- Move towards daily planning from weekly planning so that the plan is following the market rapidly.
- Incremental planning to reduce the planning cycle time to reduce how stale the information was when the plan was created.
- Plan repair rather than re-planning to counter the jerkiness of the plan.
- Create a freeze period so that the plan changes are not there in the short term.
- Improve forecast accuracy through better forecasting techniques like rule based forecasting etc.
Some of the above are good initiatives in their own right and should be done. But each of them addresses a symptom rather than the root-cause.
Some forward thinking companies have moved more towards an active / agile management. They use rapid re-planning as a last resort. The forward thinking companies create a plan that is anchored on a few metrics allows some flexibility on other metrics (for example, in a financial quarter, revenue could be the highest priority; margins and market share could be next lower priority). These companies constantly monitor their actual against plan to find deviations. If a product line is underselling, the first priority is to see how that product line can be made to contribute as was planned. The levers (or degrees of freedom) to make the plan happen could be price changes, promotions, sales incentives, channel incentives or others. Only as a last resort, and only a few times in a quarter, with the causes documented, is the plan revised; Revising the plans could be to reduce the contribution of that product line to the revenue plan, to reduce the procurement for that product line and to reduce the production for that product line.
The process of monitoring plan deviations, using all the levers to get back to plan and only as a last resort to re-plan is the mindset of active management.
What do you think?
Karthik Mani
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