SCM: the role of Concurrent Planning

What is Concurrent Planning

According to Kinaxis 'concurrent planning' (RapidResponse) is:

"a new holistic model that takes into view the whole planning network and aligns data so that a change in one part of the supply chain triggers corresponding changes and communications in the rest of the chain, in near-real time. Concurrent planning unifies plans across all time horizons and granularities so planners can understand past, present and future impacts across the entire planning horizon at once".

in contrast to traditional cascaded (or sequential) planning in which they say:

"planners focus on achieving functional excellence in their own specific area of supply chain planning, such as inventory or capacity planning. This involves isolating that one area, fine-tuning it and then excelling at it......optimizing for capacity planning alone without an understanding of its impact on inventory, for example, creates challenges that compound as plans circulate throughout the rest of the network. With each function prioritizing its own performance, collaboration, efficiency and responsiveness decline. Opportunities are lost, and broader business objectives are jeopardised".

and

"Overall, cascaded planning is slow, largely manual and error prone. And because it doesn’t give planners real-time access to the data they need from other areas of the supply chain, it severely limits their ability to react quickly to mitigate the impact of unexpected changes or events".

while

"Concurrent planning is a technique, but it’s powered by the right supply chain planning and execution technology. The technique of concurrent planning is rooted in the idea that supply chains should be fast, connected and end-to-end, so that people, processes and data are always aligned and in sync. When concurrent techniques and technologies are combined, companies can interweave every aspect of their business, from strategic to tactical, to see benefits across short- and long-term planning".

The benefits of concurrent planning are claimed to be:

Improvements in agility - whereby planners can immediately see the impact of a change in the supply chain due to an unexpected event and can can update their plans accordingly and take the appropriate steps to mitigate or avoid altogether any financial or customer impacts.

Planning proactively - Organizations with highly complex planning models can run and rerun scenarios in minutes, and planners can develop plans or sets of alternatives fast enough for the projections to be actionable.

Eliminating functional silos - Planners in all areas have access to the same up-to-the-minute data from one end of the supply chain to the other. They can use this data to collaborate more effectively with their counterparts along every link in the chain and collectively make more informed decisions faster based on this data. By eliminating planning silos, concurrent planning helps businesses reduce risk, waste and latency.

Shortening planning cycles - Concurrent planning shortens the planning cycle by allowing planners across the supply chain to create plans for their individual areas simultaneously using a common data set that updates in real-time. This faster pace means they can meet daily disruptions while being flexible enough to deal with any unanticipated challenges.

What is Concurrent Planning is trying to do?

The objective of SCM is to move materials through various conversion process and onto customers in a way that meets the customers' expectations (eg. right quality, functionality & timing) with a minimum of capacity (ie. cost) and inventory. To achieve this the supply chain must be designed, configured and planned appropriately and materials moved through it in line with demand (too fast and inventory will build, too slow and there will be service misses) with a minimum of stopping & starting (ie. variability - see Supply chain variability - what it is, why it's bad & how it can be minimised)

Planning is about what work centre capacities are needed, and when, which is relatively easy - you blow a forecast of aggregated demand up the BOMs and routings and adjust capacities accordingly. Clearly concurrent planning will aid this process immensely through it being 'end to end' and fast and also allowing Planners to quickly determine the capacity and material requirements of new and significant demands and/or the implications of capacity losses (eg. due to work centre breakdowns).

Scheduling replenishment execution is, however, much harder - we ideally want materials to flow continuously through the various conversion work centres in line with demand but, because we often use work centres for processing materials into multiple products, we have to trade-off batch sizes and set up times and schedule accordingly to meet expected demand for each product. We do this with Master Production Schedules and, because at the item level our forecasts are invariably wrong (2), we also expedite / change the schedules to prevent service misses. Clearly Concurrent Planning might appear very helpful as it can very quickly ("in near-real time") reveal, up and down the entire supply chain, all the implications of forecast inaccuracy / schedule in-adherence and allow us to optimally re-schedule.

So is Concurrent Planning the answer?

Undoubtedly Concurrent Planning is a great step forward for capacity planning and if we're going to use forecasts and master production schedules for execution it will also be extremely useful as it will help us to continuously re-schedule in line with actual demand.

But what Concurrent Planning doesn't do is eliminate the cost and inventory consequences of all the schedule adjustments/expedites that it is facilitating: the capacity losses due to additional unplanned machine change-overs, the processing delays on interrupted materials that lead to inventory congestion/build up and the consequent extended lead-times which subsequently cause delays to finished goods availability - thereby encouraging yet more schedule changes and expedites. In fact concurrent planning actually encourages and facilitates these performance destroying schedule changes by providing copious near real-time exception messages, thereby generating volatility, cost and inventory in your factory.

So what is the answer?

As the name suggests, use concurrent planning for planning if you wish but don't use it for managing replenishment execution and expediting as that actively destroys manufacturing and supply chain performance. Instead configure your supply chain to support autonomous material flow using pull replenishment mechanisms and:

• drive your supply chain replenishment with demand - not inaccurate forecasts to prevent the need for backorder averting, but performance destroying, expedites;
• de-couple your key conversion / work centre activities so that local delays don't impact dependent activities up and down the supply chain;
• do not use a replenishment execution system that uses dependent demand so that the entire end to end plan changes whenever it is run (as does APS/ERP/concurrent planning), sometimes known as system 'nervousness'
• sequence work centre activity, don't schedule.

Pull replenishment is often associated with kan-ban and operated outside of ERP but that's no longer the only option: enterprise-wide pull / Demand Driven MRP software (3) that operates through ERP can now be implemented across all types of supply chain with significant impacts upon performance - achievement of planned service levels from c40% less inventory with significantly shorter lead-times and lower costs (4): the paper Neither water or supply chains need 'Big Tech' to tell them how to flow explains the effectiveness of enterprise-wide pull / DDMRP and how simple it is to implement (and with it comes numerous 'off-the-shelf' functionalities required for managing particularly complex supply chains including S&OP/IBP what-if scenario planning)

See also

How repetitive expediting causes supply chains to under perform

SC Planning & Replenishment - keep 'em separate

SC Planning: Sequence, don't Schedule

SCM: how do nearly all manufacturers get it wrong?

and for the fundamentals re material flow see Queueing Theory & how it can transform SC & Manufacturing performance

1 - other brands are available - O9, Blue Yonder, OMP, Adexa, Solvoyo, E2 Open

2 - even when you're achieving excellent 80% mix accuracy (100% - agg. fc error/agg. fc) it will be found that c80% of item forecasts are >40% wrong

3 - Demand Driven MRP softwares

4 - Demand Driven Institute case studies