3 Steps You Need for Strategic Supply Chain Planning
One of the most common reasons organizations struggle with strategic supply chain planning initiatives, is because they don’t fully understand the present situation.
Whether you’re looking to implement Sales & Operations Planning (S&OP) or a more ambitious Integrated Business Planning (IBP) process, you must first understand three key things about your business today.
The motivation for implementing a strategic planning approach is pretty clear – you want to align your whole business and make sure you can plan for overall profit. How successful you are at achieving these goals, will depend on how well you execute the implementation.
To understand where your business is today, you need to clearly define the critical aspects of your company’s current-state business and planning environment, including:
• the business and supply chain strategy
• the current supply chain and network structure
• the strengths and weaknesses of the current planning processes
1. Understand the Business and Supply Chain Strategy
Effective planning starts with a clear definition of a company’s strategic and competitive position. This includes a clear understanding of target markets, customers and consumers, and how the company is going to effectively compete on that stage. There must also be a clear vision of the company’s basis of competition, and what the drivers of value are. From here, a supply chain strategy and an ‘aligned business model’ can be derived.
A critical part of the ‘current state’ assessment is the review of existing strategic and supply chain plans, including input from the executive team.
This review phase also presents a great opportunity to ‘refresh’ your strategic position. This can range from addressing smaller gaps in the existing process, to a complete overhaul of your supply chain strategy.
2. Understand the Current Supply Chain and Network Structure
If planning effectiveness is to be improved, you also need to understand the current network and supply chain structure. This is necessary in order to determine which planning processes and inputs are required to model, monitor and optimize your supply chain.
The effort required to map out the supply chain network depends on the extent to which the current supply chain has already been documented and understood by the business. A complete definition should include each supply chain ‘node’ (e.g. suppliers, plants, distribution centers, markets/key customers) by attributes such as purpose, strategic objectives, KPIs, throughput capacities, constraints, etc. Once the supply chain definition has been drafted, it needs to be critiqued.
3. Understand the Current Planning Processes
Having completed the first two steps, it’s then necessary to fully analyze and critique the current planning processes. This includes a review of the processes, people, and enabling technologies that are currently supporting the business.
By documenting the end-to-end planning process using actual ‘live’ documents – for example strategic plans and budgets, supporting data inputs, real meeting agendas and minutes, ‘screen dumps’, etc. – staff are naturally drawn into this process. This helps generate a more constructive critique of where the current planning processes are working well, and where they need to improve.
From here, a platform is established to develop an idea of “Where do we need to be?” – creating a ‘vision’ for the future state planning processes.
If you found this post useful, you should take a look at our White Paper on Integrated Business Planning. It’s a must-read for any Supply Chain leader seeking to improve the overall profitability of the business.