I am sure many of you would have heard the statement “Planning is our biggest problem”. Now that the demand is slowly picking up, in many companies, especially the smaller ones, planning seems to be an unsurmountable problem. As I started writing this blog, I remembered one of my many exceptional bosses, Mr Böhmler, telling me “Dinakar, a plan is called a plan, since it can be changed”. A very relevant statement in today’s VUCA world.
I want to now introduce the perspective of making a commitment and fulfilling the same, in a value stream with a continuous chain of dependencies. In a normal stable predictable situation, one can commit before planning and fulfil the plan with special measures, while in our current VUCA world planning before committing is a wiser option for fulfilment, since most of us would have already deployed many special measures. When it comes to fulfilling the commitment made, the importance and relevance in both the situations is extremely high, since any lapse in the fulfilment will imbalance the downstream stakeholders.
On the one hand, a plan needs to remain constant for ensuring harmony in any organisation, and, on the other, needs to be flexible to be able to adapt to the changes.
Well, the way out is the FROZEN ROLLING PLAN.
A frozen rolling plan typically has 5 time zones (TZ), which can be day, week, or month.
- Learning from Actual versus Estimate in the -1TZ, ±0% Change – “History!”
- Frozen Estimate for targeted execution in the 0TZ, <±5% Change – “Murphy’s Law”
- Frozen Plan for getting the Fullkit Ready by the end of +1TZ, <±10% Change – “Unknown Constraints”
- Forecast for checking the feasibility of freezing by the end of +2TZ, <±15% Change – “Higher Lead Times”
- Target for prioritising based the stakeholder needs by the end of +3TZ, <±20% Change – “External Fluctuations”
The time zone depends on what is being planned. When it comes to deliveries, a Day as the Time Zone, when it comes to Sales, a Week as the Time Zone and when it comes to Financial Statements, a Month as the Time Zone are the most appropriate.
Let me illustrate with an example of delivery:
16Mar2022:
- Understand and note down the reason why only 9 was delivered when the Frozen Estimate was 10. (Production failure → Absenteeism)
- Get everyone (including owning all their upstream stakeholders) to signoff and commit fullkit for the Estimate, Plan, Forecast and Target.
17Mar2022:
- Understand and note down the reason why only 10 was delivered when the Frozen Estimate was 11. (Vendor Delivery → Payment Overdue)
- Understand and note down the reason why the Plan and Forecast was reduced by 1. (Vendor Payment Overdue and Planned Machine Shutdown)
- Get everyone (including owning all their upstream stakeholders) to signoff and commit fullkit for the Estimate, Plan, Forecast and Target.
18Mar2022:
- Understand and note down the reason why only 8 was delivered when the Frozen Estimate was 10. (Production → Machine Breakdown)
- Understand and note down the reason why the Estimate and Forecast was reduced by 1.
- Get everyone (including owning all their upstream stakeholders) to signoff and commit fullkit for the Estimate, Plan, Forecast and Target.
19Mar2022:
- Understand and note down the reason why the Forecast was reduced by 1. (Vendor Payment Overdue)
- Get everyone (including owning all their upstream stakeholders) to signoff and commit fullkit for the Estimate, Plan, Forecast and Target.
21Mar2022:
- Understand and note down the reason why the Plan was increased by 1 and the Forecast was reduced by 1. (Load Balancing)
- Get everyone (including owning all their upstream stakeholders) to signoff and commit fullkit for the Estimate, Plan, Forecast and Target.
Prepare a Pareto for the undesirable effects noted down the previous week.
Detail the process of signoff and fullkit commitment for the top reason, which in this case is the vendor payment.
- Check the outstanding vendor payments.
- Prepare a cash flow statement
- Forecast the expected payment date
- Discuss and agree upon with the vendor
Simulate the process, identify the assumptions made, validate them and then identify why this didn’t work. In doing so, in this case, the reason was that no buffer was considered in the expected payment date. Once this is identified, modify the process steps, and use it for the next learning round.
- Check the outstanding vendor payments.
- Prepare a cash flow statement
- Forecast the expected payment date
- Plan a buffer to keep up the committed payment date
- Discuss and agree upon with the vendor
Ideally the pareto needs to be done at a higher time zone. For example, for the deliveries, after a week. Once this is done, continue the rolling plan for another week, identify the biggest contributor, and plan a change in the process to make the signoff and commitment more robust for consistently meeting the commitments, while maintain the flexibility to change based on the VUCA world we are all in.
Once we start meeting the plans and commitments not only can the organisation embark on the journey to world class, but also instil confidence in all its people to make them a winning team.
- How important and relevant is ‘planning to succeed’ for inspiring people? Why?
- How important is consistently fulfilling commitments by everyone to you? Why?
- How are you consistently fulfilling the commitments made, in our VUCA world?
Happy reading!
PS: VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity
Detailed blog to understand planning for VUCA. Thanks for this blog.