No Plan Survives Contact with Reality

You may have heard the military quote - “No plan survives contact with the enemy”. We believe this applies well to supply chains with a little change - “No plan survives contact with reality”.

The fundamental problem is that all plans are based on some prediction of what will happen in the future – and no one gets that right all of the time. Supply chains are a complex network of business partners that are constantly responding to competitive challenges and reacting to shifting customer demands. The result is that reality rarely conforms to plan and we need to make adjustments. Complicating matters is that there isn’t just one plan, but many plans that need to be synchronized across multiple partners to achieve a coordinated response.

So do we conclude that planning is a useless exercise? – Absolutely not! However we need to be smart about what we are trying to achieve with a plan. A plan should create a framework and budget that allows us to address specific tactical and strategic initiatives and profitably respond to near term change. A plan should focus on resolving (or buffering) the key constraints in the supply chain. A plan should be generated with a clear understanding of who are the "customers" of the plan, what objectives you are trying to achieve and be developed at a level where the plan can survive a certain level of change.

We also need to be able to realize when a plan is good enough. The most valuable and constrained resource in a company is typically its people. It’s often difficult, but nevertheless important to understand when you have reached a diminishing return on efforts to create a better plan, and time is better spent improving the company’s ability to respond faster, cheaper and better than competitors.

Possibly the single most important variable in a company’s ability to execute and respond to change is time to react. Speed can provide a company with a devastating competitive advantage (countless examples in business, sports, politics & war). Assuming that the planning process has provided the framework to execute – the job of responding to change can be broken down to three basic tasks; identify that a change has occurred, figure out the right response and communicate the change.

Technology is playing an ever increasing role in a company’s ability to handle these tasks and respond to change. It is now possible for supply chains to be monitored 24/7 for change, for routine problems to be handled automatically, for exceptional problems to “find” people capable of solving them, for decision support tools to provide people with the alternatives and tradeoffs, for partners to collaborate and synchronize activity and new plans to be communicated instantly across a global supply chain.