Have you noticed that the only thing we do without planning is when we stop using our thinking brain. Almost anything we do requires some level of planning: getting out of bed, preparing coffee, driving to work, delivering customer orders, buying a birthday gift, and meeting friends for dinner. Have you ever thought why we plan? We do so to avoid surprises and be able to predict the outcome in a way that we want it to be. That is obviously a sign of intelligence and separates us from less intelligent species. Companies plan their supply chains in order to be more responsive. More responsive to customer demand, more responsive to unpredictable events and more responsive to changes in the market place. For example, certain amount of inventory is kept in order to deliver to expected customer orders in a timely manner. To this end, many forward thinking companies measure their performance based on customer requested shipping dates rather than promised shipping dates. The latter is a much harder and more ambitious measure. Promised shipping date is a measure of reliability as opposed to responsiveness. Planning promotes the latter, execution addresses reliability.

 

Planning and execution go hand in hand. The faster you can execute the less planning is needed and vice versa. But in most cases if you plan well, (say) have the right level of inventory available, then you can execute well. On the other hand if the plan is not good enough there is no point in trying to execute well. Imagine having a very optimized routing and efficient logistics operation delivering the wrong products to the wrong locations. Good planning defines what should be sourced, made and delivered. Execution can then perform the plan to the best way possible and reacting to unexpected events such as machine breakdowns, Acts of God and shortages. By focusing primarily on execution efficiency such as logistics and warehousing technology etc one may miss the opportunity to save cost by orders of magnitude. This reminds me of a soft goods company that was planning to increase their warehouse space in order to be more responsive and efficient. After examining their operations, we showed that by better planning, there would be no need for more inventory space which would save them not only the cost of building the warehouse but also the on-going cost of extra inventory!

 

Plans are not always hundred percent right but in most cases close enough. However, as General Eisenhower said, "more important than planning is re-planning."  Thus it is critical to have systems that are capable to plan and re-plan in almost real-time to be able to synchronize the entire supply chain and each site to operate in a cost effective manner.