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Can Webplan Reconcile Planning and Execution? Part Two: Market Impact

Written By: Predrag Jakovljevic
Published On: July 1 2004

Market Impact

The past two years or so have been an interesting if not a tumultuous period for the Ottawa, Canada-based, privately-held Webplan Corporation (www.webplan.com), which felt compelled to further refine its original supply chain planning (SCP) and business-to-business (B2B) collaboration value proposition.. The vendor has refocused on highly actionable response management software (a subset of broader corporate performance management [CPM] software, which is about communication and delivering actionable intelligence at the right time) for manufacturers and distributors, what it believes will be a growth market.

Thus, at the end of 2003, Webplan announced that changes made to its business direction in 2003—including a drive toward delivering value to manufacturing customers through response management software—has gained acceptance with both its manufacturing customers and strategic partners, laying the foundation for growth in 2004 and beyond. Despite the fact that many manufacturers have invested in enterprise resource planning (ERP) systems and many also have supply chain management (SCM) systems, most continue to use inopportune batch reports and pesky spreadsheets to manage their operations performance. These have proven to be inefficient and error-prone methods of supporting decision-making, resulting in reliance on "educated guesswork" rather than on accurate dynamic analysis to align decisions with strategic objectives.

For a detailed discussion of supply chain management—both planning and execution, see the tutorial Bridging the Reality Gap Between Planning and Execution.

Increasingly, every user company's success is contingent upon its ability to make almost immediate finished product or service delivery to customers. As supply chains become more dynamic and operate in near real time, the lines between planning and execution continue to blur, which bodes well for their functional convergence. Thus, some supply chain execution (SCE) vendors have started to move beyond pure execution to offer some planning and optimization capabilities, often with the "adaptive" moniker.

A new requirement is that, beyond making plans happen, adjustments need to take place quickly with the ability to tweak the system to respond across a variety of organizations and functions. Companies need real time information from execution systems to develop and adjust optimal plans, while the execution side should benefit from more realistic plans for some readiness sake, rather than to merely react after the fact in a firefighting fashion. We believe that planning and execution will become virtually inseparable in a trend that will see ERP, SCP, SCE, supply chain event management (SCEM), PLM, CRM, MES, and analytics/ CPM (such as, decision support tools and multidimensional analysis on information aggregated from all levels of the commerce chain, and an extensive sets of predefined performance indicators, as well as strategic planning and forecasting and balanced scorecard functions) coming together into an adaptive system. Harnessing this technology should lead to the so-called "self-healing" or adaptive supply chain—when a software engine monitors all the numerous events taking place supply-chain-wide, identifies and escalates exceptions, sends notification, and reacts appropriately to those exceptions, ideally (and only in the long term) without human intervention.

The future will thus see a blend of real time event management (i.e., execution side for the tactical time horizon) and SCP with its strengths in inventory management and capacity planning (i.e. planning/optimization side for mid-to-long-term horizon), as to enable the successful execution of the plan given current conditions. To that end, Webplan has the opportunity to master an offering with best of both worlds' traits—traditional SCP and SCEM—by combining real time event management with traditional optimization, and by extending well beyond traditional passive alerts to deeper types of decision support based on KPIs, that would result with active (for example, which only suggest the corrective response and action) and eventually, with fully auto-responsive alerts.

This is Part Two of a four-part note.

Part One presented the event summary.

Part Three will continue the market impact.

Part Four will cover challenges and make user recommendations.

Webplan Focus on Real Time Rapidly Evolving

Webplan has always strived towards enabling the near real time enterprise, and its solutions have evolved rapidly from its memory-resident production optimization (such as a fast MRP) capabilities in the late eighties and early nineties, into a credible value proposition of Web-enabled collaborative planning, optimization and performance management of the supply chain. The product architecture has also been innovative, with the ability to mine information from back-office systems as the basis for multiple "what-if" scenarios. Until now, however, this ability has been applied mostly to resources and capacity planning and scheduling within a multi-site enterprise, with the idea to expand into more areas of a holistic SCM. Also, the credit goes partly to ERP and other extended enterprise systems that have meanwhile advanced to allow enterprises to more easily extract the business process data needed to feed optimization technology provided by Webplan and its peers.

In fact, RapidResponse is the umpteenth improved incarnation of webPLAN, a Windows NT-based groupware product for manufacturing planners that was introduced back in 1995, and which would extract data from the host MRP/ERP system and then regenerate the changed materials plans quickly. The intent has been to allow a planner to create and simulate a new plan and share it with other planners, managers, customers, and suppliers. A slew of additional modules that have meanwhile been added to this core tool have supported the expanded decision structure (i.e., multiple planners, multisite master production scheduling [MPS] and capacity requirements planning [CRP]) needed to approve and act on a new production schedule in an informed manner. With these solutions, Webplan has since been serving customers in the electronics, aerospace, industrial equipment, automotive, and consumer durable goods industries including, Agilent, Black & Decker, Cessna Aircraft, Honeywell Aerospace, Jabil Circuit, Handspring, Komatsu, Lucent Technologies, Network Appliance, Philips, Raytheon, and Sanmina-SCI.

The likes of the above manufacturers today need to react quickly in order to remain efficient and competitive, given that the biggest problem they face is that change is the only constant in manufacturing. For those who are lucky, only minor changes will happen between the "as planned" and "as executed" worlds. These changes are the usual minor but endless variances between planning and forecasting in the "ideal world" and manufacturing that takes place in the "real world." For all the investments spent on sophisticated SCP and manufacturing planning tools, almost proverbially, the only sure thing about a forecast is that it will be wrong, by and large.

Thus, despite the use of spreadsheets and other desktop tools, this "reality gap problem solving process" is still mostly manual and hunch-based, and thus hardly ever rapid or effective. But problems with the response to the inevitable reality gap go beyond just minimal automation and insufficient speed and optimization.

One of the most troublesome reality gap problems is the "multiple versions of the truth" situation, since multiple people working on the same problem scenario, both within the company and across the supply chain, will often have differing data sources. Even with the same data source, they often acquire data at different times and, as data inexorably changes over time, they will have different data, which in turn, yields different versions of the truth, like in the Japanese classic movie "Rashomon". As a result, multiple people will likely reach differing "optimal" solutions, whereby there will seemingly be more than one correct answer. During intense time constraints in the reality gap, a predominantly slow manual decision-making process is further complicated by the "which version do you believe" problem.

Conversely, in a nearly-ideal world, the strategic solution would start with a single version of the truth, then continually update this version with real time data feeds, and then finally broadly drive a collaborative decision making process across the action team. This is where Webplan RapidResponse comes in by not trying to replace planning, forecasting or execution systems, but rather to leverage these systems. Namely, a Web-based adaptive planning solution may be a more appropriate approach because these solutions can leverage data from the existing transactional systems, providing a real time analysis of events as they happen, and provide suggested courses of action. In addition, they can provide role-based views of supply chain information to the extended supply chain across multiple sites, anywhere in the world through any browser. Particularly in this economic climate, the solution is not necessarily to deploy more information systems; it is often better to leverage the information the enterprises already have to make better decisions faster and to quickly drive the right business actions.

Hence, Webplan set out to build a new type of manufacturing solution that would knit together the abundant existing information from disparate sources and then reasonably quickly drive better manufacturing decisions and actions. To that end, its RapidResponse product is aimed at helping manufacturers not to be distracted by the noise that typically results from having an overload of information. Thus, not only will the user get an alert if something goes wrong and an order is going to be late, but he or she will also get advice about alternative remedies, as well as the option to conduct a number of "what if" scenarios to find the true ramifications of opting or not for each alternative. The performance analytics enables trend-based key performance indicators (KPI) monitoring—when negative exceptions occur, one can drill down to understand the root cause. Addressing causes typically prevents errors and snowballing negative effects (such as the "bullwhip" effect of piled-up stocks) downstream the supply chain.

Webplan's Value Proposition

The basic concept of Webplan's value proposition comes down to the following tenets:

1) powerful, fast analytics;

2) the ability to do multiple "what-if" scenarios; and

3) to link these to the simplicity of a Microsoft Excel-like user interface, given that is probably the world's most pervasively used data analytics tool. Webplan felt that the key breakthrough would be a solution that masks the system's complexity while providing an obvious, intuitively easy to use interface. The result of this research and the subsequent product delivery was the innovative Active Spreadsheets (formerly Active Workbooks) technology, which is one of the three pillars of the RapidResponse suite. The idea behind presenting enterprise data in the "walk-up-and-use-it" familiar interface was to significantly reduce the initial learning curve.

But while the user interface is familiar, this is no ordinary spreadsheet. Namely, most spreadsheet usage starts with the user entering copious data detail, usually acquired from other automated applications, such as forecasting and ERP systems. Conversely, Active Spreadsheets are automatically and continuously populated with up-to-the-second live enterprise data feeds. When data comes from multiple sources within and beyond the enterprise, say from different parts of the business in-house or from supply chain partners, the system automatically and transparently consolidates this diverse information in one place. Thereby it ensures a single view of the truth. Even if there is more than one Active Spreadsheet user, then every user still maintains the same "single view of the truth" via the same view even when the data itself is changing, for as we know the "as it is" view presents the real world where change is routinely a common occurrence.

Last but not least, through its AlwaysOn Analytics capability, which complex calculations' results (such as CTP) are presented in spreadsheet cells, similar to an Excel function (for example, present value), Webplan has transparently embedded lightning-fast (owing to memory resident data) and optimized algorithms that automatically and continuously analyze the live data "behind the scenes." This obviates the above-mentioned traditional ineffective "swivel chair" method—"get the data, do a multi-hour planning run, look at the results, and then go back to the drawing board and try new assumptions and approaches."

There is also total calculation transparency, since users request desired information and the engine then determines which analytics are required to return the result. To that end and at this stage, Webplan offers a library of the following worksheets: bill of material, material planning, planning sheet, planning manager, part planning, part properties, buyer workbook, engineering workbook, customers orders, forecast, procurement, constraint management, capacity analysis, inventory analysis, inventory on hand, and inventory control.

This concludes Part Two of a four-part note.

Part One presented the event summary.

Part Three will continue the market iImpact.

Part Four will cover challenges and make user recommendations.

 
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