You and the rest of the management team have finally 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 your departments to talk to each other and planning decisions to consider the whole business – not just their own view of the world. And yes, you want to plan for maximum business profit.
By following the six steps below, you can set yourself up for a successful implementation.
1. Don’t underestimate the people factor
Warren Buffet famously said, ‘Chains of habit are too light to be felt until they are too heavy to be broken.’
If you move from a situation where there is little interaction between the different business areas and where planning is based on gut feel and old habits, then there is a big challenge ahead. 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 your vision is well communicated.
- Involve the right people with the right skills.
- Incentives for the team. The answer to “what’s in it for me?” should be clear.
- Make sure there’s enough time set aside for the project.
2. Get the team right
The project lead needs to be from the top management team. This means either the CEO or one of their direct reports. The process will ultimately align different business functions with the overall strategy and connect them 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 is driven to reach. Discipline is a key aspect of a successful Integrated Business Planning (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 dependent on accurate data. Since the core idea is to apply science to come up with the right plan, if you have poor input, the chance of reaching a good planning output is less likely. Accurate data is key to remove the “gut feel” from your planning. 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 management 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, a supply chain modelling and optimization solution that enables profit-driven decision making and “what-if?” scenario analysis. It offers the best decision support at a tactical level considering a complex range of factors such as expiry dates, lead-times, storage capacities, and 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 are in place. Once that’s secured, 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. Taking on too much to start with will be overwhelming. It will be 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 learn to execute the process.
Want to hear more?
We believe that strategic planning should be a fully integrated part of your planning cycle. Take a look at this white paper on Integrated Business Planning to learn why, or if you’re ready to find out more,Contact us here.