When someone on the other end of the phone begins with “Hey, it’s urgent!” before even bothering with a proper greeting, supply chain planners will be ready for what comes next. Most likely it’ll be something like: “Stop all the machines and change all the plans! I’ve just made a fabulous deal that’ll secure our future!”
Supply chain planning is by nature an exercise in trade-offs. Keep inventory levels down or maximize machine utilization? Create a network of multiple DCs close to customers or set up centralized warehouses? Do we produce a particular batch in the UK or in Germany?
While a lot of these trade-offs can be automated successfully using a total cost reduction scheme, some hurdles are a lot more difficult to overcome. Think back to your phone call asking for you to prioritize this “very promising” customer over a bunch of others and remember that making one party happy often means you disappoint multiple others, also loyal ones.
Some companies I know use customer segmentation models to bring a sense of reason into the capacity allocation struggle. One good example is the use of quadrants. But you should be careful to bring into the equation more than just simple metrics like volume and margin. You may, for example, want to qualify customers based on their track record in providing reliable forecasts.Using such sophisticated metrics to rate customers, planners have a useful instrument to measure each customer’s value and risk profile and to decide which to prioritize when there are capacity shortages. It is essential that the models used are agreed upon throughout the company. At regular intervals, the model should be evaluated, and the ratings updated in meetings with planning, sales, production and financial managers.
In many companies, planners develop their own particular practices to tackle complex issues, based on experience. It’s as if each planner has constructed a decision tree in their head. Yet, practices can fundamentally differ from one planner to another. I’ve seen operations where the people on the shop floor can tell exactly who devised the schedule. While this might not always be a problem, opportunities for optimization may be lost and newly hired employees could make wrong or costly moves if best practices are not agreed upon and properly documented.
That’s why it’s recommended that supply chain managers confer with their planners to develop common practices, perhaps presented in the form of flowcharts, when addressing conflict situations.
Of course, not every situation can be anticipated. As a planner, you will want to escalate your trickiest conflicts. However, you should know that, in general, companies that grant their planners a high level of autonomy and responsibility perform better in terms of service level and efficiency. So, it’s important that supply chain managers define clear escalation rules, outlining what kind of decisions a planner is allowed to make and the strict circumstances under which escalation is necessary.
Every escalation comes with a significant cost, however, because it takes time for management to investigate and evaluate. And, more often than not, management will duly confirm what the planners initially suggested. In the meantime, valuable time has been lost and the consequences may have grown more serious. That’s when you’ll need your nerves of steel again.
Does this planner story sound familiar to you? Let us know.
BiographyMattias has worked with supply chain technology for more than a decade. He has always been interested in the art of user onboarding and has valuable experience in the requirements for proper tool adoption.