How to make your Supply Chain planning a competitive advantage and not a nightmare anymore?

April 19th, 2021

People at the heart of Supply Chain, Supply Chain

If you are working in supply chain management, you know planning management could be a nightmare. Supply or demand planning in our supply chain scheduling process is complex.

We can see multiple planning within one week due to changes from customers, suppliers, even internal changes. And at the same time, we have many work orders waiting for missing parts (caused by priority moves).

In the recent report from Reuter (2021), 43% of participants stated that their current planning systems were not well integrated with other systems, again exposing an inefficiency in operations where improvement is needed. (Ref.1)

But if we look at the trend for the following years, Supply chain planning is the key to our supply chain effectiveness.

Why is planning management complex in today’s supply chain?

A simple question with multiple answers!

Most of the time, planners don’t have the right planning tools. They have to face many manual activities, daily rescheduling, missing parts… Almost 30% of planners are doing manual Planning in Excel (Ref.1) every week with their assumptions sometimes!

Moreover, planners don’t have complete visibility on the following events. They perform their tasks with missing or inaccurate data. We can see it at all Supply Chain levels, from the S&OP to the MRP.

How to propose the best delivery plan when you don’t have all keys to build the proper plan?!

Other companies’ functions (sales, operations, supply chain) can’t even understand the planning process. The planners own this process, but nobody understands it because it is user-customized, manual, and time-consuming! I like to say it’s the black box of our supply chains.

And finally, if we look at the indicators driving the planning process, we assess a process’s performance with missing tools or data.

But scheduling is the heart of our Supply Chain performance!

From Reuters’ article, Supply chain planning is at the top of the Supply Chain agenda for 2021.

Planning is our supply chain’s conductor; it gives the pace and the limits of the global performances.

Are we able to produce this? Do we have the capabilities? What is the global load and capacity of the supply? How to mitigate issues? …

If we look at today’s master planners, they have obsolete tools to simulate, anticipate and plan!

How to then fill the gap to allow all the companies to go on the right way?

How to make your Supply Chain planning a competitive advantage?

Here are some tips we propose to turn your planning management into an asset for your supply chain management.

– Priority management and communication

Define proper rules about priorities and share them with your teams! These rules could be on the orders or customers’ priority rules. Make it visual and straightforward!

Define with your S&OP team how you will manage the flows or build a network to deliver your customer with less effort robustly.

Another thing will be to define the proper lead time for each product family to manage firm orders and then work on the customer orders and priority changes.

– Demand-driven planning and not Forecast based planning

As explained in the article of Supply Chain Brain (Ref.2), The top strategy for today’s Supply chain is to “Adopt a demand-driven planning and business operating model based on real-time demand insights and demand shaping.”

Back to basics, what are we learning in Supply Chain training? Forecasts are always wrong! Build our planning on false assumptions increase the errors and so the variability in our supply chain. For the short-term operational horizon, book to early some material or capacity not needed for the customer orders.

– Work with updated data

In 100% of the projects I did, we had a discrepancy in data accuracy. You are not alone!

It’s significant to have a defined data management process to ensure that you review your Supply Chain key parameters at least once a year.

As key parameters, we think about Lead times (all lead times!), MOQ (Minimum order quantities), ABC class, batch size, average demand, inventory level.

Driving planning with inaccurate data increases your process errors and may significantly impact your inventory management and customer satisfaction.

– Work with shorter Supply chains

It’s not because your supply chain network is complex that you can’t change anything.

Did you think to manage multiple small planning rather than one complex?

Did you think to change your supply chain strategy from Make to order to Assemble to order?

And if, moreover, you can manage shorter Lead Times, don’t you think that any change in the Supply Chain would be less complex to manage? One short supply chain will provide you more visibility.

In the APICS dictionary, we talk about the decoupling point, and the Demand Driven Institute has gone more profound in the use of this concept. A strategic decoupling point allows you to manage multiple Planning instead of one global and complex Planning.

– Implement Continuous improvement philosophy

With the situation of 2020, we all know that a good strategical process will never be sustainable for our supply chain. Continuous improvement is a mindset before being a process. Implementing this mindset will drive your team to look at the main gap in your process, understand the market and be proactive to face main changes. Today it is not just about continuous improvement to improve, but it is continuous improvement to adapt, as assumptions we take to build our planning are not valid a long time in our today’s world.

These tips and practices can be implemented step by step, but first, they should be driven by the management. If you want to change your supply chain practices to be more efficient, you need to have the top management agreement to lead these fundamental changes.

References