Every good business manager knows the importance of planning over long-term, midterm and short-term timeframes. Long-term planning concerns itself with strategic matters, high-level analyses of the competitive landscape and which markets to pursue. Midterm planning operates at the 12-month to 24-month time horizon, bridging the gap between where a company is today and where it wants to be in the future, while short-term tactical planning turns an eagle eye to the details of day-to-day operations.

It is both exciting and important to engage in planning strategic visions of the future, but it is at the short-term tactical level where a company’s fortunes rise or fall on a daily basis. Short-term planning concerns itself with the nuts and bolts of making a business run: Which product should the factory make today, and in what quantity? What constraints in labor, equipment or raw materials will affect the factory’s output? What route should a fleet of trucks take to deliver the products from the manufacturer to the customers with the greatest speed and fuel efficiency?

With a sophisticated planning engine, that data would be available to create a tactical planning strategy for the business. For example, the manufacturer could determine exactly how to load a particular truck so that the materials are in the proper order for unloading when the driver arrives at each destination.

enlarge Data fed directly into the Teradata EDW eliminates unnecessary synchronization with other independent systems, thereby enhancing the tactical planning process.

Logistics of tactical planning
There are three technical steps that take place during the tactical planning process. First, the raw data is prepared in a relational database. That data is then fed into dedicated hardware that runs a linear program called a constraint planner. As its name suggests, the constraint planner takes into account limitations in time, energy, materials, manpower and other variables in order to produce a recommendation for the best possible tactical plan for production and distribution. Before the data that emerges from the constraint planner can be applied, it is run through a second relational database.

Traditionally, companies would buy dedicated hardware and set up databases solely to perform these before-and-after steps. This tack proved difficult, however, when trying to synchronize the master data across many independent servers. As it turns out, these extra databases and pieces of hardware may have been unnecessary: On top of its normal tasks, an enterprise data warehouse (EDW) can prepare the data for constraint planning and handle the output.

Furthermore, an EDW can complement any advanced planning system (APS) such as SAP and other enterprise resource planning (ERP) tools (see figure above).

Fresher data, smarter decisions
Using an EDW as part of the tactical planning process certainly makes sense from a capital perspective. Why create a dedicated database and buy special hardware that you only use on weekly or monthly planning runs? Why make redundant copies of data when you can use the data already sitting in your EDW?

If your company has an EDW, using it to help with tactical planning eliminates the need to buy additional hardware. That way, you can get more out of your existing investment. If you don’t yet own an EDW, consider that it can perform more useful functions than a database that exists solely to feed a planning engine.

Since all of the data is in one system, an EDW also saves time in the planning process—and speeding up any process (without losing quality) is always advantageous. In addition, if you move to a more frequent tactical plan in your EDW, say twice weekly, you have the advantage of using fresher data in planning your business operations. Clearly, faster cycle times provide a competitive edge when it comes to tactical plans.

Plan for the future
The use of an EDW for planning purposes replaces scattered and disconnected pieces of hardware with one enterprise-wide system through which plans can be channeled. As a result, companies can plan more easily across their entire organization with greater transparency and better sharing of information.

Another option with an EDW is to increase the level of detail in the planning process. This too provides an advantage—instead of making broad tactical plans, the EDW can narrow the focus for a more detailed strategy. The greater power allows for more detailed midterm planning during the 12- to 24-month period and offers the ability to combine data from sources at many levels in long-term strategic planning. But the greatest impact and most immediate benefit is in short-term, tactical planning.

By integrating a Teradata EDW into your tactical planning process, your company can reduce the complexity of its IT architecture, enable higher frequency and more detailed tactical planning, and achieve an enterprise-wide view of the planning environment. Future Teradata innovations will provide companies with additional tools and capabilities to enhance the accuracy of their tactical plans (see “Managed planning” below).

As Teradata’s technology continues to improve, the tactical process will move closer to its ideal design of dynamic, real-time information and feedback. The entire system of production and distribution will talk to itself in a continuous loop that alternates between making plans and receiving information to tweak and fine-tune those plans. The perfect planning system hums along while whispering to itself, “I know what I planned, I know where I am. I know what I planned, I know where I am.” Teradata’s EDW helps its users get a little closer to that utopian goal. T

Managed planning Teradata’s software engineers are in the midst of adding new functionality that will make a Teradata enterprise data warehouse (EDW) more useful than ever for planning purposes. These improvements will fall into two categories—exception management and parameter management. Exception management involves determining the difference between actual performance and planned performance—a distinction that can be missed by current planning processes. Utilizing the exception management function enables businesses to frequently compare actual performance to the planned performance at a high level of detail and currency. If the planning engine aggregates detail, then the EDW, along with measures of detail actuals, can be utilized to fill in the gaps. The gaps include the minute, day or hour when inventory is available, the surplus or deficit quantity, and the actual consumption or shipped quantities. As opportunities arise, such as a larger product inventory than anticipated, then action can be taken to drive additional revenue for the business. Imagine a factory plan that calls for building 150 widgets by end of business Tuesday. In order to achieve this goal, the factory is scheduled to build 100 widgets on Monday and 50 on Tuesday. But suppose 150 units are finished on Monday. A planner checking in midweek would see only that the total number of units had been built within the prescribed time and would not notice that the reality differed from the planned output. With exception management in place, the planner would have been informed that goals had been achieved early and that the entire order was available for early shipment. This would allow them to appropriately align their manufacturing process plans. In a similar way, parameter management allows a planner to change assumptions on the fly to match reality. All plans are based on assumptions, so a certain plan might assume a 20% loss during a finishing process. If the finishing process works better than expected and losses total only 10%, a parameter-management function can immediately change yield-management data so a company does not end up with more product than it wants or needs. —R.S.

Teradata Magazine-December 2006