The virtues of anticipation
As supply chain professionals, we’ve all been trained to think ahead.
Forecasting sales, foreseeing capacities, material requirements, personnel needs – a good part of our activity is devoted, quite rightly, to anticipation.
Of course, this is absolutely necessary: we need to prepare our company to meet future needs.
Anticipating doesn’t mean doing things too soon
However, we often have an unfortunate habit of releasing production orders too early and placing orders with our suppliers too far in advance.
Making decisions too early means closing yourself off to alternatives. What happens if demand changes?
Our systems and behavioral biases encourage us to firm up orders too early.
Let’s take an example: we’ve loaded forecasts and firm orders for finished products.
If I’m a supplier of components, sometimes several BOM levels down, I see net requirements cadenced over time – without knowing what is for firm requirements, forecasts, safety stocks. These requirements are calculated very precisely by the ERP system, and are official system figures, which inspires confidence.
I’m in a hot seat every time there’s a shortage. When I ask my supplier for a shorter lead time, it’s complicated. Clearly, it’s in my interest to place orders in advance.
Most procurement planners are measured on their ability to avoid shortages, much less on their ability to increase stock turns…
Keeping the workshop busy
Another example: I’m in charge of production planning for a factory. A factory is a pool of machines, representing millions of investments – and perhaps hundreds of operators. The production manager gets nervous as soon as the production resources or operators risk not being occupied.
So, the pressure is on to release production orders as soon as possible. Some even believe that the sooner you release, the sooner you’ll deliver. The result is overcrowded workshops, crushed by conflicting priorities, working on orders that are often no longer the right ones, because demand has changed since they were first released.
To decide too early is to make a bigger mistake…
Add a little variability to the mix, and there’s a good chance that decisions taken too early will backfire.
We’re not sourcing the right components, we’re not making the right products, we’re committing precious company resources to doing the wrong things.
This is nothing new – the Japanese, through the Toyota production system, taught us this a long time ago. And yet, our industry remains stubbornly stuck in fixed horizons, early releases and management modes that encourage us to decide too early.
Procrastinating until the time is right
The key is to anticipate but remain zen until action is required.
Let’s understand our operating model, our constraints, the risks we need to protect ourselves against, and the real lead-times within which we need to trigger orders. Let’s then build a control model to restrict the replenishment loops, and let’s control them on a day-to-day basis with the appropriate tools.
Intuiflow is designed to do just that – and sets itself apart from many other solutions on the market. Triggering stock replenishment too early or in excessive quantities is structurally avoided. A production order will only be released at the right moment, so that it arrives in time within the time buffer of your primary flow constraint.
Supply Chain Managers, this is one of your change management challenges: you have to give your planning teams the confidence to dare to decide later!
