To develop a Lean Resilient Supply Chain seven key capabilities must be mastered by Chief Supply Chain Officers.
The second one is to be capable of Implementing a Pull Planning System.
Your supply chain planning system must be completely redesigned to create a pull system. You must think about how to implement a demand-driven pull S&OP (Sales and Operations Planning). And also how a demand-driven pull S&OE can be implemented. How to implement levelling, higher planning frequencies, and smaller batches. And how to implement synchronisation with KANBAN and Junjo stock policies.
How can an organisation deliver the required products in the shortest Lead Time, with 100% customer service, while minimizing the overall stock?
The best system is the Pull Planning System, a new paradigm for pull demand-driven supply chains.
We must start with S&OP a pull capacity planning process. We have every month to review the capacity we have, and we do it with aggregated forecasts, not forecasts at the SKU level but aggregated ones, so forecasts still have a role to play in our pull system.
But the S&OE, sales and operations execution, the actual orders, not forecasts, are going to be used to trigger execution, while the traditional systems are using forecasts, we will use actual orders to replenish, or to make-to-order or to make-to-stock. We also need to establish high frequency replenishment, transport loops and small batches.
In Euclides Coimbra’s book "KAIZEN™ In Logistics & Supply Chains", there is a fully explained case of a strategic value stream map before improvement, that was a forecast-driven push system, with big inflexible lines, and then you can see the changes that were done, with a new strategic value stream design, where we have a demand-driven pull system, and flow cell line design, that allowed us to achieve breakthrough results.
The file 7 KEY CAPABILITIES for a Supply Chain Lean Transformation outlines the process for Implementing a Pull Planning System.
In our next post we will talk about Capability #3 Creating Material & Information Flow.