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The Path to Decision-Centric Planning – Where to Begin  

By Robert Kaufholz25 Jun 2024

Over the last month, we’ve explored the transformative power of decision-centric planning in our blog series. From unlocking supply chain success to tackling real-world challenges, embracing organizational change, addressing data latency, breaking down silos, and optimizing decisions to impact-driven goals, we’ve covered a comprehensive range of topics to help you understand and implement this approach. As we conclude this series, a key question emerges: How do we start this journey to decision-centric planning? The answer to beginning this transformative journey is simpler than you might think: begin with operational decisions.

The Hardest Step Is the First

The Hardest Step Is the First

At the recent Gartner Supply Chain Symposium/Xpo™ 2024 conference in Barcelona, speakers delved into the necessity of moving to decision-centric planning, but they acknowledge that this is a big change. Sales and Operations Planning (S&OP) may be an outdated process for making decisions in the fast-moving, highly unpredictable supply chains of today, but this formal process is baked into the DNA of many organizations. The monthly cadence of S&OP decisions and meetings drives collaboration. Taking the first step towards decision-centric planning can feel too intimidating.

For this reason, Gartner acknowledges that it’s best to start small. Change management is easier when you change a few processes, not the entire organization at once.

So which first step is most likely to set you up for success? After all, wrong footedness at the beginning of a journey can haunt you for entire transformation. Gartner analysts proposed Sales & Operations Execution (S&OE) decisions as a good fit—and we agree. Operational decisions are an area where many organizations can get quick wins without a full change management process, yet there is no need to confine the timeframe and choices to those that traditionally define S&OE. Any operational decisions can fall into the first wave of decision-centric planning.

Why Not Strategic Decisions?

A primary goal of decision-centric planning is to maximize the impact of decisions, so it may seem like the best place to begin is with executive decision-making. After all, what’s more important to a business than meeting the financial plan? However, starting with financial or executive decisions can be daunting. Strategic decisions that require financial trade-offs are the most likely to be part of a well-defined S&OP process—and the most difficult to adjust.

S&OP typically requires the coordination of numerous stakeholders and complex, long-term planning meetings. These high-level decisions often necessitate a significant shift in organizational mindset, making it challenging to implement decision-centric planning effectively from the top down. The barriers to entry are high, and the process can be slow and cumbersome.

Operational Focus: Easy Entry, High Impact

Reduce Stockouts and Unsold with Inventory HUB

Operational decisions, on the other hand, offer a more accessible entry point. These decisions are made more frequently and closer to the ground, involving fewer stakeholders initially. Here’s why this approach is beneficial:

  1. Practicality: Operational decisions are part of the daily workflow. By integrating decision-centric planning at this level, you embed the process within existing operations, making it less disruptive.
  2. Immediate Impact: Improvements in operational decisions can yield visible results quickly. This immediate feedback can help in garnering support and proving the value of the new approach.
  3. Simpler Change Management: Fewer people are involved in operational decisions compared to financial ones. This smaller scope makes it easier to manage the change, train users, and refine the process before scaling up.

Examples of Operational Decisions

Leveraging Data for Better Inventory Decisions img

So where are the opportunities to gain from decision-centric planning on the operational side of the business? Consider these scenarios where operational decisions play a crucial role:

  1. Supply Chain Adjustments: Anticipating potential disruptions, such as a strike, months in advance allows for proactive scenario planning. Even if the strike is a year away, operational decisions need to be made to mitigate risks and adjust plans accordingly. Your operational decisions might include diversifying suppliers or increasing inventory of critical components to mitigate risks.
  2. Inventory Management: Regular adjustments based on sales forecasts and market trends help in optimizing stock levels, reducing excess inventory and minimizing stockouts. For instance, if a trend indicates an unexpected increase in demand for a product that was not in the baseline forecast, operational decisions could involve ramping up inventory in anticipation.
  3. Production Scheduling: Deciding on production schedules based on current demand, lead times and resource availability ensures efficient use of resources and meets customer demand effectively. An operational decision here could be to adjust production volumes or shift schedules to meet changing demands without overburdening the workforce or resources.

Growing into Decision-Centric Planning

Strategic Use of Promotions

Starting with these operational decisions not only provides quick wins but also sets the stage for expanding decision-centric planning throughout the organization. As the process proves successful, you can gradually incorporate more departments and more complex decisions.

  1. Organic Growth: By involving supply chain teams initially, you create a core group of users who understand and advocate for the decision-centric approach. As they interact with other departments, such as sales or finance, these departments can be gradually integrated into the process as the need arises, rather than through a top-down push.
  2. Iterative Improvement: Starting small allows for iterative improvements. You can refine the decision-making process, tools, and techniques before rolling them out on a larger scale, ensuring a more robust implementation.
  3. Culture-Building: As more people experience the benefits of decision-centric planning, it fosters a culture of informed, data-driven decision-making. This cultural shift makes it easier to tackle more strategic and financial decisions down the line.
  4. Sustained Momentum: Maintaining the initial momentum is crucial. Celebrate early successes and use them as case studies to demonstrate the value of decision-centric planning, encouraging wider adoption across the organization.

Beginning the Journey Toward Decision-Centric Planning

Embarking on the journey of decision-centric planning need not be overwhelming. By starting with operational decisions, you leverage a practical, impactful and manageable entry point. This approach not only delivers quick results but also lays a strong foundation for expanding the practice across the organization. As you grow and integrate more complex decisions, you’ll build a resilient, adaptable and decision-savvy organization ready to tackle the challenges of tomorrow.

Follow the rest of our blog series on decision-centric planning:

If you would like to learn more about how you can start your journey with decision-centric planning by optimizing operational decisions, talk to us about how Decision Hub makes it easy to do just that.

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