How mature is your supply chain planning process?
When it comes to supply chain planning, each company is different, and yet they’re all the same. They are different because their internal processes may vary greatly. Still, they experience the same problems, make similar mistakes, and hopefully learn from them
Here are some tips that will help you determine where you stand and how to bring your planning process to the next level.
1.Where do you stand?
In some companies, there might be neither a planner nor a planning process. The level of demands and stocks are decided based on empirical knowledge and rules of thumb. Your workers typically have a very short-term visibility on production and inventory levels. There is no formal planning process and teams take ad hoc actions when needed.
Even though it’s possible for some companies to work with a very basic supply chain plan, it is definitely not a sustainable way of planning for others. When your business starts growing, you might lose money from multiple sources: production delays, stockouts and/or stock excesses, missed sales orders, highly variable reorder quantities, decreasing customer loyalty, unhealthy relationship with your suppliers, etc.
For these companies, taking ad hoc decisions for supply chain related matters is certainly not supporting a long-term vision and strategy and, above all, it soon becomes extremely expensive and damageable to your growth.
Are you always planning in firefighting mode? Does it take you a full day to update your plan?
Planning reactively means that you don’t look toward the future; you react to today’s emergencies, like a rush order or an unexpected machine breakdown. As a result, your plan is constantly outdated, you can’t foresee major issues, and you end up always in firefighting mode.
Your planners currently exchange Excel spreadsheets on a daily basis, and that creates mistakes, frustration, endless copy-pasting, and a lot of wasted time. That’s without mentioning that Excel is the least collaborative tools of all time. Likewise, departments and teams do not communicate clearly, they work in silos, and your supply chain planning process is isolated from the rest of the company.
A common symptom of this fragmented and fractured production planning process is the “lost-in-translation” effect between your sales and operations departments. The sales team adjusts the sales forecast regularly and the manufacturing team manages the production and inventory accordingly, but with nonexistent to very narrow upstream visibility. Stocks goes in, stock goes out, that product is out of stock here and overstock there… Until you can no longer get out of this infernal loop.
Information hardly flows down the value chain. The planning process relies on silos, and as a result misses the point and the big picture. No matter how fast your supply planners can run, they won’t go anywhere near an impactful result if they can’t focus further than their feet.
If an unexpected event arises, can you update the plan in less than one hour?
In order to plan proactively, keeping a transversal overview of your supply chain is fundamental. It starts at the demand level, then goes all the way down to production, warehouse, shop, and backward. To be able to gather, process, review, and act on this key information, you need two critical ingredients: interconnected data flows and tight collaboration.
Enabling collaboration across your value chain means that people get the necessary means to share information that otherwise would stay stuck in their head. This goes beyond the scope of what tech gadgets can do for you, even though they might help. Changing culture and habits takes time and investment. No need to mention that the transition between a reactive and a proactive planning approach requires project management and helpful hands.
Once your new demand & supply planning method is up and running, you’re able to extend your visibility in the future, which means you’re capable of predicting and anticipating stockouts, machine breakdowns,and other unexpected events. This considerably improves your ability to react to the unforeseen, and that becomes a competitive advantage.
Is your plan mathematically optimized towards certain KPIs?
At this stage, planning your production and stocks is no longer an issue. Your process runs smoothly and your operators, staff, and suppliers have totally adopted the new way of working. It’s now time to optimize.
You start focusing on planning KPIs (finally!), gradually working on them until it doesn’t require more than some occasional finetuning. You’ve been able to automate the most tedious tasks, which frees valuable time for you to monitor market changes and anticipate major moves, so that your company stays on top of the game.
It is worth noting that you can’t jump directly from an ad hoc or reactive planning process to an optimized one. Indeed, you cannot refine skills you’ve never tried to learn to begin with. As planning is a complex task involving both humans and machines, delegating it to an automated tool from the start without bothering to understand how it works is an illusion.
How broken is your planning process? Take the test.
2. Bring your planning process to the next level
As already mentioned, upgrading your ways of working requires more than good will. Different elements are to be considered, among which people, tools, and how they interact with each other.
First of all, you will need the right skills in supply chain planning, change management, and IT. Maybe you have them in-house, maybe not. It’s totally common place that managers look out for temporary reinforcement of their teams. Also, employees who have been working at your company for the last 15 years might not make the best change managers, precisely because they’ve “always worked that way.”
Then, as part of the change project, come implementation projects of new technologies. These require knowledge from outside of your company: tech experts in the particular tool that you want to deploy. Ideally, these experts should master both your industry and technological requirements.
A common mistake when selecting a tech solution is to go after the perfect fit. That, just as Prince Charming, is a fairy tale. In most cases, “almost good” will do. You’ll soon find out during the change project that your own processes are flexible, and that it’s easier to adapt to a new reality than customize a full IT system based on people’s bad habits.
It thus comes as no surprise that, not only is it hard to level up, it’s also crucial to stay up. Building a very optimized plan doesn’t help much if the rest of the company cannot follow the pace. Make sure that your ERP system integrates with the planning process and that they are reflected in the various departments.
In the end, it all comes down to the demand & supply planners. You may not always feel the pain that they encounter daily. If their typical day is about extracting data, copy/pasting them, process them in Excel, scratching their head, running across the plant or warehouse, and back to the start, then there’s one thing you can be sure of: this is painful for them and for the company. And you should do something about it.