Rapid Planning Guards Against Market Volatility
by Sanjiv Chopra, February 2011
Sanjiv Chopra, a senior director of industry strategy and Oracle Insight who leads Oracle’s high-tech industry vertical, weighs in on the benefits of rapid planning.
A customer changes a large order at the last minute; a key component supplier experiences a shortfall. Surviving in a fiercely competitive, volatile market means companies must be able to achieve supply/demand balance rapidly. Most companies with mature supply chain processes have demand and supply planning processes that run at a regular cadence and produce good tactical-level plans for execution. However, when immediate problems occur, the batch planning processes have too much information latency, making it difficult for companies to react rapidly and make optimal decisions.
Companies can build agile and responsive supply chains by complementing their existing planning processes with real-time rapid planning capabilities that allow them to react within minutes to unexpected supply chain events. The ideal solution for rapid planning capabilities should allow for supply chain best practices such as mapping out “what-if” scenarios, allocating customer demand dynamically (auto allocation), prioritizing customer orders for production (clear-to-build analysis), and performing root cause analysis for demand that is late (late demand analysis), while integrating seamlessly with other planning processes.
What-if capabilities, which allow the assessment of alternative supply chain scenarios, simulate the impact of incremental demand forecast or capacity changes to achieve optimal supply/demand balance in a matter of minutes. While the demand-side changes are generally triggered by demand forecast quantity or product mix changes, the supply-side changes could include simulating the impact of updating product bills of material to correct lifecycle status, viewing the impact of alternate parts, or substituting components on supply/demand matching scenarios.
Auto allocation, the process of automatically apportioning product supply to customer orders according to a transparent set of business rules and criteria, is especially important to original equipment manufacturers when product demand exceeds product capacity or supply. Orders can be allocated based on flexible business rules to optimize profitability and maximize market share. A similar set of capabilities can be leveraged to simulate the impact of customer order request changes rapidly in order to improve customer responsiveness.
Clear-to-build analysis, which allows planners to quickly view and simulate whether sufficient material is available in order to take customer orders, is extremely valuable to manufacturers who produce some or all of their products in-house. In case of material conflicts or shortages, planners can simulate reallocation of on-hand material quantity across different make orders to arrive at an optimal prioritization of make orders in order to achieve company objectives.
Late demand analysis allows planners to identify the root cause of a late customer order and proactively develop a contingency plan to contend with a potential material or resource shortage. This capability allows planners to drill down from a sales order that is late all the way through the entire supply plan, including the extended supply chain, to quickly identify root cause for the delay and take proactive action to minimize occurrence.
Rapid planning capabilities provide an integrated planning approach that deals with supply/demand disruptions in near-real time. A company that complements existing planning processes and systems with these new capabilities can match demand and supply with a quick assessment of various scenarios in order to arrive at optimal decisions. The resulting supply chain plans are of high quality, promoting enterprisewide visibility, predictive and real-time analytics, transparency, and collaboration among planners and stakeholders.
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