If we only knew our customers demand (forecasts), we could perfectly manage our supply chain, inventories, suppliers and factories and there would be no fires, emergencies, cost overruns, stock outs etc.
This has been a dream for industries since long. In reality we have to protect our business with either significant inventories and/or with surplus capacity. The “optimum” compromise of this general management dilemma is called “operational excellence”.
There are several management approaches which claim to lead towards “operational excellence”:
- Six Sigma
- World Class Manufacturing
- Total Quality Management ...
with a truck load full of tools to support organizations to achieve this goal.
We use the proven approach to “Business Excellence” proposed by Oliver Wight International (formerly known as S&OP process) in which you clean up your ERP system and its critical data set, define a clear and accountable organization, reengineer the necessary processes and implement monthly cascaded review meetings of your core processes (innovation, production, selling). The outputs are monthly rolling forecasts of your demand, supply and inventory plans leading to reliable monthly rolling P&L and balance sheet forecasts.
This improves material and resource availability, both prerequisites for stable LEAN management and continuous improvement thereafter.