Making the case for mid-term production planning

It’s well known that there are three key stages of integrated business planning: demand horizon or strategic horizon, mid-term horizon or tactical horizon and scheduling and sequencing or near term. But while demand forecasting and scheduling are often high on the priority list, mid-term production planning can be easily – and wrongly – overlooked.

We’ve been thinking about why mid-term production planning should get more attention and wanted to share some perspectives.

From our conversations with supply chain leaders, it is apparent a lot of focus goes on estimating future demand though accurate long-range forecasts. In parallel, tremendous operational energy is expended on short term scheduling.

Mid-term production planning spans the often-overlooked middle ground. Yet, many organisations lose the benefit of their supply chain planning forecasts because they don’t have an effective way of translating them into effective scheduling.

One of the reasons we see for this right now, both in the UK and across the EU, is that manufacturing organisations are predominantly execution focussed, trying to recover ground lost during the current supply chain crisis. However, mid-term production planning serves a crucial function by transforming a good sales and operations plan into an achievable short-term schedule with good plan stability and adherence.

To achieve true supply chain transformation, it’s important companies have clarity and visibility at all stages. In fact, Unilever CEO, Paul Polman, explains the benefits of being less focussed on the short term:

“Remove the temptation to work only toward the next set of numbers…Better decisions are being made. We don’t have discussions about whether to postpone the launch of a brand by a month or two or not to invest capital, even if investing is the right thing to do, because of quarterly commitments.”

So, is your supply chain planning fit for the mid-term?

After speaking to a number of top global manufacturers, we recommend some key mid-term production planning innovations:

Actively build supply chain resilience into planning models: forecasts are never 100% accurate and plans need to flex without breaking.
Spend more time on scenario planning: by automating repetitive planning tasks and using cloud technology to support complex optimisations.
Explore and test new technologies: use AI, machine learning, or digital twins to better support fast scenario planning and impact assessments.

Don’t just take our word for it; Gartner, McKinsey and Harvard Business Review all hail medium term planning.

Don’t agree? Or want to know more? We’d love to know your thoughts on this topic and how you’re approaching midterm production planning. Schedule a call below or reach out at hello@replan.tech.