Imagine if you left home only 1 minute earlier than you intended to catch the train to work. You ran into an old friend you had not seen since your high school days. As a result, you get together and he gives you a job at his start up which will then make you a billionaire 2 years later! A few seconds changed your life! So called small events can have enormous impacts. We are not capable of finding such associations and causality of many events. Big data has become popular due to the fact that it can help us to gain insight into correlation between events and relationships that would otherwise be not so obvious and transparent to us.
What does this have to do with supply chain planning? An equipment breakdown even for an hour may or may not have a huge impact on the supply chain. If the impact is not well understood and there is not enough of integration between planning and execution it is hard to tell. Delivering an order that might otherwise be delivered by the existing inventory in a DC may prevent us from executing on orders that may get delayed for larger customers expecting their orders in full. Or it may delay arrival of the subassembly to the next site causing days of delay because the latter decided that it may not arrive and other orders were started instead. There are numerous examples of how small events and decisions made at the execution level may have a large impact of the entire supply chain.
We can only know this if there is real-time connectivity and understanding between planning and execution, or S&OP and S&OE. Just integration is not good enough since it is simply streaming data back and forth. Planning and execution need to work based on model understanding and using the same logic. Otherwise, planning will ask for too much or too little; and execution may not deliver what is expected or be underutilized causing unnecessary lateness or increase in cost.
Just recently, a large client of Adexa experienced an interesting realization just before and after implementing our combined S&OP and S&OE system. A large order was placed on the manufacturing from the planning side of the business, not knowing that there is already enough in the DC for this order. As soon as the system went up, it immediately flagged availability of the demand and saved the company a lot of time and money as well as high customer satisfaction.
Having S&OP and S&OE as a continuum of planning is not just a luxury but essential to make optimal use of manufacturing resources and be able to give reliable commit dates and project accurate financials. Any other way of doing this is throwing the problem over the proverbial wall. To learn more about this topic and how your planning and execution processes can be changed to a continuum rather than separate silos click Here.