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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
The experts at Oliver Wight provide business leaders with invaluable information for integrating the tactical planning process Integrated Tactical Planning (ITP) is an essential process for regularly re-aligning product, demand, and supply plans in the short term, thereby giving the Executive team the confidence that operational activities are being well managed, unless they formally hear otherwise. This cross-functional re-planning process is vital to responding to change, increasing competitiveness, and reducing costs. Integrated Tactical Planning: Respond to Change, Increase Competitiveness and Reduce Costs helps senior executives devote more time to strategy and other value-added activities by deploying ITP practices throughout their organization. Written by the leadership team at Oliver Wight, one of the world's most respected firms for effectively integrating business processes and improving business outcomes, this authoritative resource offers a contemporary view of the processes, behavior change methods, and new technology for implementing ITP processes. Throughout the text, the authors share business-proven concepts, define fundamental terms, and provide real-life examples of how Integrated Tactical Planning has been applied in various industries and businesses. Clear and accurate chapters cover essential topics including strategy alignment, product and demand plan execution, supply scheduling, performance improvement, and more. Presenting the information necessary to get an organization started on its Integrated Tactical Planning journey, this book: * Describes how to manage and align product portfolio changes and new products within a single management process * Explains the mechanisms and behavioral requirements for an organization to successfully execute Integrated Tactical Planning * Offers methods for improving reaction time and cost-effectively responding to changes in Demand and Supply * Reviews different design and deployment strategies, structures and roles, and the key ITP elements such as process definition and sustainability * Features a comprehensive case study that details the challenges and results experienced by an Oliver Wight client company that implemented Integrated Tactical Planning Integrated Tactical Planning: Respond to Change, Increase Competitiveness and Reduce Costs is a must-have book for senior executives, leaders, managers, and planners at organizations of any size across all industries.
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Table of Contents
Cover
Title Page
Copyright
Preface
Unlocking the Greatest Management Secret
Demystifying Terminology
The Rationale
The Benefits
CHAPTER 1: Great Execution
Introduction
About the Process
Why Integrated Tactical Planning?
Integrated Tactical Planning Rationale
Integrating the Business: The Maturity Journey
Do We Know What Game We Are Playing?
Aligning Systems with Planning
Summary and Key Change Requirements
CHAPTER 2: Empowering the Organization
The Integrated Business Model
Summary and Key Change Requirements
CHAPTER 3: Delivering the Value
Definition of Product and Portfolio
Defining the Elements of Product and Portfolio
Scope of Product and Portfolio Process
Integrated Tactical Planning Horizon
Product Projects Manager
Product Life Cycle
Integration with Demand‐Supply Tactical Execution
Master Data Management
Resource Planning
Project Management
Launch Preparedness
Summary and Key Change Requirements
CHAPTER 4: Optimizing the Go‐to‐Market Approach
Demand Creation
Definition of Demand Management
Role of Demand Execution Manager
Linking Demand Planning to Demand Execution
Forecast Consumption
Demand Segmentation
Abnormal Demand
Demand Monitoring
Order Promising
Benefits of Demand Execution
Summary and Key Change Requirements
CHAPTER 5: Managing the Value
Key Aspects of Supply Execution
Master Planner/Scheduler as a Pivotal Role
Time Fence Management—The Next Level of Detail
Stocking Strategies
Decoupling Demand from Supply
Demonstrated Capacity Planning
Inventory Management
Aligning the Supply Chain
Summary and Key Change Requirements
CHAPTER 6: Driving Performance Improvement
Measures: Powerful Tools for Improvement but …
Summary and Key Change Requirements
CHAPTER 7: Running Smoothly
The Daily‐Weekly Cadence
Empowerment Criteria
Stop‐and‐Check Meetings
Structure
Leadership and Roles
Behaviors
The Sustainability Plan
Summary and Key Change Requirements
CHAPTER 8: Time to Releasing Value
Background
Designing the Way Forward
Getting Traction—Moving from Reacting to Forward Looking
Results 12 Weeks On
Conclusion
Glossary of Terms
References
About Oliver Wight and the Authors
Index
End User License Agreement
List of Illustrations
Chapter 1
FIGURE 1.1 Wildfire
FIGURE 1.2 Levels of Planning
FIGURE 1.3 Number of Communication Permutations
FIGURE 1.4 Business Excellence Maturity Chart
FIGURE 1.5 Understanding Your Supply Chains
FIGURE 1.6 A Simple but Powerful Change Model
Chapter 2
FIGURE 2.1 The Integrated Business Model
FIGURE 2.2 Cumulative Lead Time Calculation
FIGURE 2.3 PTF and Focus Month
FIGURE 2.4 The Weekly Planning Quorum
FIGURE 2.5 The Pareto Principle
FIGURE 2.6 Customer Promise
FIGURE 2.7 Example Escalation Criteria
FIGURE 2.8 Demonstrated Capability
FIGURE 2.9 Scenario Planning
FIGURE 2.10 Change Management
FIGURE 2.11 Change Can Be an Emotional Rollercoaster
Chapter 3
FIGURE 3.1 What Is “New” to the Business?
FIGURE 3.2 Product Control and Execution
FIGURE 3.3 Below‐the‐Line Product Control Using Demand and Supply Planning...
FIGURE 3.4 Product Planning Manager Role
FIGURE 3.5 Product Life Cycle Curve
FIGURE 3.6 Demand‐Supply Information Required for Tactical Execution
FIGURE 3.7 Master Data Requirements for Launch
FIGURE 3.8 Resource Planning
FIGURE 3.9 Master Product Plan
FIGURE 3.10 Example High‐Level Project Plan
FIGURE 3.11 Launch Checklist
Chapter 4
FIGURE 4.1 Demand Doesn't Just Happen
FIGURE 4.2 Definition of Demand Management: Demand Planning Versus Demand Ex...
FIGURE 4.3 Below‐the‐Line Demand Execution Activities
FIGURE 4.4 Demand Execution Manager Role
FIGURE 4.5 Aggregate Versus Detailed Demand Execution Activities—The Focus P...
FIGURE 4.6 Forecast Consumption and Roll Logic—Ignoring It Can Trip You Up!...
FIGURE 4.7 Example of Demand Segmentation Techniques
FIGURE 4.8 Use of Data Visualization Techniques in Demand Execution
FIGURE 4.9 Abnormal Demand: Demand Execution Consists of a Decision‐Making P...
FIGURE 4.10 Monitoring Demand: Daily/Weekly Demand Variance Monitoring
Chapter 5
FIGURE 5.1 Integration of Master Planning and Scheduling with ITP and IBP...
FIGURE 5.2 Key Aspects of Supply Execution
FIGURE 5.3 Supply Planner versus Supply Scheduler Roles
FIGURE 5.4 Who Else Is Involved
FIGURE 5.5 Cumulative Lead Time Calculation
FIGURE 5.6 Emergency, Trading, and Open Zones in a Make‐to‐Stock Supply Envi...
FIGURE 5.7 Make‐to‐Order Time Fences
FIGURE 5.8 Supply Stocking Strategy
FIGURE 5.9 Master Supply Planning and Scheduling—The Conflict
FIGURE 5.10 Rough‐Cut Capacity Planning Simulation
FIGURE 5.11 Inventory Management
FIGURE 5.12 Month‐Weekly‐Daily for Capacity
FIGURE 5.13 Oliver Wight's Universal Equation Covering the Nodes in the Imme...
FIGURE 5.14 Inter‐Site Supply Chain Model
FIGURE 5.15 Example Time Fences
FIGURE 5.16 Purchase Order Lead Time
FIGURE 5.17 System Capability Is Dependent on Data Integrity
Chapter 6
FIGURE 6.1 The Execution Hamster Wheel
FIGURE 6.2 The Improvement Process
FIGURE 6.3 Hierarchy of Performance Measures Implementation
FIGURE 6.4 Supply Chain Manager's Self‐Image
FIGURE 6.5 Process Velocity Ratio
FIGURE 6.6 Customer DIFOT Measurement Hierarchy
FIGURE 6.7 Example Root Cause Analysis Tools
FIGURE 6.8 Performance Measure Example—Customer Service On‐Time In‐Full Perf...
Chapter 7
FIGURE 7.1 Planning and Replanning Cycle
FIGURE 7.2 The Daily‐Weekly Cadence
FIGURE 7.3 Daily Governance
FIGURE 7.4 Example of the Weekly Planning Process and the Integrated Tactica...
FIGURE 7.5 Example Weekly Governance Complex Organization
FIGURE 7.6 Monthly‐Weekly‐Daily Processes Need Formal Architecture to Run in...
FIGURE 7.7 Example Decision Rights Designed to Empower People to Make Decisi...
FIGURE 7.8 Weekly‐Daily Integration via Aligned Meeting Agendas
FIGURE 7.9 SIPOC Chart of Mapping Processes and Meeting
FIGURE 7.10 Sideways SIPOC
FIGURE 7.11 Example Integrated Tactical Planning Matrix
FIGURE 7.12 Five Keys to Sustainability
FIGURE 7.13 A Simple Change Management Approach
FIGURE 7.14 Example RACI for Abnormal Demand Management at Order Intake
Chapter 8
FIGURE 8.1 Product Introduction Road Map
FIGURE 8.2 Reason Code Analysis for Misses in Customer Delivery Performance ...
FIGURE 8.3 Weekly Case Fill and DIFOT
FIGURE 8.4 Inventory and Obsolescence 12 Weeks On
Guide
Cover Page
Table of Contents
Begin Reading
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INTEGRATED TACTICAL PLANNING
Respond to Change, Increase Competitiveness, and Reduce Costs
ROD HOZACK, STUART HARMAN, TODD FERGUSON, AND DAWN HOWARTH
Copyright © 2021 by Oliver Wight International. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 646‐8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at http://www.wiley.com/go/permissions.
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Library of Congress Cataloging‐in‐Publication Data
Names: Hozack, Rod, author. | Harman, Stuart, author. | Ferguson, Todd, author. | Howarth, Dawn, author.
Title: Integrated tactical planning : respond to change, increase competitiveness, and reduce costs / Rod Hozack, Stuart Harman, Todd Ferguson, Dawn Howarth.
Description: Hoboken, New Jersey : Wiley, [2021] | Includes index.
Identifiers: LCCN 2020046413 (print) | LCCN 2020046414 (ebook) | ISBN 9781119784753 (hardback) | ISBN 9781119784777 (adobe pdf) | ISBN 9781119784760 (epub)
Subjects: LCSH: Business planning.
Classification: LCC HD30.28 .H699 2021 (print) | LCC HD30.28 (ebook) | DDC 658.4/012–dc23
LC record available at https://lccn.loc.gov/2020046413
LC ebook record available at https://lccn.loc.gov/2020046414
COVER DESIGN: PAUL MCCARTHY
COVER ART: © GETTY IMAGES | HIROSHI WATANABE
Preface
Unlocking the Greatest Management Secret
We have long believed that Integrated Tactical Planning is the 21st century's greatest management secret in that best of companies simply “execute” all the time without stopping to think about whether they are doing the right thing at the right time. Our experience and observations suggest there is scant evidence of consistent methods and standard terminology to define best practices and that many companies do not know what these practices look like. In writing this book, we have been able to release some of the great practices we have deployed when we were in the industry ourselves and, more recently, some of the stunning successes we have had engaging with our clients. One of the standout findings through our research is that every Oliver Wight consultant would insist that there is a weekly replanning process deployed to support a company's monthly management process. Full stop. This may sound simple and reasonable, but where is the background literature to support how this is best achieved? Even when speaking with our software alliance partners, there is some functionality designed within the application, but it is nonstandard terminology and typically a silo functional view at best. We intend to make Integrated Tactical Planning an industry standard term and elevate its understanding from ad hoc to defining something that all companies can, and indeed, should be doing. Most important, we would like to share the benefits realized by clients who have embarked on the Integrated Tactical Planning journey to offer a perspective on how it might help your organization and improve the lives of customers whom you ultimately serve.
Who is this book for? This is intended as an executive synopsis of Integrated Tactical Planning for senior executives to understand the fundamentals so they can inspire their teams with the knowledge of its effectiveness and maybe identify the missing ingredient in truly freeing up management's time to spend more of it on strategy and other value‐add activities. People who are in planning roles will also find it useful, especially if they are frustrated and struggling to get cross‐functional buy‐in to what they know needs to be improved. This book will reveal concepts that have been shown to work across a range of industries and sizes of organization.
Demystifying Terminology
The sales and operations planning (S&OP) process has had a massive impact on business since Oliver Wight first introduced it in the 1980s. In the early days, S&OP was designed to align the Sales outlook with the Production plan and resulting inventory. As one consultant back then was noted saying, ”It is designed to stop the ‘blood on the conference room floor’ caused by the misalignment and misunderstanding of perspectives, when sales and operations people get together to prioritize plans.”
S&OP has become the standard for defining a robust monthly management framework that brings together often‐competing plans, perspectives, and goals. The fundamentals introduced by Oliver Wight, such as, “one set of integrated plans and numbers,” being the “decision‐making forum for the business,” “management by exception,” and “bad news early is better than bad news late,” have stood the test of time.
More recently S&OP has evolved to be known as Integrated Business Planning, which is designed to include all other plans and functions that were not initially included in S&OP. It now truly does integrate all plans and functions in a business and is seen as the management process for running a business, big or small. It includes product and portfolio management, financial evaluation of the plans, and, most important, alignment with strategy. Indeed, you could argue that the modern version of Integrated Business Planning is designed to operationalize strategy.
The terminology in this book may be a bit daunting if you've not experienced an S&OP or Integrated Business Planning process before, not to mention the myriad technical terms used in the planning and supporting processes. Therefore, we have included a glossary at the end of this book, and the APICS Dictionary is also a good source of information about standard processes and terms.
If you are familiar with the term S&OP, we'll be using Integrated Business Planning from here on, and although they are not 100% interchangeable, for the purpose of this book, we'll assume that it means the monthly management framework. We will explain a little more in Chapter 2 but have intentionally kept references and descriptions of Integrated Business Planning to a minimum, because this book is about Integrated Tactical Planning.
The Rationale
There has been something missing from the monthly management process that has, in many cases, suboptimized the outcomes, which is, how to aggregate longer‐range plans and align them with what is being done day to day? One of the hallmarks of Integrated Business Planning is that it is designed to focus on the mid‐ to longer term of at least 24 months. So, who is looking after the short term? These are time‐critical issues and processes, but if you have designed only a monthly management process then how does this work? That is where the weekly Integrated Tactical Planning process fits in.
It is a change in mindset. Rather than create a great plan out in the future and then “hope and pray” that it actually happens, the Integrated Tactical Planning process will take said plan with both hands, watch over it, respond to its needs, and then deliver it safely to execution. Another Oliver Wight truism, which is relevant here, is ”silence is approval.” This means that if senior management doesn't hear anything, then they can safely assume that everything is still on track.
The Benefits
One of the most notable differences between a monthly planning process and a weekly planning process is obviously cadence. If you're running it weekly, each year there are 52 improvement opportunities, as opposed to 12 at most for a monthly process. From start‐up of Integrated Tactical Planning to the delivery of sustained improvements in performance metrics, working capital, and cross‐functional teamwork can be as quick as 12 weeks. In fact, many of our clients tell us that they start getting benefits in the first 4 weeks. One process lead at an agri‐business company commented, “The sales lead loves the new process because it has eliminated at least 12 phone calls a day, and the gap we identified 4 weeks ago between the demand plan and the projected harvest volumes allowed us to purchase from other suppliers early and closed the supply gap cost‐effectively.” Integrated Tactical Planning helps foster confidence in execution and credibility from customers who view the organization as a reliable partner.
Of course, if there is only the weekly Integrated Tactical Planning process without the longer horizon monthly process, ultimately, there will be a loss of direction and connection to direction setting and strategic trade‐offs, so both monthly and weekly processes are needed. It is, however, important to recognize that they have very different purposes and objectives. On a final note, some companies have tried to blend both weekly and monthly processes into one, by running a weekly S&OP process or breaking their monthly numbers into weeks. This doesn't work. Just from a purely numbers perspective, it more than quadruples the number of data points and creates a level of detail that is often unworkable. It often causes people to drop the long‐term view or aggregate the short‐term numbers to too high a level to properly see the issues.
Acknowledgments
This book would not have been possible without the dedication of a number of people. The Oliver Wight International Board is to be thanked for seeing the value of elevating the understanding and awareness of the Integrated Tactical Planning process and approving the plans for publication of this book. The following people were particularly instrumental:
Rod Hozack for doing the background research, identifying the gap in our offerings to clients, and sparking the concept for further development; he also brings a wealth of experience in product and portfolio management and strategy deployment
Stuart Harman for being the co‐developer of the process in Asia Pacific and bringing his experience of performance measurement and continuous improvement
Todd Ferguson for seeing the vision and possibilities and bringing his depth of knowledge in demand planning, execution, and forecasting
Dawn Howarth for bringing her deep understanding of operations, manufacturing, supply chain, and her brilliance in editing the copy down to be truly focused and razor sharp
CHAPTER 1Great Execution: An Overview
Do you ever feel that your business signs off on a solid plan every month, but it is never actually delivered? Does everyone seem to be running around putting out the latest fire, crashing from one crisis to another, but thinking that each one is an isolated incident that could not have been predicted? Is your team stressed out with trying to keep their heads above water with all of these changes so that they never actually have any time to work on long‐term fixes for problems and only ever apply a bandage before moving on to the next fire? Or is everyone looking over everyone else's shoulder to make sure that things are done because they either don't trust them to do things or don't really know who should be doing what?
If you feel any of these symptoms apply to you, then read on.
Most businesses now have some form of a monthly planning process that looks to balance supply and demand over at least the current year. This type of process started life as sales and operations planning (S&OP), but Oliver Wight evolved it into what is now known as Integrated Business Planning. What many businesses don't appreciate is that this type of process is fine for the mid‐ to long‐term future to identify and address the gaps in strategy and business plans, but in the short term you need a complementary suite of processes with more frequent cadence and more granularity of detail to actually make the monthly plan happen. This is called Integrated Tactical Planning.
The value of a good planning environment is not so much about the planning capability, but as Oliver Wight put it more than 40 years ago, it is the ability to “re‐predict, re‐predict, re‐predict” (Wight, 1981). In modern parlance, that means a formal planning environment that has the ability to replan quickly and accurately as circumstances change and engage the right people, at the right level, in the right time horizon, to collaboratively agree to the change in plans.
Having said that, businesses need a good plan to start with, so we are not suggesting this is a replacement for a rock‐solid Integrated Business Planning process looking out for the next 2 to 3 years, but what we are suggesting is that change is inevitable, and the Integrated Business Planning process should not be managing those changes in the next 3 months. What companies need is a robust lower‐level process, with the purpose of rebalancing plans each week to meet the Integrated Business Planning plan in the next 3 months … and if it can't be done, they need to communicate that fact early.
The key to why Integrated Tactical Planning is crucial to running a business well is summarized in the following three ingredients that explain why some companies make it and others don't:
Reducing the time it takes the executive team to manage the business (operational activities) by a factor of five
Refocusing the executive team on market‐facing activities
Realigning everyone else (onto the same page) to drive execution and results
Integrated Tactical Planning in concert with Integrated Business Planning is a fundamental process that provides businesses with the confidence that these objectives will be met.
Introduction
Welcome to the well‐hidden world of the Integrated Tactical Planning process. In a sea of advice from consultants and subject matter experts on the monthly business‐management framework of Integrated Business Planning, there are very few references as to how the Integrated Business Planning process plans get deployed. (If you are not familiar with the concept of Integrated Business Planning process, Chapter 2 will expand the concept a little further and its relevance to the layers of business planning.) The Integrated Tactical Planning process is the heartbeat or control tower of execution in a business, and the intent of this book is to reorientate your way of thinking about the differences among the layers of planning and the differences between planning and execution.
If you feel like the executive team is continually being sucked into managing immediate and urgent issues, and other senior managers don't seem to be able to break out of focusing on the next few months (at best), and there's very little confidence in predicting the end‐of‐year position, it is likely you need greater discipline in getting the tactical horizon under control. As one senior executive was heard saying, “It feels like there's a wildfire burning unpredictably, and we just can't get ahead of it to create a fire break. Even if we did get ahead of it, we wouldn't know where to put it!” (See Figure 1.1.)
FIGURE 1.1 Wildfire
If this sounds like your company, it is not hard to get started, and once started, the benefits will come quickly. Excuse the pun, but you just need to create the “burning platform” for the business and get going, and then you need to structure a sustainability plan so it becomes self‐perpetuating.
About the Process
This book will give you the basic definitions, concepts, and real‐life examples of how Integrated Tactical Planning has been applied in various industries and businesses, and, importantly, give you enough information to help your organization get started. It is, however, not the definitive text on the subject. By the end, though, you will understand enough about the concepts and application to know that taking a cookie‐cutter approach will not work. Process design must be aligned with your company structure, its strategy, and its go‐to‐market approach, and you must recognize that behavior and culture are highly likely to need to change.
Why Integrated Tactical Planning?
Although this is not a new concept, it has not had much airplay over the last couple of decades because it has been overshadowed by a growing understanding and desire to deploy mid‐ to long‐term aggregate planning processes (Integrated Business Planning) in businesses. This monthly management framework has delivered enormous benefits to businesses, but in some circumstances, it has led to a blurring of objectives between a monthly senior management planning process and the weekly middle‐management execution of those plans. When we say, “execution of those plans,” we usually mean the next 3 months, but we'll cover how to determine the time frame later in the book.
Many Integrated Business Planning processes struggle to focus enough time on the longer term because the shorter‐term (tactical) issues keep getting in the way. In the 50 years that Oliver Wight has been helping companies run better businesses, we don't know of any examples of companies that have too many resources to do what needs to get done, and hence, the focus is on having the right level of people in the organization, making the right decisions, on the rights things, at the right time.
The other symptom we often see is a gulf between the monthly medium‐ to long‐range planning process and execution of those plans in the next week or so, with nothing in between. When we started working with a food company recently, they ran a rudimental monthly Integrated Business Planning process, and the only process thereafter was a daily sales and supply schedule check. By putting off considering some of the materials they needed to purchase 12 to 14 weeks out, it left purchasing second‐guessing most of their purchases. They ended up with either holding too much raw and packaging materials or running out of critical ingredients. It also meant that there was no way to use the planning system to manage purchases. This expensive piece of planning software just became a transactional system—and is such a waste of resources both human and computer.
To contextualize where Integrated Tactical Planning fits, there are five fundamental levels of planning (see Figure 1.2):
Annual strategic and business planning processes—typically a horizon of 5 to 10 years
Quarterly check‐ins to the strategic themes, key metrics review, and the cost of the go‐to‐market approach
Monthly realignment with the annual business and strategic planning horizons—typically a horizon of a rolling 24 months, but 36 months is becoming more common (the Integrated Business Planning process)
FIGURE 1.2 Levels of Planning
Source: Oliver Wight. Copyright Oliver Wight International, Inc. Used with permission.
Weekly realignment of the tactical horizon back to the monthly horizon (the Integrated Tactical Planning process)
Daily execution and alignment back to the weekly plan
This book will cover primarily the weekly process shown in point 4, but ultimately best‐in‐class businesses will have one set of plans that cut across each level of planning. This is, however, where confusion and misalignment can occur. One client, who exported perishable items around the world, was quite specific about the break in integration with the comment, “We put a lot of effort into doing our monthly management process and making sure the numbers and plans are aligned out to 36 months, but then immediately after we sign them off, we forget about them until next month, and wonder why we never hit our plans.” The moral of this story is that to create greater certainty in delivering our plans, from strategy to daily execution, we need mechanisms to ensure congruence across all levels of planning and execution and the ability to realign—top to bottom, and bottom to top—when things change.
Integrated Tactical Planning is the suite of processes that ensures alignment between the monthly plan, and what is done day‐to‐day. Many of our clients have demonstrated results with Integrated Tactical Planning very quickly, but in order for complete alignment with strategy, Integrated Tactical Planning also needs to be aligned with long‐range plans generated from a robust Integrated Business Planning process, which takes its guidance from strategy. The result is an aligned set of plans and numbers that is designed to deliver sustained competitive advantage.
Think of it like a bicycle road race, such as the Tour de France, where there is a route that is set ahead of time. All the competitors will be aware of the route, would have studied it, and probably would have driven and ridden it many times in the lead‐up to the race. There is, however, still a lead motorcycle to show the way. Why? Because the cyclists are so engrossed in what they are doing in the moment that there is precious little bandwidth left to think big picture about the overall route, let alone which turns to make and when—once racing, the plan is set, and they are now in tactical execution. There will be bumps along the way, such as flat tires, falls and injuries, illness, rain, spectators, and more; most of which will have been considered and contingency plans formulated, but each will need to be managed as they occur in a tactical sense to stay on track with the overall plan.
As a supply chain director said to us in the early days of working with his company, “We don't need this cadence and congruence stuff; we pay people to react and be flexible, and formality and discipline just get in the way.” To a certain extent, there is logic in that argument. If we had absolute certainty on the outcomes of all our plans, we would not need any of these layers of process. The key, however, is to understand that plans are going to change, and it is how we respond to change that is the real value—it is the difference between reacting and responding. Reacting involves no anticipation or planning, and responding is the opposite—the what‐if question has been asked prior, and a set of premeditated contingency plans formulated in readiness. So, assuming that you have a good plan to start with, it is not the planning that is important, it is the replanning and anticipation of change that counts more.
When changes to plans do occur, those plans need to be continually realigned back to the overall direction. That is what we call closed‐loop planning systems, where at any one time we know we have congruent plans from the big picture right down to what is being actioned right now.
Integrated Tactical Planning Rationale
The key difference an Integrated Tactical Planning process brings to the business is that it is deliberately designed to be a weekly cross‐functional replanning process, with the specific intent of rebalancing plans back up to the Integrated Business Planning process plans inside the tactical horizon.
The process relies on key roles being defined and those roles then being responsible for actively managing changes to core plans inside the tactical window (which will vary from company to company, and a formal definition will be shared in Chapter 2). Think of core plans as the product portfolio plan, the demand plan, and the supply plan. These are the input plans, and all other plans are outputs from these plans; for example, an inventory plan is an output of the balance between the demand plan and the supply plan.
The issue that Integrated Tactical Planning solves in the tactical horizon is the many‐to‐many communication needs. In a good Integrated Tactical Planning process, a cross‐functional quorum of people is assigned to proactively seek, manage, and communicate changes to plans. Organizations can also exacerbate the chaos caused by the many‐to‐many communication by allowing information to get trapped in functional silos. This can happen even in smaller organizations, so can you imagine how the complexity exponentially increases in organizations with tens of thousands of people in multiple locations.
A simple equation to highlight this is (n2—n), where n is the number of people in an organization, and when you solve this equation, it is the number of possible communication permutations at any point in time. Now add in, email communications, corridor conversations, meeting actions, the lunchroom conversations, and more, and it doesn't take long to see that this is an exponential curve as depicted in Figure 1.3.
FIGURE 1.3 Number of Communication Permutations
Source: Oliver Wight. Copyright Oliver Wight International, Inc. Used with permission.
To give you a few numbers: if we had 10 people in an organization, the number of communication permutations at any one time is 90. This is eminently manageable. If we have 100 people, the number of communication permutations is 9,900, which becomes more of a juggle. If you were in a mid‐sized organization of 500 to 1,500 people, the number of communication permutations becomes huge—249,500 and 2,248,500, respectively. How do you manage that much communication? Without a framework, you don't! One of the early ways to manage this was through functions and a command‐and‐control management style. As mentioned previously, all that does is trap information in functions, departments, regions, sites, or any other structural boundaries organizations tend to create to control outcomes.
The only way to manage this in a cross‐functional and whole‐of‐business way is to create a structure of formal communication and decision‐making, which we call Integrated Business Planning and Integrated Tactical Planning processes, and, yes, they are decision‐making and action‐oriented processes. If your meetings are more or less information sharing and talk fests, you're missing an opportunity.
A starting point we often use with clients is to spend time understanding what decisions are made, at what level in the organization, and in what time horizon, and then assign those decisions to the relevant layer in the planning process. In this case, decisions about rebalancing plans every week and reconciling back to the signed‐off Integrated Business Planning process plans lie with the Integrated Tactical Planning process. As an aside, this then assists with defining the escalation criteria, which is activated if plans cannot be rebalanced within agreed tolerances and time frames, and requires a definition of process and roles to effectively resolve the imbalances. The intent should be to design the process so that those who enact the changes are authorized to make the required decisions. There are times, however, when the cost and/or the impact of the change is so great that a higher level of authority needs to be engaged. People need guidance to know when that threshold is about to be breached and then how to go about getting authorization to resolve.
The first step is to define the key roles, or quorum. The role definitions need to be written in such a way as to authorize these people to proactively identify changes to core plans and assess whether that change will actually become a problem. Note, the tense in the previous sentence is future tense; an important behavioral characteristic is to anticipate potential issues in the tactical horizon, with the objective to eliminate surprises.
Also, the bigger the organization, the more deliberate and formal the nodes of information collation and decision‐making need to be. The many‐to‐many communication, and/or hierarchical escalation, is just too time‐consuming and human resource hungry to profitably survive in this modern world.
The quorum then owns the management of core plans in the tactical horizon (core plans being the product portfolio, demand, and supply plans). The group proactively seeks out changes and follows a predefined decision‐making and escalation set of criteria questions, or RACI (a role‐definition template whose name stands for responsible, accountable, consulted, informed):
Who wants to make the change?
What is the cost of the change?
Does the change affect other areas or functions?
What are the options for resolution?
What is the recommended approach?
Is the benefit of making the change greater than the cost of doing the change?
Who needs to sign off on the change?
Who needs to know about the decision?
Should we have seen the need for this change earlier?
Another important business principle bigger than just Integrated Tactical Planning is that the process must be set up to foster learning so that over time the gray areas of decision‐making become more precisely defined and understood. An indication that the learning is being effectively wound back into process is through stability (a reduction in the number of plan changes within certain time frames), reductions in numbers of escalations, and reductions in physical constraints, such as reducing time fences and flexibility measures. In the beginning there are usually a lot of changes occurring, which is often referred to as “nervous planning,” but as time goes on, the number of changes decrease, and a calmness develops in managing the small number of changes that do occur.
Integrating the Business: The Maturity Journey
Maturity maps have become more widespread in recent years, but few people know how to use them. Everyone would like their businesses to be totally seamless and integrated with technology (see Phase 4 in Figure 1.4), but what is usually missed is mapping out the journey up through the phases. We often refer to this as an investment model, in that there are certain things that need to be in place to act as foundations and building blocks to facilitate the next phase of performance.
FIGURE 1.4 Business Excellence Maturity Chart
Source: Oliver Wight. Copyright Oliver Wight International, Inc. Used with permission.
Oliver Wight uses maturity maps to plot the journey up through the phases to assess where and when to allocate or invest resources to evolve to a higher level of maturity. This is explained in more detail in The Oliver Wight Class A Standard for Business Excellence (Oliver Wight International, 2017), but it is worth briefly positioning the Integrated Tactical Planning process within the maturity context.
As mentioned previously, most companies aspire to be operating at Phase 4 when all business processes are integrated with technology. However, many companies have spent a lot of money on technology only to have a small percentage of that investment realized. The reason is that to get to Phase 4, the company needs to go through a journey from Phase 1 through Phase 3; you can't jump steps. A fundamental process in Phase 1 is the Integrated Tactical Planning process. Without it, the company is going to struggle to mature into Phase 2.
Phase 1 is characterized by working to eliminate the unplanned events that we talked about in the opening paragraphs and doing the routine things routinely to develop the structure and cadence to manage the business in a more controlled manner. There are behavioral, process, and technology elements to be addressed to get to the top of Phase 1. Behavior is often the most difficult to address in that this is a new way of working for many, and it is likely to challenge many long‐held beliefs and ingrained ways of working. We don't actually mean unplanned events are literally eliminated. They will, however, be fewer and be more effectively managed when they do occur. As one operations manager aptly described it, “It's amazing how many unplanned events you can actually plan for!”
The two important behavioral changes that are required to get to the top of Phase 1 and prepare for moving into Phase 2 are described here:
A passion for data integrity.
Not too many people would put the words
passion
and
data accuracy
in the same sentence, but there is always a lot of passion expressed if inaccuracies are causing erroneous plans and information. Data are like feral animals in that they need taming and training, and not just as a one‐off exercise. Once under control, data just need a gentle hand to continually steer them in the right direction and keep on track.
Driven by process.
Focus, discipline, and a never‐ending drive for continuous improvement are key characteristics of high performance. It doesn't matter whether it is becoming a musician, an elite athlete, or a market‐leading business, without these qualities, businesses will eventually wither and die.
As mentioned, most people do not get excited about process adherence, 100% data accuracy, or carving out time for doing root cause analysis and creating a corrective‐action plan. It takes time, and it requires discipline and some hard thinking. If, however, we want to make the system work and create certainty in planning and execution, it is fundamental to be done. The benefits are a reduction in the amount of noise in planning and the ability to use the system to keep all planning levels congruent all the time. The benefits of one set of plans and numbers that everyone trusts and works toward can't be overstated.
To support this, however, technology needs to be considered early in the design and deployment phase. Although not recommended, many processes can be driven by a spreadsheet in Phase 1, but as processes mature, and the business becomes more certain about doing the routine things routinely, fit‐for‐purpose software and tools are going to be required. This is how the maturity journey becomes an investment model to ensure processes are supported by appropriate technology at the right time … and not before. As the CEO of a very large retail company once said, “Don't talk to me about software; we have purchased so much software in the past, and none of it is being used, and worse still, much of it is still unwrapped in the box it came in!”
The other question to ask about technology is, “What do you already have?” We usually get strange looks, but on further investigation, we will usually find that several modules were purchased in the original enterprise resource planning (ERP) implementation but aren't being used. Worse still, there is no one who knows how to use them, and sometimes it's been so long that there is no corporate memory of what was originally purchased. But remember, a tool is seldom the answer in isolation. You need to be clear as to what you want it to do for you and how you are going to use it before you invest or even before you dust off the cobwebs of something you already have.
Do We Know What Game We Are Playing?
Our go‐to‐market approach is critical for maintaining a company's competitive edge, but all too often when asked, most people in supply chain and operations would say they have a good working model of their supply chain, but the knowledge gets a bit more fragmented and sketchy as people from other departments are quizzed. As a supply chain director once quipped, “Why do they need to know?” The answer is straightforward, and that is, if running a viable business is about getting our products to our consumers—at the right time, at the right price, and with expected quality—then understanding the supply chain and its inherent peculiarities, limitations, and costs is critical for everyone to understand and can have a profound impact on competitiveness if not well understood.
As an example, that same supply chain director came back to us after he and a cross‐functional team had spent considerable time mapping out their many supply chains and said, “I can't believe it. We have at least 27 distinct supply chains, eight manufacturing sites, 83 stocking points around the country—three of which I didn't know about—and a lot of missing steps and missing control points in the routing. No wonder we can't get this under control!”
One of the prerequisites of Integrated Tactical Planning is to map out the supply chain as it exists today to understand the scope and scale of the world your company operates in to at least our most immediate suppliers and customers—referred to as tier‐1 customers and tier‐1 suppliers in Figure 1.5
