Julie Fraser: Close the loop between planning and execution

Like anything else, the supply chain market goes through cycles. In the 1980s and '90s, advanced planning & scheduling (APS) was the big focus for many companies. Then supply chain execution, including warehousing and transportation, became the hot seller. Around 2000, sales & operations planning (S&OP) gained in popularity and usage.

Now, given the cost of fuel, it seems things are shifting back to transportation and execution issues.

It all makes sense based on industry conditions. Certainly fuel prices are driving companies to make better decisions about transportation and execution. However, we would argue it's time to truly close the loop between planning and execution.

If the plan has a more accurate view of what demand is likely to be, execution becomes easier.

Feeding a truly demand- and capabilities-based plan to the distribution team to execute is a better start than what many companies have today. Similarly, as products move through the execution process, people need to understand what has happened, and the effects those movements had on the total supply-demand network balance to replan.

In control terms, this is a closed loop—i.e., planning and execution update each other and reset each other as conditions in either area change. It's not a new concept. This has always been the holy grail of supply chain. However, with the speed of change and cost of moving and carrying inventory today, the urgency is higher than ever.

Manufacturers must close the supply chain loop—and with fairly immediate updates.

Some solution providers are stepping up with new products to make this happen. Many vendors that are very strong in either planning or execution are incorporating the other more effectively today, and manufacturers need to leverage that capability. We will highlight a few examples here:

John Galt has introduced both planning and execution improvements in a new consumer-centric Atlas planning solution. The plan is turned into assumptions of outcome, which the system monitors. This allows a manufacturer to track retail customers' execution against the plan, and proactively manage their sales and customer outcomes.

Manhattan Associates has dubbed its full portfolio SCOPE, or Supply Chain Optimization—Planning through Execution. This solution set includes a concept called Flow Management, which integrates supply, demand, and inventory strategies from planning through distribution, allowing reallocation on the fly based on current conditions.

Some companies hold long-standing strength in both planning and execution. A few of the ERP providers in particular have this—e.g., Infor, Lawson, and Ross/CDC—though most are stronger in planning than execution.

Supply chain specialists such as i2 Technologies and Logility also have strong planning and execution, while many others grew up in one area or another.

The key is to make connections between the business processes. What you may find is that the focus changes—for example, from key performance indicators in each area to actually creating the highest customer-service levels at the highest profit. Achieving those broader gains in the supply chain requires that planning and execution work in concert—in a closed-loop environment, ideally.