The crisis we are currently experiencing is unprecedented in its scale as well as the measures taken to fight it. Although it is essential to contain the spread of the virus, the containment measures imposed by a majority of national governments are having a severe impact on the economy. Here is the second part of an article offering some insights on how best to prepare for the post-COVID-19 period.


Structural phase: The search for performance gains

The Problem

In many ways, the post-COVID-19 world will be different from the one we knew only a few weeks ago.

Leading financial experts have been telling us since the stock market crash and the near-universal lockdown in March, that we should expect a worse recession than experienced in 2008-2009.

It is hard to see, despite the proactive support plans that we are promised, how demand could return to its pre-COVID-19 level in the coming months or even years.

The recession scenario therefore appears to be more than plausible. Despite the anxiety the word evokes because of its subconscious association with unemployment and precariousness, crisis periods are conducive to questioning and change.

The companies that emerged with their heads held high from the 2008-2009 crisis are well aware of this. They took advantage of the crisis context to implement changes that had previously been postponed or deemed unnecessary.

Today, these companies can testify that the 2008 crisis revealed performance gains that were slumbering within non-optimized manufacturing processes.

For many of these companies, these changes had the name: "lean manufacturing".

Lean manufacturing was in itself THE right answer. It made it possible to optimize manufacturing processes through little investment. This is because lean is above all a matter of management techniques and a change of mentality.

This is how the companies that opted for lean after 2008 fared and came out of the crisis much stronger than before.

Therefore, if Lean can be seen as the solution, the question remains “what can still be "leaned" in companies?”, especially amongst those that have already opted for a lean production approach, whether before or after 2008!

The Solution

  • Enterprise Lean Planning (ELP)

Enterprise Lean Planning is a management system based on planning tools and techniques that increase the overall performance of the company.

Lean Manufacturing uncovers performance gains that lie at the heart of non-optimized manufacturing processes, whereas Enterprise Lean Planning uncovers performance gains that lie at the heart of non-optimized planning processes.

To achieve this goal, ELP will focus on optimizing decision making at the different levels of the company: strategic, tactical and operational. Additionally, it will focus on how these decisions are communicated between the different levels, as well as on how to collect and consolidate data during the running and progress of the various projects and productions.

Like Lean Manufacturing, Enterprise Lean Planning requires little investment and is primarily based on management techniques as well as a change of mentality.

  • The three pillars of ELP

In its practical implementation, ELP will be based on three pillars:

1) Multi-level planning: this consists of the dynamic integration, through PDCA-type cycles, of the different levels of planning in the company, from strategic planning to task execution.

2) Decision intelligence: this consists of the implementation of decision-making processes supported by artificial intelligence, simulation tools and advanced analytics.

3) Integration with ERP systems: this consists of creating intelligent bidirectional gateways with the IT management solutions already in use.

Performance gains

The optimization of the various planning and decision-making processes will affect the main dimensions of the company's operations, namely investments, sales and marketing, human resources and purchasing.

The ELP acts as a decision-making "digital twin" that enables the design and execution of simulations that calculate the expected return on potential future investments. It helps to identify the most profitable productions and measures the marginal gain of each additional order. It therefore facilitates negotiations for sales managers.

The ELP helps identify the resource profiles that the company will need, guiding recruitment and the implementation of training programs. It also helps to better utilize resources by taking into account individual aspirations and capacity limitations.

The ELP dynamically interconnects the various upstream and downstream departments of production as well its subcontractors. It also enables better use of existing ERP systems. It makes the investments already made in ERP systems profitable and reduces their TCO.

The ELP also allows the optimization of purchasing processes and the reduction of raw material consumption.

  • Enterprise Lean Planning and Factory of the Future

Enterprise Lean Planning accelerates the transformation of companies into "Factories of the Future" while reducing the costs of such transformations.

With the help of the ELP system, the company's transformation problem is seen from an overall performance point of view. Each stage of the transformation is not an end in itself but instead becomes a lever for performance.

The implementation of the ELP system acts both as a compass, because it sets the course (moving towards a "Factory of the Future"), but also as a map, because it gives the order of priority in which transformation actions must be undertaken. Last but not least, it links each of these actions to KPIs and, therefore, to a clearly identified return on investment.

  • The emergence of Supply Chain Managers

As you will certainly have noticed from reading this article, the recommended solutions are all, in one way or another, related to Supply Chain (SC) management. Not a SC management confined to supply scheduling, but rather a SC looked at in a broad sense. A SC that integrates and regulates schedules and flows relating to supply and demand across different levels of management of the company - from strategy to execution of operations!

This is where Supply Chain Directors, Supply Chain Managers and Operational Planners become the thinking heads, the driving belts and the leaders of business transformation.

Conclusion

While it may feel unnatural and even unpleasant to prepare for the worst, the events we are living through remind us that considering any type of scenario, both positive and negative, it is one of the most important tasks for a leader.

Modern planning is a science that is evolving. The tools and methodologies made available to companies make it possible to quickly carry out simulations that will measure the impact of different risk factors on overall performance.

Thanks to such tools, decision-makers can better protect their company against business hazards. In the current specific context of the post-COVID-19 era, these tools will help them, in particular, to set up various recovery scenarios designed to reduce the negative effects of late deliveries and absence of key resources.

The post-COVID-19 period will most likely be marked by economic recession. Here too, companies need to turn this negative perspective into an opportunity to make the next step in their transformation. They can be supported in this effort through the implementation of lean techniques applied to the various planning processes at work in the company. These techniques have a name: Enterprise Lean Planning.

Under the baton of the Supply Chain Directors, the intelligent use of these new ELP management tools and techniques will enable companies to gain valuable performance points that were slumbering at the heart of non-integrated and non-optimized decision-making processes.

Author : Immersed in the problems of industry (S&OP, IBP, Demand Planning, Production Planning & Scheduling) planning and resource allocation up to 24 hours a day, Frédéric Dufour, CEO of Planningforce, wanted to share with us some thoughts on how best to prepare for the post-COVID-19 era.

Read the first part  of this article :