being met in the future. What amazes me today is the number of companies we still encounter who are running unconstrained planning processes even though their world is tightly constrained. For example, if you have labor constraints and batching constraints in your plant that effectively limit your throughput, then they need to be taken into account when creating your production plan. Otherwise, the projection of your future situation will be grossly inaccurate.
- Planners can understand the impact of their changes. If planners want to make changes to the plan, can they see the effect? Will capacity be overloaded? Will a different customer be shorted now? Too many times, I’ve seen planners manually change a production schedule to make it look great from the plant’s perspective without any understanding as to what impact this has on inventory and customer service. A good planning process allows you to see the ripple effect of any changes.
This isn’t meant to be an exhaustive list, but rather some key things to consider when reviewing your current planning process or establishing a new one.
If you are currently experiencing pain points in your supply chain planning processes (S&OP, IBP, demand planning, etc.), please get in touch. Our team can quickly and effectively help identify the root cause(s) and help you create a corrective action plan.
Charlie Marge is a supply chain optimization expert with 25+ years of experience in both consulting and software. At Chainalytics, Charlie leads projects in many areas, from strategic supply chain network design to operational advanced planning & scheduling. He has worked in all major industries with a particular focus in Food, Beverage, and CPG.
