When Supply Chain Planning Takes a Detour

By: Matt Tatham

A planning process is just that, a plan. Dare I quote the day-old adage “failure to plan is planning to fail?” 

Supply chain planning is likely one of the most interconnected and interdependent sets of tasks within any organization. A basic example: we can’t submit the supply plan or run material requirements planning (MRP) without first having a demand plan. But of course, we cannot have a demand plan without first running a statistical forecast and deploying the Delphi Method with the sales team to arrive at a consensus forecast. And so the daisy chain of interdependent planning activities works its magic.

Every month, there are critical deliverables from each function within supply chain planning with very specific timing. Far too often I have seen this process become the Wild West, which can cause the whole process to fail. 

Take the case where a demand planning team has submitted the consensus forecast to the supply team to run MRP and execute against the supply plan. It’s week 3 and the supply team has cut purchase orders at lead time. So far so good. 

But of course, in week 4, the demand planning team goes in and updates a forecast at a future date because “we JUST found out we were awarded an end cap,” and submits to the current month’s consensus without any formal communication to the supply team. 

When MRP is run again, the supply team will see new messages to order and expedite something that didn’t exist during the last PO run and which could cause some significant supply issues if the request was inside lead time.

If this sounds familiar, welcome to the Thunderdome, and please know you are not alone. This is a common scenario in supply chain planning, though not necessarily one that contributes positively to the well-oiled machine that supply chain planning should be.

Let’s look at this and other pitfalls that are common in supply chain planning.

Tools are Only as Good as Training

Have you ever found yourself excited about a new shiny planning tool, process, or cutting-edge tech? You might have been like a puppy with a new toy initially, but after three to six months post-go-live, you found yourself doing more manual work in the “new” system/process while still using your “old faithful” Excel spreadsheet because it was comfortable and, let’s face it, easier.

If that example rang true, consider what efforts you’ve put into training your team to fully embrace the new tools or processes. Too often, team members feel overwhelmed with their day-to-day responsibilities and aren’t excited to add yet another “pay now for down-the-road reward” task to the list.

Developing a robust user adoption method for fully integrating any new technical capabilities into your team is imperative, otherwise, you will have people falling back to old ways of doing things, which certainly won’t realize the efficiencies you had hoped for.

Ignoring a Planning Horizon Means Unhappy Customers

Sales/Marketing/Brand Team: “Hey guys, what’s our current lead time?”

Supply Team: “Four months.”

Sales/Marketing/Brand Team: “Perfect, we just found out we’re getting a $2 million order with a delivery date of two weeks. Thanks!”

As satirical as this may seem, it’s not. It’s a very real scenario and one that can tremendously impact the planning process. 

Making sure all involved groups in your organization, from sales to customer service, understand your company’s planning horizon and having everyone operating within its parameters will alleviate a tremendous amount of unnecessary strain on the planning process and frustration all around. 

Granted, retailers don’t always provide 100% clarity on their plans because that would be too easy, so if a promo request does pop up within lead time, there are steps that can be outlined ahead of time to ensure these events are addressed properly: 

  1. Customer allocation or prioritization
  2. Review safety stock coverage
  3. Order and expedite
  4. Review in Sales and Operations for executive approval
  5. Log as a frozen zone violation and track the promo attainment for future risk management reasons 

The point here is that even exceptions or aberrations are best handled with a predefined process that avoids the chaos and confusion by everyone trying to heroically improvise without coordination. 

It’s Easy to Get Sidetracked by Minor Problems

When it comes to supply and demand planning, only so much disruption can be tolerated at any given time. And distractions can come in many forms, the most insidious of which is where perfection becomes the enemy of the good. There will always be systems, processes, or models that can be improved, but don’t confuse those that are “a minor problem that, when solved, will get us incremental improvement” with those that “are a minor problem that, unless fixed, will be a showstopper.” 

By no means should you ignore the latter issues—these are the business killers—but the former are a distraction and your team should be vigilant to differentiate and triage among the two types. Leverage the Pareto Principle regarding the business impact of each problem to objectively guide the team in what to address first, starting with what has the highest impact on business operations.  

Supply Chain Planning in Siloes Hurts the Business

The most successful planning organizations I have been a part of not only encouraged but also facilitated the free flow of information across different business units and functions. When the free flow of information or plans is made in siloed business units, this can lead to low morale, adverse impact on workflows, and ultimately can only hurt the business. 

Let’s say the finance team is working on a five-year plan as well as the budget for the current year, and creating gap-closing plans with the highest-ranking sales individuals in the organization (with varying degrees of confidence). 

Simultaneously, the marketing team is busy creating back-to-school events and huge media pushes and has booked a few HUGE influencers. 

The brand team is working on an overhaul of the current product line, improving form, fit, and function and they’re sure this will double sales. Oh, and of course, there will also be a huge sustainability push in the coming months.

None of these teams are talking to one another, and interdependencies aren’t being taken into consideration. Each team is creating its own models based on incomplete information and, thus, inaccurate assumptions, where if you compared all of them alongside each other, none would match. 

The moral of the story with respect to silo planning is that it’s just truly a bad idea and, instead, if you want to avoid pain, every organization should implement a sales and operations integration process to bring all of these sets of plans together to align on a “consensus forecast” and drive growth in the business over the long term horizon. 

A Better Plan

While there are many detours along the supply chain planning journey, the road best traveled is the one with the fewest dead ends. The lessons learned the hard way by every experienced planner lead to the same takeaway: an integrated end-to-end planning approach with checks and balances is more than a good idea; it is imperative if you want to avoid chaos, frustration, and the non-value added tasks associated with planning. 

While technology is great, it is not a cure-all and any new tool is only as effective as the knowledge and buy-in to use it, so focus on ensuring your team adopts any new solution and doesn’t fall back on old ways or shadow processes. 

To ensure everyone is marching to the same tune, educate all of your cross-functional teams to respect lead times and avoid exacting unnecessary strain on the supply chain and potentially upsetting customers. As a best-in-class planner, always remember to plan for the unexpected, so make sure your inevitable exceptions have a well-defined exception process to leverage rather than relying on last-minute individual heroics of stressed planners because there will always be good business reasons to deviate from the happy path. 

Last, but most certainly not least, keep your planners focused on planning by investing in adequate technical support to save them from burning unnecessary hours troubleshooting system issues and minor problems while also carrying out their day jobs.