30 Nov 2023
The Integrated Tactical Planning (ITP) process is a weekly re-planning process. It is designed to empower middle and junior managers to re-balance the demand, supply, and inventory plan inside the shorter-term window (e.g. a rolling 13 weeks) as they see the need.
We often see weekly processes that have good engagement from the team and good intent, but which fall short on one or more of these key elements:
1. No guiding set of plans: The monthly Integrated Business Planning process is the management framework that approves the new set of plans which should be setting the direction for the business to execute. These typically cover a rolling 24-months, or in the case of many Oliver Wight clients, a rolling 36-months. Without this visibility or intent, the weekly re-planning process can wander anywhere before surfacing as a shock to the management team at the end of the month.
2. No guidelines for decision making and escalation: The team re-balancing the plans each week has no certainty around what decision it can make and those which they should be escalating. This can lead to either too many or too few escalations to senior management.
3. Horizon is too short: The weekly re-planning horizon can often be as short as the next one-to-three weeks. This covers optimal manufacturing sequencing and cycle time, but omits the impact on material order lead time, resulting in no time to ‘course correct’ back to the first three months of the IBP plan.
4. No daily check ins: Most manufacturing and supply chain businesses have daily meetings and do a great job of checking in on quality, safety and shift patterns. However, they often don’t check in on the progress to the weekly plan, until the end of the week. Similarly, on the demand side, there is often no execution process checking in on the progress of daily sales to meet the weekly demand plan. Both can result in drifting from the IBP and ending up with weekly and monthly surprises when the numbers are rolled.
The solution to these is not rocket science but does take a focus on creating a closed loop planning systems and making sure decisions and escalations are assessed for materiality. The intent is the empowerment of people to make decisions at the lowest possible level of the organisation chart. If done well, people also know and work to, escalation trigger points.
The keys to addressing the four elements above are:
1. Define the IBP time fence: This is the point that monthly IBP aggregate plans are pro-rata-ed into detailed plans and phased into weekly buckets. These are then handed over to the ITP team to execute. The calculation of the cumulative lead time is the time from placing an order for the longest lead time material, right through to having a finished good ready for storing or shipping. If ITP is running well, the weekly re-planning process is proposing the new three-month plan to the IBP process once a month, so ultimately there should be no difference. In immature processes however, the IBP plans are often changed as part of the monthly roll process and not connected to the weekly execution processes. This creates an environment where the weekly re-planning process needs to catch and manage plans that are often unrealistic.
2. Define and agree the escalation points: This should be done not only with a mindset of empowering people to make decisions but also giving people the trigger points for seeking more senior management approvals. This can be as simple as a pre-authorised amount of money that the individuals and teams can spend, but often they can, and perhaps should, include knock-on impacts to key operational metrics and key customers.
3. Work to two time fences: There should be another time fence set up that is often described as concrete, frozen, locked, etc, and it is the zone that many companies work to. Unfortunately, while the terms used to describe this time fence indicate it cannot change it often does and reinforces the focus on this short term. We prefer to call this the ‘emergency zone’, because we can change but prefer to keep it stable. With increased stability in this zone, the team can spend time on the remaining zone, which we call the trading zone. As the name implies, we can trade plans week to week to re-balance back to the IBP plan and when done well, reduces the need to change inside the emergency zone. The emergency zone is usually between a week and two weeks out and is aligned with the optimal manufacturing sequencing rules and, in a supply-chain organisation, the delivery frequency of purchased-in finished goods. The goal is to look far enough out to have time to course correct back to the IBP plan in the trading zone.
4. Add the weekly plan to the daily meetings: On the supply side, we need to answer five questions:
a. How did we do yesterday?
b. What is on for today?
c. What is on tomorrow?
d. How are we tracking to the weekly plan?
e. Do we need to communicate a possible delay?
For the demand side, it can be as simple as tracking the percentage of sales to the weekly demand plan each day and answering the question, “Is there a trend to over- or under-achieving the weekly demand plan that needs to be communicated?”
In summary, plans are made to achieve an outcome by doing certain things in a certain sequence. If there is no process to check in on those plans as they are executed, there is no way to learn or apply that learning, and the business may as well not plan … a great plan, poorly executed, is ultimately, not a great plan at all.
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