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How integrated business planning improves operational efficiency metrics

With the COVID-19 pandemic inducing large scale supply chain disruptions globally, the manufacturing industry is now focusing heavily on sales and operations planning (S&OP) and integrated business planning (IBP). However, S&OP initiatives are often hampered by large gaps between planned and budgeted sales numbers and actual sales figures. Additionally, incorrect forecasting methods and unexpected supply issues cause last-minute changes in production numbers. Traditionally, forecasting accuracy metrics such as mean absolute percentage error (MAPE) are used to measure the effectiveness of forecasting algorithms; in the process, failing to measure the effectiveness of the production scheduling or internal logistics factors. Ensuring sustainable manufacturing in the new reality requires manufacturers to adopt a demand driven material requirements planning (DDMRP) approach by decoding the correlations between MAPE and inventory turnover to improve operational efficiency.

Natarajan Viswanathan

Domain Consulting Partner, Aero and Process Practice, Manufacturing, TCS

Prudhvi Kumar Visarapu

Business Analyst, Aero and Process Practice, Manufacturing, TCS


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