Differentiated Planning

Question 1

Describe the task of replenishing your refrigerator

Answer 1

Milk and bread = cycle planning (buy everytime we shop)

Pasta and eggs = reordering (buy when low)

Strawberries and champagne = manual / MTO (buy when needed)

Question 2

What are the 7 viewpoints on planning?

Answer 2

One planning solution does not fit all!​

Use the standardised method to optimise your planning​

Always separate master planning and operational planning​

Never use forecast-driven MRP for operational planning​

Simplify planning of your predictable high-volume materials​

Use consumption-based planning with requirements for your unpredictable materials​

Simplify phase-in and phase-out planning

Question 3

How can we address the issue of priotization?

Answer 3

Using product segmentation

Question 4

Describe the segmentation model

Answer 4

Axeses:

• x = stability / predictability
• y = volume / impact

There are then six segments.

The model helps to identify which planning principles and which focus to apply to the products.

Products are clustered together and must be managed similarly

Question 5

What are the benefits of segmentation?

Answer 5

Ability to apply standard policies and principles to all products within a segment

Focus on improving forecasting efforts to only segments where needed

Allow for segment-specific inventory policies

Common language across SC network and planning levels

Question 6

How to determine a products stability?

Answer 6

Using CV

Question 7

What to base predictability on?

Answer 7

Plan accuracy

Forecast accuracy

Question 8

What to base impact on?

Answer 8

Volume

Cost, value, strategic importance, capacity utilization

Question 9

Describe the forcast review principles for the “high-impact” segment

Answer 9

High impact on bottom line = high focus from planners

If predictability is high = statistical forecast is enough

If predictability is low = detailed review of forecasts

Question 10

Describe the forcast review principles for the “high-focus” segment

Answer 10

High focus = much attention from planners

Frequent review of forecasts needed

Question 11

Describe the forcast review principles for the “low-impact” segment

Answer 11

Low impact = less focus required

Review on quarterly or yearly level

Question 12

What to do with high predictable products?

Answer 12

Cyclic planning with fixed production plan

Plan is changed if stock reaches limits

This will increase throughput

Question 13

What to do with medium predictable products?

Answer 13

As forecasts are poor, one should use ROP

ROP = safety stock + demand during lead time

Question 14

What to do with low predictable products?

Answer 14

Use MTO

Question 15

What to do with high focus products?

Answer 15

case-by-case (typically ROP or MTO)

Question 16

Describe the steps in the stepwise approach to improving planning

Answer 16

1) Stabilize and simplify
2) Increase predictability
3) Optimize flow and flexibility

Question 17

Steps to stabalize and simplify

Answer 17

1) explicit stock point
2) align service level expectations and ensure safety stock
3) Simplify BOM
4) Replace forecast driven MRP with consumption based planning
5) Reduce lead time and order sizes
6) Reduce no. of stocked materials and lumpy materials

Question 18

Steps to increase predictability

Answer 18

Separate tactical and operational planning​

Differentiated planning and control e.g. cyclic planning​

Reduce demand variability amplification​

Increase predictability in processes​

Reduce stock and time buffers ​

Reduce no. Of materials​

Demand and supply integration​

Use simple leading KPI’s

Question 19

Steps to improve flow and flex

Answer 19

Reduce lead times and order sizes more​

Rate based planning / synchronized external supply chain ​

Increase flexibility​

Decoupling the external supply chain​

High frequency deliveries with milk runs to customers​

Standardized work​

Supplying plant must control stock​

Handle dependencies and risks​

Partnership with key customers and suppliers

Question 20

What are the effect to SC by using forecast-driven MRP?

Answer 20

Forecasts at SKU level are bad = plans derived from forecasts will be bad

MRP calculation changes totally with a single change to a parent item

Changes in forecast lead to Bullwhip