So, you and the rest of the management team have decided that you can’t afford to wait any longer – it’s time to execute that strategic planning initiative that will bring all those oft-talked about benefits to your business. Your goals are lofty – you want to align the whole business, be able to plan for today, next quarter, next year, and beyond. You want all your departments talking to each-other so that planning decisions consider the impact on the whole business – not just their own view of the world. And yes, you want to be able to plan for the overall business profit.
There are some essential factors that will have a dramatic impact on the success or failure of this initiative. They aren’t complicated, but they are critical.
1. Don’t Underestimate the People-Factor
‘Chains of habit are too light to be felt until they are too heavy to be broken’
If you are moving from a stage where each function operates in silos and where there is little interaction and where planning is based on gut feel and old habits, there is a big challenge ahead. As always when implementing new processes, it is a matter of people, process and technology. You may have defined the best possible process and you may have state of the art technology, however if you haven’t got the people part right you will struggle.
The Path to Effective Change:
- Ensure that the vision is well communicated
- Make sure you have the right people with the right skills
- Make sure there is enough incentives for the team
- Make sure there is enough dedicated time
- Make sure there are enough people assigned
The Path to Effective Change
2. Get the Right Team
The project lead needs to be from the top management team. This means either the CEO or one of their direct reports, because the process will ultimately align the different functions with the overall strategy and connect all the different functions into one homogenous process.
All departments must be represented:
- Sales (demand management)
- Inventory Management
3. Plan the Project
Yes – even for your strategic plan, there needs to be a well-communicated plan where everyone understands their role, accountabilities and where they need to be and when. The plan must have a series of well-defined milestones that the project team be driven to reach. Discipline is a key aspect of a successful IBP process and it is good to make sure that the implementation of the IBP creates a foundation for this.
4. Use the Right Data
An effective strategic planning process (such as integrated business planning or well-executed S&OP) is very dependent on accurate data (data integrity is essential). Since the core idea is to apply science to come up with the right plan, if you have a poor input, the likelihood of a good planning output is less likely. Accurate data is a key enabler in the process to be able to remove the “gut feel”. Secondly, make sure that the source of the data is the same. For example, if you compare sales data from different sources you will most likely end up with discrepancies.
5. Use the Right Enabling Technology
The benefits of a strategic planning approach are extensive and undeniable. But large-scale supply chain business isn’t simple, and your supporting technology infrastructure will need to be up to the task. Excel spreadsheets, and even good business intelligence solutions are not designed for this purpose and do not have the power to support the complexity in a usable and meaningful way. The right technology becomes the enabler for the entire process. The appropriate solution should be built on supply chain modeling and optimization. It will enable overall profit-driven decision making by running “what-if” scenarios. At a tactical level it will give the best inventory management answers considering a complex range of factors such as expiry dates, lead-times, storage capacities, resource and asset utilization. It will take a holistic view of the entire supply chain and deliver the best (most profitable) plan that considers all factors.
6. Walk Before you Run
The key is to make sure that the process and the infrastructure is in place. With that in place don’t try to address all points at once. Work down a list and first try to address the “low hanging fruit”. A fully-integrated strategic planning process that considers all aspects of the supply chain will take some time to fine tune and taking on too much to start with will be overwhelming and it will be too difficult to determine what constraints and rules impact certain parts of the resulting plan, as there will be too much noise from all the other rules and constraints. Start small and then add constraints and business rules and more details as you are learning to execute the process.
Want to hear more?
At Optimity we believe that strategic planning should be a fully integrated part of your planning cycle. To find out why, contact us today: