Much time, effort and money has been expended and many books written aimed at improving the process of planning across the supply chain. Comprehensive supply chain planning is often found to be cumbersome to manage and difficult to implement.
Long-range planning often seems detached from the reality of the business or does not incorporate enough fresh thinking. Medium to short-range planning often proves too rigid and does not adapt to circumstance.
Planning processes end up being supported through loose collections of spreadsheets or via complex advanced planning tools, which try to model reality to the nth degree, thereby removing any intuition from the process. Either of these scenarios poses a sustainability risk to ongoing supply chain planning. On top of this, creating continuity and consistency across timeframes seems to be a distant ambition.
New approaches to supply chain planning are emerging, however. A greater appreciation for the role of comprehensive information, available to all levels of planning, is being supported by advances in information management technologies (databases, integration tools, etc).
These technologies are making the process of collecting and managing broad ranges of information much easier. More businesses are starting to take advantage of new capabilities, within familiar end-user products, to access business information and support more advanced forms of user interaction. By creating comprehensive central repositories of information, coupled with innovative, yet familiar user interfaces, businesses are getting on top of tactical and operational planning issues. The time seems to be upon us where convergent strategic, tactical and operational planning is a distinct reality.
Historical, current reality
Current reality indicates that many organisations find difficulty in planning at various levels:
At a strategic level, it may be found that supply chain planning becomes disconnected from overall business planning. All too often there is a lack of dynamic creativity during the strategic planning process, resulting in staid top down models with little or no input from the broader business. Technology has provided assistance in some ways through network design tools, market segmentation capabilities and various financial modelling tools available in the market. Because these technologies are focused within their specific domains they do not go far in solving the issues mentioned above.
Current tactical planning is often carried out using combinations of custom-built tools and ERP of other enterprise systems. The process sometimes proves difficult to co-ordinate, making planning cycles very cumbersome to execute (almost not worth the effort). Models and planning processes end up residing in the hands of the few who designed and built them and are therefore not self sustaining. Traditionally, technology has not been agile or flexible enough to service dynamic tactical decision-making. It has not adequately supported rapid scenario modelling or fast-paced tactical decision-making and reorganisation.
Operational planning activities vary considerably from one organisation to the next. Some make very effective use of ERP systems while others follow combinations of semi-automated and manual processes to maintain operational plans. Far too seldom, however, is the loop closed. Plans are diligently created only to be overridden or ignored. Either the planning process cannot keep up with fast-paced change or plans become too impractical to execute. There are always reasons as to why the plan was not adhered to. Seldom are these reasons collected and fed back into the planning process to drive improvement. As mentioned above, ERP systems support these activities with varying degrees of success. This often depends on how well operational processes and controls are enforced and sometimes the degree to which comprehensive ERP functionality has been deployed.
The benefits of technology-assisted planning become questionable when there is a significant lack of plan adherence, or when planning systems try to automate too much and model reality perfectly. These scenarios create significant levels of frustration and prove costly and difficult to sustain.
There are several clear implications to operating un-integrated or manually integrated planning processes, some of these more severe than others. A lack of convergent planning leads to difficulty in achieving strategic business alignment; this in turn frustrates organisational growth and leads to an underutilisation of company resources. Ultimately, management efforts are rendered less effective in the process. What follows is a brief list of some of the symptoms of poorly aligned or un-integrated planning:
* Lots of wasted planning effort, co-ordination effort, fire fighting;
* Frustrated ability to see strategic objectives through;
* Hidden or wasted capacity (contemplating capital expansion when current capacity is poorly utilised);
* Slow turnaround times and low customer service;
* Lack of agility at all levels; and
* Difficult environment for supplier performance.
The bottom line is that market circumstances and opportunities are unpredictable. Competition for customers and resources is fierce. There is no room for inefficiency and unnecessary mistakes. Planning systems have to date, constrained planning agility. They are either too regimented in their approach, disjointed in addressing the broader supply chain or do not take a holistic perspective on the business. Companies cannot afford to be found lacking in terms of supply chain visibility or process and planning agility.
By Dean Tebbutt and Derek Kudsee
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