THE PLAN PROCESSES IN BUSINESS PROCESS

Plan processes at their simplest, level 1, are point solutions. Plans are created
internally, with no integrated processes between different functions or plants
within the company. Basic tools � spreadsheets and simple material requirements
planning (MRP) or inventory control tools � support the process.
At level 2, the planning processes pick up and aggregate demand across the
firm. Simple MRP planning tools are augmented with finite capacity planning
capability � S&OP and later advanced planning and scheduling systems �
which allows the firm to create reliable plans that can be adapted to ensure that
more focused performance goals can be met. The planning now takes place
across functional boundaries, so the firm moves toward internal supply chain
excellence.
Between level 2 and level 3 is the wall � between my company and your
company. This wall acts as a psychological barrier to improvement, but the
more innovative firms break through, extending their processes into their suppliers
and customers. Now they can pick up advanced demand forecasts from
customers and give their suppliers early warning of changes in market conditions
and cancelation or reduction of supply rates. This condition increasingly
takes place collaboratively, with direct, electronic interchange of data between
planning systems, governed by strict rules of engagement, such as service level
agreements between collaborating partners in the extended value chain.
Level 4 planning takes in more steps in the extended chain. Some firms can
travel back four or five levels in the chains supplying key components. Dell,
for example, can reschedule its supply base for key commodities across five
levels of suppliers in 30 to 45 minutes. Now the whole process is enabled by
technology. The various players in the extended value chain are linked together,
across the Internet, with common data standards and linked process flows.
Critical events are monitored by real-time software and alerts sent to control
points in the chain if plans are not achieved.
No company or network, to the authors� knowledge, has yet fully achieved
the aspiration of level 5. The logical conclusion of the integration of Planning
across a supply network is to manage the network as though it were a single
entity, with no barriers caused by the artificial accident of share ownership.
Moving between level 4 and level 5 is similar to the internal supply chain,
moving between level 1 and level 2.

Between level 1 and level 2, performance improvements come from moving
out of functional silos to internal supply chains, where performance is measured
across the whole chain from inbound dock to dispatch. All the local functional
targets � for purchasing, manufacturing, and sales � are subservient to achieving
the best overall performance. The companies in the level 4 supply chain are
the equivalent of the functional silos at level 1. Local performance measures
are represented by local shareholder interests. To move to level 5, and realize
the major value opportunities, the linked firms must work on optimizing the
whole network, not individual shareholder funds