I would like to raise the topic of product definition but not as described in Roman Kuhn article regarding part level definition in metals but at the aggregate level used in medium term business decision making (S&OP). I would be interested in the views from others and their experience and practices around this topic, in particular any comments on the ideas discussed below ….
Need for Common currency?
How to align a family level of detail which is realistically possible to commercially forecast (with some level of accuracy), against supply chain/manufacturing constraints which differ significantly for specific parts or combinations of parts within the product mix.
With forecasting tools, this is often resolved by generating such specific product detail using a historic detail mix. This allows detail loading, analysis and direction decision to be taken BUT what business issues does this create?. By introducing layers of ‘generated’ detail, does this remove a common currency across the functions and generate apparently clear firm decisions which are themselves built on historic practices which we should be challenging in S&OP? In other words, it reinforces the current situation.
Is it better to avoid generating differing views/levels of detail and to bite the bullet, by setting out a level of detail which is truly compatible across the functions? Although this is in itself a trade-off taking away some sensitivity on mix impact, it is at least clear and visible. It also supports the true cross functional planning, generating real dialogue across the functions on what the pain/prize is for this ‘planning level product’.