Stable Planning

Objective:
Address instability in DDMRP and MRP models by introducing stable demand signals to suppliers, specifically focusing on stabilizing the plan outside of lead time (LT). This reduces the bullwhip effect, improves supplier performance, and leads to more predictable supply chains. Current approaches do not attempt to stabilize the plan beyond LT, even though these numbers are critical for upstream suppliers and their own planning.

Key Concepts:

1. Instability in Current Models:
   In DDMRP and MRP models, plans are adjusted frequently within the lead time (LT) and often left unstable outside of it. This is because the numbers outside LT are typically only used for long-term internal planning, not for immediate operational decisions. However, suppliers use these numbers to make their own planning decisions, and the constant oscillation in order volumes creates a bullwhip effect that magnifies fluctuations through the supply chain. This instability often leads to inefficiencies, such as extended lead times, higher buffer stocks, and strained supplier relationships.
2. Multiple Time Horizons for Stability:
   Stable Planning introduces controlled flexibility across three distinct time horizons to limit fluctuations and provide more predictable signals to suppliers:
   • Horizon 1 (Within Lead Time):
     No changes to the plan are made within this period, ensuring full stability for orders already in progress.
   • Horizon 2 (Limited Flexibility):
     Orders can change by a defined percentage, but the timing of these orders remains fixed. Any increases are distributed evenly across the order book rather than front-loaded into a single period, preventing sudden spikes that would disrupt suppliers.
   • Horizon 3 (Full Flexibility):
     Beyond the second horizon, orders can change in both quantity and timing as necessary. This offers flexibility where it is needed most, while still ensuring that suppliers are provided with a reliable and stable forecast for long-term planning.
3. Stabilizing the Plan Beyond LT:
   One of the major weaknesses in current planning approaches is the lack of effort to stabilize the plan outside of lead time. Since these figures aren’t used internally for immediate operational decision-making, they are often left unchecked. However, these numbers are crucial for suppliers who rely on longer-term forecasts to plan their production, procurement, and capacity. By leaving these numbers unstable, the planning system inadvertently creates order oscillation, leading to the bullwhip effect where small changes in demand are amplified up the supply chain. Stable Planning addresses this by applying a controlled flexibility to these forecasts, ensuring that suppliers receive consistent and stable demand signals.
4. Stable Signals to Suppliers:
   By reducing the variability in the numbers communicated outside of LT, suppliers are better equipped to plan efficiently. The controlled adjustments in the second and third horizons reduce the need for suppliers to hold excessive buffer stock or extend lead times to protect against fluctuations. The stability created by this approach fosters better collaboration between the buyer and supplier, leading to more efficient production schedules, reduced variability, and improved overall performance throughout the supply chain.

Benefits:
Stable Planning is designed to shorten lead times, improve supplier relationships, and enhance the predictability of supply chain planning. By stabilizing the plan beyond LT, businesses can prevent the bullwhip effect and provide more accurate and reliable demand signals to suppliers. This leads to a more balanced and efficient supply chain, where suppliers can plan effectively without needing to hedge against frequent changes in forecasts. As a result, the entire network benefits from reduced variability, more predictable production processes, and better overall supply chain performance.ir daily tasks, reduce costs, and support scalability, ensuring they remain competitive in a dynamic market environment.

Get Involved

To express your interest in participating in this innovation project, please send an email to: Innovations@b2wise.com quoting “Stable Planning”.