The success comes with integrating tactical planning processes, planning entities, operational planning, and execution.
There are probably not too many other topics that require an orchestration of processes, data flows, and teamwork across many organizational units to an extent such as supply chain planning and execution does. Not enough, you have to deal with often conflicting expectations if it comes to time horizons and accuracy.
A first step towards distinct supply chain capabilities is to establish an end-to-end process view. Involved parties have to develop an understanding of their role and also of the limitations within the areas affecting or being impacted by their processes. The interdependency between processes, data flows, timing and accuracy of information is an essential factor within this evaluation. At the end, it will be a combination of increased transparency and accuracy and a common understanding of how to deal with the remaining level of ambiguity. Like every other interaction among different organizational units and individuals, the collaboration is strongly influenced by perception rather than a pure fact based communication. A small number of incidents (completely wrong forecasts, stock-outs, shut-downs in production etc.) might have a significant impact on how people judge the performance of others and the information handed over to them. An appropriate tool support and a higher level of automation may reduce this effect. For example, if expected delivery dates are automatically updated by the system as soon as the information is available, people will start relying on the data as the best knowledge the organization has. | What sense investing in planning capabilities if your execution hampers! There is generally a high level of mistrust between planners, sales people, and the production and logistics folks responsible to actually produce and distribute products to the customer. You will hence hear from the latter that just if planners would provide realistic plans and sales would stick to those, the execution is no problem anymore. However, aforementioned will always complain about executions’ unreliability. In order to get a sense of the truth, it is necessary to assess your supply chain processes, define process objectives and measure appropriate process performance indicators, and to evaluate disturbers as well as reinforcing factors. Investments into better and more accurate planning results will provide the expected return, only if your operational processes are capable of deploying products with an appropriate reliability.  |
Is your operation covering up the shortcomings of planning? On the opposite site, unnecessary high costs may occur in production and logistics because of pure quality of your planning processes. It is not always as obvious as in the case of high inventory levels or frequent repackaging of final products that your company is losing money. |
There is not a single discipline that leads you to a comprehensive design of your supply chain. However, following an end-to-end process view fosters collaboration across departments and challenges established thinking in broader context. Data flow, the reciprocal interaction between inventory policies, planning data accuracy, and forecast processes and cycles - to name just a few - can be assessed. It finally supports you in evaluating quality and options of tool support and automation.
Face the truth – the world is bad to you! It is a myth that planning and process excellence can solve all issues. The design of supply chain processes has to incorporate exception handling and standardized procedures in case of interruptions in production, unexpected events in your logistics chain, as well as significant deviations from originally agreed plans and expected demand and customer behavior. Processes and business rules should be challenged by case scenarios, ensuring that deviations are corrected within the next planning runs. It should hence also be clear and well defined how to initiate an extraordinary additional planning run. |
A central piece of any discussion about supply chain excellence is the S&OP (Sales and Operations Planning). It is much more a process topic than many people expect. The process design has to reflect the various constraints your business has to deal with. Typical topics which need to be considered are:
- Time horizons and granularity of planning
- Hand-over of planning data from sales, to SCP, to production, to logistics
- Feed-back loops and iterations
- What decisions are based on which planning cycles?
- Definition of decisions, which need to be made outside of a regular planning process
The level of sustainability you reach in defining and implementing all those aspects will define the difference between managed chaos or agility.
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