Breaking Down Demand Planning: Part 2
This is part 2 of 3, as Seth Pacha, our demand planning guru outlines data integrity elements and system automation.
Data – clean and aligned to system configuration
- Do accurate lead times exist with alignment to the planning system?
- Are correct suppliers established within the system?
- Are key fields for planning populated such as standard cost, lead-time, minimum buys, order multiple, packaging quantity, supersession, critical part indicator, bill of material for kitting, customer information, supplier information, etc?
- Are fields manually updated or driven by integration to WMS/ERP solutions? Integration is key between the inventory planning solution and the source of the master data. Establishing daily checks that monitor key fields for accurate data helps uncover the true source of the data as well as integration and process issues. For example, a simple job to look for circular supersessions might highlight issues with engineering or with master data teams.
System – proper configuration to drive 90-95% automation
- Are the lead-time components set up correctly? •Are planning horizons established properly when determining what to order?
- Do proper rules exist for the determination of whether to plan the part in inventory?
- Does the understanding exist of how safety stock generates for each part?
- How frequently does the data refresh and does that align with the execution of the various system modules?
Some systems contain multiple, key configurations to execute properly. These key configurations need continuous review to see performance over time. If the system has “what-if” capability allowing the understanding of the results of changing these configurations before implementing them into a live production environment, make sure the organization understands the full impact of the changes. Does the system project performance just for a given point in time or does the system highlight the expected performance for the next year? If a system does not have “what-if” capability, then building similar capability through a process is paramount.
As an example, configurations that determine whether to plan the part in inventory or not are key in determining warehouse size and the size of the workforce. A process to review before making any changes to this key configuration is a great sanity check for operations as well as purchasing. Finally, comparing the system results to the expected value proposition from the system provider is also necessary. Make sure before purchase that the provider derives the value proposition from actual data, not generic results from similar clients. This establishes a baseline for comparisons to performance from a data, process, and system perspective.
Up next is our 3rd Installment on Demand Planning: Processes and Performance Management. For further insight into our coaching services please reach out to us.
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By Brad Stewart
Co-Founder, CCO
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”
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