Why do we plan?


Published by Jan Veerman, last updated on

This is my second blog of Planadigm. Planadigm, the new paradigm in planning, is our organisation that delivers services in planning process improvements and the implementation of a state-of-the-art planning platform (Pigment, visit https://www.gopigment.com for a first impression) to support planning processes.

But what is planning, why do we plan? According to Wikipedia, planning is “the process of thinking regarding the activities required to achieve a desired goal. Planning is based on foresight, the fundamental capacity for mental time travel. Planning is a fundamental property of intelligent behaviour. It involves the use of logic and imagination to visualise not only a desired result, but the steps necessary to achieve that result. An important aspect of planning is its relationship to forecasting. Forecasting aims to predict what the future will look like, while planning imagines what the future could look like.”

Planning is needed to achieve goals. In our private lives, planning is part of our daily activities. A plan what to buy in the grocery store, a plan to bring the kids timely to school or collect them later that day, a plan to visit family or friends, a plan where to go for summer holidays and which touristic locations to visit. We plan, daily. And we need to plan, else we do not get things done.

In business, we also plan, a lot! Demand planning, supply planning, finance planning, operations planning, cashflow planning, planning of a merger, planning of hiring new employees, planning to extend a factory, planning to change supplier. The goal of planning in business is the same as in our private lives: we need to achieve certain goals.

Companies established internal processes to support planning. Plans are made and shared within organisations when a first draft of the yearly budget has to be ready, meeting are planned to align, discuss, update and re-align. Layers of overhead are added to control the process in the hope to create a better plan, and faster. Additional guidelines are added for the planners to adhere to, additional data and input are added to incorporate different view points to support the plan.

We experience that planning processes in organisation tend to become too complex, too rigid, too cumbersome. Input from the planners (bottom-up) is changed any management (top-down) due to last-minute changes and large gaps between expected versus planned result. No-one recognises the plan after two to three rounds, resulting in an alienation of the plan. Responsibility to stick to the plan is limited and mainly driven by KPI setting and the bonuses that can be achieved. Resulting in sub optimisation of plans, adding less and less value to the overarching plan of the company. Too much stock, bull whip effects, long supply chains, all clear signs your planning process is out of synch.

But we need to plan, else we will not be able to achieve the set goals. How can we improve the planning process? For example, by reducing the many layers that were added to the planning process. Reduce the people involved, grant responsibilities to the lowest level in the organisation possible, and provide clear (upper and lower) boundaries within the planning process upfront. A plan is per definition wrong, but is a guidance to support the operational process to achieve goals. Changes will occur by unforeseen events (pandemics, shortages, war, inflation, you name it), which could reflect in changes to your plan. But a well drafted, simple plan, is easy to adjust to the new reality.

If we can have an agile planning process, we can quickly adjust our course of action to changing circumstances. And if we have the supporting, agile tooling in place, we can immediately recalculate, create a scenario and see the impact. We need to plan, to achieve our goals. But we can improve our planning processes dramatically by removing unnecessary steps (‘via negativa’), enabling the planner with the responsibilities he or she needs and set clear boundaries in which to operate. Supported with a flexible and agile tool, you have the perfect combination to plan and adjust for the future.

In my next blogs, I will do deep dives in specific areas of planning, like parameter-based planning, exception management, scenario planning the power of connected planning and more. Stay tuned and let me know if you have questions or feedback. I can be reached at jan.veerman@planadigm.com or +31(0)6-51884701.

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