5 October 2021 - by Cédric Van Helleputte, Anneleen Tronquo and Pieter Appelmans
A digital wave has been going on for quite some time now. Companies find themselves rethinking the tools they are using, for example moving from R3 to S/4 HANA or moving to next-gen APS (advanced planning software). But the tool is not the only component of a digital transformation, rethinking processes is an equally important step.
In the past, we wanted to target ‘a good plan’. However, defining a good plan has been a struggle, given that variability is king. A next-generation planning process is reliable; it generates optimized and feasible plans. The process also needs to sense and adapt to change. Such responsive processes have no issue with handling a stockout at a supplier or an unexpected customer order. Finally, a next-generation planning process is also agile. It is able to cope with drastic shifts in the value chain; for example, think distribution network redesign.
Now, how do we move this kind of next-generation planning process forward? There are three cornerstones that can facilitate such a transformation.
We briefly elaborate on each of these three cornerstones.
Sufficient attention should be paid to the human-machine symbiosis. What brings the most value at each step of the process? How will humans and machines interact with one another and complement each other? A human planner is strong on validation, making known-unknown decisions and a machine is good at repetitive tasks, handling known-known decisions and making difficult analytical calculations. While this seems obvious, experience shows us that, in 80% of cases, not all reporting needs are captured and planners still use Excel to tweak certain reports. Humans and machines need to be better aligned.
To further stimulate the importance of that collaboration, it is essential that the planners trust in the machine’s output. Nobody wants to tell management there is a potential stockout coming because the black mystery box told us so. Using metrics to evaluate plans generated by the system can help with this. Think for example of forecast accuracy metrics in dictating why certain forecasting models are selected, or coverage metrics indicating why a certain deployment priority has been selected. They help show the value that the machine is bringing to the table.
Lastly, when digitalizing a process, you are always confronted with conflict management. Unfortunately, current conflict management solutions don’t seem to work. Among other issues, there is an overload of warnings and no clear insight into the importance. Conflict management should be designed from a process perspective. Who will manage the conflict? When will it appear and when will it be handled? These are the types of questions that can help in rethinking conflict management from a process perspective. Please reflect on this in your company: considering the planning process definition, is sufficient time spent on defining conflicts and the way the system generates and shows alerts & conflicts to planners? Or are planners flooded with alert and conflict information? In the latter case, planners resort to reviewing the entire plan and ignore conflict information.
We’ll let you be the judge of that one…
The output of a planning process is not the plan but the decisions that are based on it. If no decisions were driven, the output of the planning process was useless. However, making decisions is often difficult due to conflicts of interest, lack of transparency and so on. It’s during those moments that planning can play the role of a business orchestrator.
There is the simplicity of the rules of engagement. Creating connections with different business partners and determining where planning is empowered to make decisions and what the threshold for an escalation is or when a cross-functional alignment is needed.
We also have the power of prescriptive clarity. Information should be easily visualized by people outside the planning organization. We need to think about how the info will be interpreted. The end goal of the creation of this visibility should be the reduction of manual communication. Having visibility but picking up the phone every five minutes to ask questions does not help in generating value.
To tackle the challenge of value driver alignment, it is important to visualize how you are generating value across different departments. Use these visuals, these metrics, to create buy-in in your process.
Increasing decision-making speed does help create a more responsive and agile process. However, increasing decision-making speed is a final maturity step. It is more important to respect and trust your decision-making process first, through the following 5 steps:
For most companies, taking these 5 steps constitutes the next step in the planning maturity curve – next up are concurrent planning and shorter planning decision cycles. But for now, let’s start here!