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At what granularity should we plan various Supply Chain activities?
Supply chain execution in the short term needs to be planned at the most granular level. The planning horizon for this activity is quite short and depends on the backend flexibility and responsiveness. Agile companies across various industry sectors need to plan for just a few days and refresh their plans every day for a flawless execution.
Certain other elements of planning, such as capacity, manpower, cash, and the long lead time items need a longer planning horizon but don’t need the same level of granularity. The planning horizon for these activities usually varies from a month to a quarter. Improved flexibility and faster response can shorten even this planning horizon. Weekly refresh generally suffices for this planning.
Decisions such as setting up new manufacturing facilities normally have a much higher lead time. The level of granularity required here is even lower. Demand predictions can be aggregated over the product and geography dimension for such decisions and the decisions can be reviewed at a monthly frequency.
Choice of multiple planning horizons and the length of each horizon determines how smooth and harmoniously the operations would run. Improving backend flexibility and responsiveness shortens all the three planning horizons and improves the twin consumer facing metrics of product availability and product freshness.