Part 3 of 6 in the series “Rethinking Digital Business Planning“
In today’s digital economy, few corporate attributes are more discussed and highly valued than organizational agility. To compete effectively in a complex, fast-changing business environment, companies recognize they need the ability to move quickly and easily.
When commentators speak about complexity, what they refer to invariably are the complex operational and supply chain dynamics that come with the territory of competing on a global scale. Facilities are spread out across far-flung regions and supply chain partners can come from anywhere in the world. Demand is always fluctuating and disruptions are common. While managers on the front lines of business operations and supply planning understand the need for greater agility, gaining the visibility and insight needed to see what’s happening and respond effectively is often elusive.
Response and supply planning
Effective response and supply planning can help address these challenges. The previous blog in this series talked about sales and operations planning (S&OP) in the context of digital business planning, a holistic approach to supply chain planning that uses trusted data, process integration, automation, and collaboration to meet the demands of complexity in the digital economy. Think of response and supply planning as a vital extension of S&OP that enables companies to plan according to demand priorities and adapt quickly in the face of demand fluctuations and supply disruptions.
To enable the agility that planners need, response and supply planning should include capabilities for:
- Multi-level planning to model across locations in the network and manage complex multi-level bills of material
- Supply planning to develop tactical supply plans using an unconstrained heuristic or constrained optimization algorithm
- Rough-cut capacity planning to consider capacity and material constraints simultaneously and quickly build a rough, time-series capacity plan
- Response management to create operational order-level supply plans, with prioritization logic and the ability to manage the re-promising of sales orders based upon modeled constraints
- Embedded analytics to create visualizations of planning outputs or KPIs to measure performance against the plan
- Exception management to identify and address problem materials and resources, then determine the best course of action for resolution
How it helps
With response and supply capabilities that augment core S&OP, organizations can perform strategic, tactical, and operational planning covering all time horizons in a single, integrated process. These capabilities allow planners to gain data visibility via gating factor (root cause) analysis, analyze supply usage, view sales order confirmations, and perform supply/demand pegging. Planners also have the ability to run deep simulations or ad hoc scenarios based on transactional or master data changes, resulting in analysis of the situation.
Response and supply planning also helps to optimize profits with a focus on bringing operational and financial planning together for both constrained and unconstrained scenarios. By better managing allocations and response across prioritized demand streams, organizations can achieve target customer service levels. Ultimately, organizations have the ability to concurrently plan capacity and materials across manufacturing and supply networks, leading to lean, low-cost operations.
For more information, see the IDC infobrief: Digital Business Planning is at the Heart of Supply Chain Transformation.
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