23 THE OUTSIDE-IN PLANNING HANDBOOK | 2023
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In the advisory board exploration to define outside-in processes, the group started by closely examining current processes and asking the following questions: • What are the gaps in today’s approaches? • How can the process be improved through the use of market data? • What market data is available? How can it be used? • How do we define the value of process improvement? • With the advancement of analytics, how can different forms of data be used to improve decision support? How will this redefine the models? In exploring the topic of constraints, it became clear that the current focus is only on modeling manufacturing constraints and balancing planned orders to improve manufacturing scheduling. Instead, the group agreed that there is a need to
model the logistics and procurement constraints in concert with manufacturing to drive a feasible plan. Managing direct materials in today’s planning architectures is a black hole, as shown in Figure 10. ______________________________ Insights from the river of demand activity for this large consumer goods company included the vast amount of unused data, the disastrous impact of tight budget integration, the disconnected management of contract manufacturing, and the lack of a sound signal of demand for logistics and procurement. Despite having 93% of channel data available every week, the supply chain does not use this data. In addition, the Vendor Managed Inventory (VMI) signal only connects to order management. VMI and e-commerce have less latency than orders, but neither is used to improve demand sensing and reduce latency. The flow becomes muddy past corporate demand planning with less clarity on a market signal in the current state. _____________________________
Figure 10. Drawing of the River of Demand for a Large Consumer Products Company
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