For the first time at our user conference, Kinexions, we invited in a number of analysts, bloggers, and consultants to give them a deep dive on Kinaxis and the roadmap for RapidResponse. We had an afternoon session devoted to the Influencers in which we brought in some customers to speak about their journey with RapidResponse. But the highlight for me was the Influencer Panel I hosted as the last event of the conference. We had great participation from:
- Andy Coldrick of Ling-Coldrick
- Bob Ferrari of The Ferrari Research and Consulting Group
- Russell Goodman of SupplyChainBrain.com
- PJ Jakovljevic of Technology Evaluation Centers (TEC)
While all the panelists added greatly to the discussion, two highlights for me were comments made by Andy and PJ. Andy said that we have moved from thinking we need a single number forecast (and therefore single number plan) to understanding that we need a single perspective and a range of plans that cover range of possible business conditions under which we will operate over the next period. My take on Andy's point is that "what-if" analysis is an absolutely core capability at every level of planning, be that strategic , tactical, or operational. Being able to understand what levers are available to you and the impact that pulling these levers will have on financial and operational metrics is crucial to developing flexibility and agility in your supply chain and broader operations functions. PJ used the dramatic failure of the Boston Red Sox in August to illustrate that planning is not enough. As PJ told it, the Red Sox had done a tremendous amount of planning over the past few years which is what resulted in their great season up to August. But what management failed to do is monitor the health of the star performers and only realized that some players had put on as much as 15 lbs. Even worse their mechanisms for responding were not in place meaning that they had no way of getting relief pitchers or other key players at such short notice. PJ's anecdote captured my view that planning is not enough very well. It also ties in very well with Andy's observation about a range of plans. How Andy's and PJ's comments link together is that you need to monitor how your operations, particular customer demand, are matching up with what you anticipated (your operational plan), and respond very quickly when the two do not match. Having pre-evaluated a range of possibilities means that you are able to respond with confidence, even though reality will never quite match any of the scenarios you had pre-analyzed Planning is not enough, but we all have to do it. Not planning would be very stupid. But not building the capabilities to detect when reality does not match the plan very quickly and then respond profitably to reality is equally short-sighted. Plan-Monitor-Respond.
Having a single forecast is actually does more harm than good. Even if the forecast was 70% accurate in the closest period at the aggregate level, it is still 30% wrong. There is even larger variability within products, making it always necessary to monitor the actual demand and have a range of possibilities to deal with positive or negative deviations. The same goes for supply. In some systems, the variability of supply is far greater than the variability in demand. Planning processes that don't track supply as vigorously as demand misunderstand more than have the variability in supply chains.
The Shewhart cycle of Plan-Do-Check-Act is one of the greatest methods to counteract these deviations.
Yes, PDCA and Sense&Respond are themes that have been around for some time. We use the term Plan-Monitor-Respond that combines these two into a single concept.
PDCA tends to approach things from quality control angle meaning that it treats divergence from plan as 'aberrations' that need to be 'corrected'. In other words a lot of PDCA is focused on improving the quality of the process or the plan. What I think is missing in PDCA, is the acceptance that the plan is always wrong to some extent; often significantly wrong. This is something you bring out in your comment.
Sense&Respond on the other hand tends to focus on detecting when the plan is not being followed, but does so in a narrow quality control manner, assuming that the quality bands were correct in the first place. In other words there is little attempt to understand the impact or consequences of the quality band violation, and therefore the true severity.
Plan-Monitor-Respond is focused on the customer impact and aims to drive a quick and profitable response to real supply chain conditions, whether caused by demand or supply variability.
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