Capability

For many organizations reflecting upon their IBP performance, demand planning is considered as the primary indicator on determining a successful IBP process. A demand plan that achieves utopia by perfectly aligning demand with supply and when this does not occur it must be a demand planning issue and therefore IBP must be broken.  Conceptually we can all accept that there is no such thing as a perfect forecast, in practice however many organizations expect this elusive perfection and as an IBP practitioner, I am often besieged by supply chain leaders on the failures of supply chain performance as a result…

I’m going to reframe from a lengthy affirmation of how your S&OP process is rocking; The effective ownership of the unconstrained demand forecast, systemic bias controlled within +/-2%.  The ability and accuracy of the process to constrain demand based upon material, resource availability and machine capacity. Generating a credible supply plan and measuring production adherence weekly and monthly against this plan to ensure sales commitments to customers are respected. Controlling abnormal demand when customer orders are over forecast, worst still when they drop orders inside published lead-time. Your ERP is effectively driving the materials requirement plan and accurately performing production…

Let’s talk about capability, I don’t mean people skills, I mean the systems, processes and tools which govern and control an enterprise. Conceptually, the objective of integrating a business is simple; integrated business planning aims to align the financial plan, demand plan and supply plan (‘align’ not necessarily meaning ‘make the same’). Business planning is predicated on the capability to facilitate change and steer the business to a desired destination. If the suite of business management systems are not capable, or have been wired in a way which impedes decisions to follow a desired course there is a significant challenge…