SUPPLY CHAIN STANDARD NOVEMBER 2008
www.supplychainstandard.com
So what tends to happen is that planners will expend
the same effort on a low value runner-type product as
they would on a high value sporadic product and really
that balance needs to be addressed so that the effort is
on the high value sporadic product – dealing with the
low value runners should be more automated.
SCS:PLANNING SYSTEMS 15
appropriate for every product class or location,”
says Platt. “So what tends to happen is that
planners will expend the same effort on a low
value runner-type product as they would on a
high value sporadic product, and really that
balance needs to be addressed so that the effort is
on the high value sporadic product – dealing with
the low value runners should be more automated.”
He believes that if you don’t have that flexibility
in your supply chain planning you tend to get
caught in a trap. Having flexibility, “unlocks the
opportunity to extract benefits on different
segments – for example product transport –
enabling you to tailor your strategy to those
segments and that gives you the opportunity to
either do it economically, using automation to plan
those low value runner-type products, or have a
more collaborative consensus-driven process for the
higher value, more difficult to predict, products.”
Forecasting
When it comes to forecasting, “it’s important to decide
what you can forecast and what is more difficult to
forecast and tailor your demand planning strategies
around that,” says Platt. “It’s also incredibly important to
make sure that you are planning at the appropriate level
of granularity. Sometimes SKU level is going to be
appropriate, and sometimes it’s very difficult to
forecast at that level because the products are,
perhaps sporadic, or do not have enough
history. It may be that forecasting at a more
family level is more appropriate,
disaggregating later to give you a better
quality forecast.” However, he warns against
planning everything at the lowest level of
granularity, as it is easy to get bogged down
with data. “You can find yourself just
planning data and not focusing on the value
added activities.”
Getting demand planning right is
fundamental to planning in a make-to-stock
environment. But you don’t need to forecast
everything; fundamentally there is nothing wrong
with other strategies like “reorder point”, “make to
order” and “min-max”. They might be
appropriate for certain products, for others they
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