Breaking Down Planning Silos In the Automotive Supply Chain

Posted by Nick Ostdick on Feb 9, 2017 9:00:00 AM

silos.jpgIt’s the dead of winter and you wake in the morning to find your car windshield completely covered in a thick layer of ice. You turn on the defrost and wait for the ice to thaw, and after a few minutes a small patch of windshield is clear for you to see through. As you drive down the street, you realize you cannot see the entire road, are unable to spot potential hazards or obstructions in your path of travel, and have to slow your speed in order to avoid a collision or accident.

What does this have to do with global automotive supply chain management? Well, the danger of driving without a fully clear windshield is similar to OEMs who fall back on sequential planning silos as part of their demand capacity planning strategy. The lack of visibility, agility, and responsiveness that comes with driving with a blocked windshield is analogous to the lack of visibility and supply chain insight manufacturers struggle with when it comes to planning silos hampering their productivity and efficiency.

In today’s integrated supply chain, sequential planning silos represent an era when different stages of the planning process - not to mention those stages outside the planning process like sales, procurement, and production - were thought to be distinct from each other. However, today’s intelligent production systems and powerful reporting platforms are disruptive forces in breaking down planning silos and merging these functions into one, unified strategy.

The problem with planning silos

The sheer concept of a silo - a top down entity with little room for maneuverability - is problematic for the variant-rich automotive industry. Demand planning is not a one-direction-only process where planners and managers move from start to finish throughout the planning process. Instead, given the constantly shifting rules and constraints of production programs, planners must be able to alter plans, modify production programs, reallocate part or part families, and monitor variables on the production floor in real-time to ensure orders are filled and delivered on-time.

Because planning silos essentially force OEMs to conduct their planning processes in a linear fashion, planners and managers lack the capacity to:

Align sales, procurement, inventory, and production into one cohesive process. Because sequential planning silos isolate different processes that are key in overall demand planning strategy, various departments within a manufacturer's architecture lack the ability to communicate and share vital information about sales, procurement, inventory, job allocation, and transportation. This lack of transparency can not only significantly reduce a manufacturer’s efficiency and productivity, but it can also result in bottlenecks and breakdowns at various points across the value chain.  

Modify production programs in real-time. In a variant rich industry where production variables and constraints can change while jobs are being processed on the production floor, the ability to modify production programs in real-time to not only increase efficiency and cost-effective production models, but also ensure the production stage is not disrupted by slowdowns stemming from outdated or irrelevant planning strategies. A siloed planning platforms prevents this level of communication and collaboration and encourages ineffective job and resource allocation.    

Gain valuable insight into the impact of each component stage. Today’s integrated automotive supply chain is no longer a disparate set of processes where little communication or data sharing takes place between departments or organizations. To optimize planning and production efficiency, various stages of the sales and planning process must coordinate on goals and objectives. By breaking down planning silos, planners and managers can gain valuable insights into the impact of each component stage on others to increase productivity and efficiency.   

Value in breaking down planning silos

The value in breaking down sequential planning silos cannot be understated in optimizing an OEM’s value chain from start to finish. In an era of such critical technology advancements as Industry 4.0, Big Data, and advance analytics, planning silos represent a severe roadblock to optimized planning, production, and reporting platforms. By significantly reducing or even eliminating instance of planning silos across the sales and planning process, OEMs can experience:

Enhanced visibility. We know the value of end-to-end (E2E) visibility in today’s automotive supply chain and the importance in engineering this visibility for greater production efficiency. Breaking down planning silos and discovering areas where planners and managers can create a more coordinated planning structure and architecture is key in enhancing visibility into a manufacturer’s overall supply situation.  

Increased agility. Agility and responsiveness are two prized traits in a global industry where constraints and variables are constantly shifting and altering. Planning silos are a significant stumbling block in OEMs achieving the lean, agile planning and production models necessary to adapt to real-time alterations in production programs. Breaking down planning silos and addressing various planning stages as a holistic enterprise will help OEMs operate with greater maneuverability and agility.   

Greater transparency. If visibility into an OEM’s overall supply situation is a core driver of optimized production, then greater transparency into how a company’s supply chain functions is the way in which planners and managers achieve greater visibility. Breaking down planning silos provides companies with critical insight into how their planning and productions function in coordination with each other, as well as exposing areas where efficiencies can be increased to further optimize production.   

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Topics: Sales & Operations Execution (S&OE), Sales & Operations Planning (S&OP), Supply Chain Management