11 Dec 2023
The Integrated Tactical Planning (ITP) process is a weekly cross-functional re-planning process designed to deliver the Integrated Business Planning (IBP) plans in the near term, typically covering a rolling 13-week horizon. One of the critical measures that assesses the ‘health’ of the planning and execution processes within the remit of ITP, is a business’ customer service measure, often expressed as delivered in full on time (DIFOT).
There are many ways to measure customer satisfaction, but delivering to a customer, what they ordered within specification, on time, and in full, has always been, and will always be, the prime component of customer satisfaction. Other elements of customer satisfaction, such as price, quality, and helpdesk support, are all important too, but if a company continues to miss their customer promise to fulfill a customer order, the result will be lost sales, lost loyalty, and lost credibility.
So how does the ITP process help with improving DIFOT? DIFOT is an output measure of doing a lot of other things right prior to being able to make a valid promise. For example, in a manufacturing environment, there are several steps to being able to ship a finished product, such as purchasing raw and packing materials, batching intermediates, making the finished product, passing through a quality check, packing it off, and finally storing or shipping. If any of those steps is performing poorly, it has a knock-on impact on DIFOT … remember DIFOT is an output measure, and the input metrics must be on time in full (OTIF) too.
The weekly preparation process needs to hold the owners of each of those steps accountable for their OTIF. The minimum OTIF for each step should be 95% completed on time to the plan we agreed through the ITP process and meeting. Often we find in organisations, there are functional team meetings to assess performance, but there is no cross-functional view of performance or the impact of poor performance across all the steps. This is where ITP bridges the gap. It means that if DIFOT is not at 95%, the ITP team can check back on each step to find the area that needs help. The cross functionality of the ITP process is the critical element for ensuring the ‘weak link’ in the flow from purchasing to shipping is addressed.
These are the other areas that help improve DIFOT and are key guiding policies for the ITP process:
1. Inventory policy: Once approved by management, it is loaded into the master supply planning and scheduling system. This is to guide decisions made by the planners, and should be visible to customer service in the order entry and promising system, through the system’s available-to-promise functionality.
2. Segmented customer service promise: This is determined based on ABC classification of customers and SKUs. It should be split into two sets of promises that cover when stock is normally available versus when stock is supply constrained.
There are other elements that are important too, such as having the formally-defined processes, an educated group of people working those processes, and those processes being supported by fit-for-purpose technology. However, simply by getting the process step owners in a room once a week to agree a valid set of plans for each element of your supply chain to hit 95% OTIF, DIFOT will to start trending up immediately.
For further news and views follow us on LinkedIn.