What is Centralized Planning?
Centralized planning means that decisions are not taken independently at local level, but holistically at a more central level.
Why optimize Centralized planning?
The advantage is that planners can optimize over multiple locations, and by this, apply synergies, e.g. transport optimization over depots, or improve employee efficiency by reassigning them to another location. In general it implies that planners are physically at a centralized location, hence not near a location where the production or services take place. It is easier for the planners at a central location to exchange best practices, to increase transparency of the way of working, and increase the span of control. Also in this way unnecessary costs can be avoided (hiring extra employees in one location, while having overcapacity in the other) as well as leveraging in purchasing through the economies of scale.
An example when centralizing transport optimization:
- A truck can become empty near a different depot than its previous loading depot. Loading at that depot, or backhauling at a supplier gives opportunities for reducing empty mileage
- Similarly there can be opportunities for loading/servicing at multiple depots (co-loading) before unloading/servicing, or to combine orders between depots with orders from/to depot
Centralizing requires that the data is of desired quality and that there is less need for local presence to make decisions during operations or execution.
How to optimize Centralized planning?
Centralized planning is supported by software with a central schedule and database, where users at various locations can work in the same schedule simultaneously. One of the methodologies is a "control tower" concept. A supply chain or service control tower is a single command center with the required technology, organization, and processes to capture and use data to provide enhanced visibility for short- and long-term decision-making. They are typically set-up to monitor, measure and manage transport, inventory or services movements.
While the planners are in general also centrally located, there is no must for this, as long as everybody is working on a central schedule. The information is shared among various locations for local usage, but sometimes also to external people, like customers or suppliers.
What are the results of Centralized planning?
The results of applying Centralized Planning:
Why contact ORTEC to optimize Centralized Planning?
- Being able to optimize over multiple locations
- Realizing synergies over depots e.g. transportation
- Improving employee efficiency by reassigning them to other locations
- Exchanging best practices by planners is easier at a central location
- Increasing transparency in workflows and the span of control
- Saving on costs by reassigning employees: instead of hiring in one location, while having overcapacity in the other
- Leveraging in purchasing through the economies of scale
The technology of the ORTEC solutions enables and supports centralized planning. The implementation of ORTEC solutions and the centralization of planning can be done simultaneously. For implementations on a larger scale, ORTEC can assist to support the change.