the merging of planning and execution

Copyright © 2011 Kinaxis Inc. All Rights Reserved. 2Copyright © 2011 Kinaxis Inc. All Rights Reserved.

Trevor Miles

director, thought leadershipe: [email protected] | m: +1.647.248.6269 | t: @milesahead

Convergence of

Planning and Execution


Convergence Drivers


Today’s multi-tier global supply chain

Pervasive, global outsourcing

Product portfolio proliferation

Shrinking product lifecycles

Increasing demand & supply volatility


Companies can’t predict the

future,

…build organizations that will

survive and flourish under

…any possible future.

Source: McKinsey Quarterly, Dynamic management: Better decisions in uncertain times, December 2009


A volatile economy makes

traditional budgets

obsolete before they’re even

completed. New approaches:1. Scenario planning with trigger events

2. Zero-based budgeting

3. Rolling forecasts

4. Quarterly budgetingSource: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009

Convergence of

Planning & Execution


Demand Dynamics

• Top CPG companies forecast performance

– MAPE for a monthly lag was 33%

– MAPE for a weekly lag was 48%

– NPI with weekly item/location MAPE was 65%Terra Technology, “2011 Forecasting Performance Benchmark Study”

• High-Tech/Electronics – anecdotal

– Struggle to get better than 50% MAPE

• Where will breakthrough performance come from?

– Learning to forecast and plan better?

– Learning to respond profitably to real demand?


Product Dynamics

• Each point is a specific SKU

• Coefficient of variation = Std.Dev./Mean

80% of Volume

80% of Variability


Product Dynamics



Make-t

o-S

tock

Configure-to-Order

Pull

Make-to-Order Rationalize?


Product Dynamics



Make-t

o-S

tock

Configure-to-Order

Pull

Make-to-Order Rationalize?

>50% Margin

Contribution!


Life Cycle Dynamics

Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011


Life Cycle Dynamics



Life Cycle Dynamics


We focus too much

of our attention

on this phase


It is ironic that in many cases the

programs and innovations put in

place to generate growth cause

such a high level of demand

volatility and demand

unpredictability that the resulting

execution failures create a loss of

both top and bottom line growth.Next Generation Supply Chain Management - The Integration of Planning and Execution,

CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009


So what’s the solution?


The “Triple-A Supply Chain”Hau L. Lee, Harvard Business Review, October 2004

Agile

Adaptable

Aligned

respond and recover from

unexpected events quickly

evolve over time to follow

macro trends

align interests of all

participating firms

To achieve sustainable

competitive advantage, you

need all three capabilities


Problem starts with Taxonomy

• “Don’t Re Plan: Just Execute” – Wrong!

– Segments process into planning and execution

– Assumes forecast/plan is accurate/correct

• When we know it is not

• Therefore, executing against “wrong” plan

• Don’t Just Execute: Coordinate & Collaborate

– Start from knowledge that plan is not 100% correct

– Recognize need to re-plan, quickly

– Requires coordination across multiple tiers/functions

• Alignment is the goal

• Adaptability is the skill

• Agility is the method


It’s a phased approach

• Phase I – The Basics:

– Improved S&OP, a single view of demand, and enhanced

feedback loops to planning from execution

• Phase II – The Real-Time Supply Chain:

– Sensory networks, real-time visibility, intelligent alerts, and

decision-support dashboards

• Phase III – Sense & Respond Networks:

– Next generation supply chain technologies, changes to

hierarchical planning models, multi-level visibility, and new

organizational structuresNext Generation Supply Chain Management - The Integration of Planning and Execution,

CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009


Kinaxis’ Point of View

Balancing supply and demand

of anything is everything



Business is Complex,

but your Processes and IT systems

don’t need to be



Planning, Monitoring and Responding

must be equal and integrated competencies



All of Planning and Execution

must be integrated into a single system


Requires a breakthrough approach …

Visibility Analytics Collaboration

Consequence Evaluation

and AlertingSimulation/

What-If Analysis

Scenario

Comparison

… on a proven technology architecture


Collapse time to

make profitable

course

corrections

Plan, monitor, and

respond to all

aspects of supply

and demand

balancing in minutes

- not days or weeks

Reduce risk,

increase customer

satisfaction and

improving

profitability


SmartMarket LCD BufferInbound Hub

(VMI, SOI, CPO)

Carrier

DC

(VMR, DDR, VMI)PCCEMSSupplier

Change in Customer

Order Request

Customer Granted

Delivery Appt Does Not

Align To Commit Date

POD Date Missed

Request to Commit

Difference

Component Material

Shortage

Component Material

Order Late

Material Quality

Issue

Component Material

Excess

Material Readiness

Late Build Plan

ASY Shortage

ASY Excess

Shipping Capacity Constraint

ASY MPS Adherence

PRD MPS Adherence

MAD Date Missed

ECN (New, Changed)

NPI (New, Changed)

SKU Quality Issue (Stop

Ship)

Load Date Missed

In Transit / Shipping Late

SKU

Shortage

SKU Excess

Customer manages Alerts and KPIs

from Order Receipt to Order Delivery


Thank you! Questions?Trevor Miles | e: [email protected] | m: +1.647.248.6269 | t: @milesahead

the merging of planning and execution

Technology

life cycle

supply chain

product dynamics

specific sku

rights reserved

trevor miles

tmileskinaxis

copyright