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Are you cutting down the latency between demand data, Supply Chain planning and execution?
Most Supply Chain teams focus on improving the accuracy of their planning process and the discipline in execution. While these are important objectives for a well-functioning team, the parameter often overlooked is the time lag between these activities.
Let me explain it with an example from a typical CPG company. Actual demand data till 31st July is taken to finalize the demand plan, by end of August, for September, October, November… August plan is already frozen in the previous month! Demand Plan for September is used to plan production during August, and the demand plan till November is used for procurement planning.
By the time these plans are executed over the horizon of the next 3-4 months, demand patterns are likely to shift. These intrinsic inaccuracies invariably lead to stockouts as well as inventory pileups and the teams wonder where they went wrong in planning! Switching to more sophisticated forecasting models and getting more experienced demand planners doesn’t help.
The real lever for improvement is cutting down the time lag between actual demand data, the entire planning process, and the entire execution process! Point to ponder…