Greg Baxter, the President and Founder of Baxter Planning Systems, often repeats the phrase “Planning is simple: You forecast, set target stock levels, and place orders.”
As is often the case with a simple statement, the devil is in the details. Forecasts can be inaccurate. Unexpected events occur, such as quality issues or supplier problems. But at the core of that statement is the underlying philosophy of Baxter Planning Systems software and planning services. That underlying philosophy is another one of Greg Baxter’s favorite sayings: “Optimize and Automate.”
The core of the Optimize and Automate philosophy is that while there can be complicated details involved in planning a global service parts network, that a majority of the work managing a network on a daily basis is mundane, and that systems, rather than people, should be responsible for the mundane. Rather than manage the minutiae, an up-front and periodic investment is made in tuning a planning system to meet business objectives, and then let the system execute the plan with a minimalist approach to intervention. This post introduces the Baxter view of Optimize and Automate, and future posts will delve deeper into these topics.
Critical customers and their service level agreements, penalties for non-compliance with agreed service level agreements (SLAs), cost of inventory and costs of lack of inventory availability should all come together with a mathematical model to optimize the forecasts and target stock levels. If proper attention is placed on the inputs to the stocking model, then the output is an Optimized stocking model that requires few overrides and little manual intervention. While overrides to a plan are sometimes necessary, too many overrides is an indication that the inputs to the model should be reconsidered. A well tuned-model should need few overrides.
Much of the execution of a parts plan is also mundane and can be very time consuming. If the plan is well tuned and trusted, then the execution of plan should be automated to the highest extent possible. Automation, when combined with a robust management by exception system to surgically turn off automation when thresholds of unusual or unexpected behavior are crossed, means the well-optimized plan is executed in an efficient and timely manner.
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