Sunday, December 11, 2016

Planning for the unknown

As I am working with clients on their planning system, we usually roll out planning horizons, planning hierarchies and planning strategies in order to provide a framework for the planners by which they can repeatedly anticipate actual demand and plan for it ahead of time.

However, at a worrisome rate, I find out all too often that such a system does not exist at all. Planners seem to think that because its impossible to figure out exactly what's coming, we better wait until it's happening. Especially when we're in the business of highly customizable products, we tend to hold off on planning capacity, materials and labor requirements until we have a better idea what the customer wants. That is dangerous and downright inefficient. Luckily, we're not in a life or death situation with these orders, so we'll get by without planning. It just costs us a lot of money and time.

But imagine the same thinking would be applied in more serious, life threatening situations. Put yourself on a flight from Newark to LA. You just boarded and settled into your seat when the captain and co-pilot engage with the board engineer and the crew in the middle aisle to discuss weight and balance of the airplane. The discussion might go something like this: 

Flight attendant: "Today we have 80 passengers, which fills the plane to 65% "
Pilot: "How's the weight distributed"
Flight attendant: "most of them are seated forward cabin"
Engineer: "if the weight isn't distributed evenly, we might crash into the forest behind the end of the runway because we can't take off... and if we take off we might have a real disturbing flight behavior by the airplane"
Co-Pilot: "yeah, I had that on a flight into Fort Lauderdale last year and we had to rig the airplane nose up for the entire flight, which burned so much fuel we almost ran out"
Pilot: "That's not good... so let's see how we can distribute the passengers a bit... how about the luggage below?"
Flight attendance: "that's done. I don't know where they put it?"
Pilot: "hey guys, that's really scary but we have to get these customers to their destination, otherwise we get a bad track record for on time delivery. Let's just go and hope for the best"

I don't think you would want to eavesdrop on a conversation like that. And don't worry, this kind of talk never happens on an airplane (I hope) because flight crews are obligated to plan ahead, anticipate what could happen and put policies in place for eventualities.

But why do we only do that when life is on the line? Can't we take financial and competitive situations seriously enough so that it warrants good planning?

I dare you to take a long hard look at your planning and compare it to that of a situation as described above. There is no excuse to not reserve capacity and to not balance the production line, spreading out the work (whether it comes in exactly like you anticipated or not) evenly... to put buffers in place (inventory, capacity and time) by which you quote delivery times... and work with a set of policies that get you to operate at the edge of your possible performance boundaries... no matter what exact situation plays out later.

Be prepared... it pays off whether lives are saved or (only) your customer service is improved.

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