N+2 Global Planning
N+2 Global Planning
N+2 global planning is a supply chain management strategy that aims to ensure that there is always enough inventory to meet demand, even in the event of unexpected disruptions. The “N” in N+2 represents the normal level of inventory that is needed to meet demand, while the “+2” represents the additional safety stock that is kept in reserve to protect against disruptions.
Benefits of N+2 Global Planning:
- Improved customer service: N+2 global planning helps to ensure that customers always have the products they need, even in the event of disruptions. This can lead to increased customer satisfaction and loyalty.
- Reduced costs: N+2 global planning can help to reduce costs by preventing disruptions from causing lost sales or production stoppages.
- Increased agility: N+2 global planning can help companies to be more agile and responsive to changes in demand or supply.
How N+2 Global Planning Works:
N+2 global planning is a proactive approach to supply chain management that involves the following steps:
- Identify potential disruptions: Companies using N+2 global planning first identify potential disruptions that could impact their supply chain. These disruptions could include natural disasters, supplier problems, or transportation delays.
- Assess the impact of disruptions: Once potential disruptions have been identified, companies assess the impact that these disruptions could have on their supply chain. This includes estimating the amount of inventory that would be lost or delayed in the event of a disruption.
- Develop mitigation strategies: Companies then develop mitigation strategies to reduce the impact of disruptions. These strategies may include increasing safety stock levels, diversifying suppliers, or using alternative transportation routes.
- Monitor the supply chain: Companies using N+2 global planning continuously monitor their supply chain for signs of disruptions. This allows them to take early action to mitigate the impact of disruptions.
Examples of N+2 Global Planning:
- Apple: Apple uses N+2 global planning to ensure that it has enough inventory of its products to meet demand, even during peak sales periods.
- Walmart: Walmart uses N+2 global planning to ensure that it has enough inventory of essential items in its stores, even in the event of natural disasters or other disruptions.
- Amazon: Amazon uses N+2 global planning to ensure that it has enough inventory of products in its warehouses to meet demand, even during peak shopping periods.
References:
Tools and Products for N+2 Global Planning:
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SAP Integrated Business Planning (IBP): SAP IBP is a cloud-based supply chain planning solution that helps companies to improve their forecast accuracy, optimize inventory levels, and reduce costs. IBP uses advanced algorithms to generate N+2 global plans that take into account demand variability, supply constraints, and transportation lead times. [Link: https://www.sap.com/products/ibp.html]
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Oracle Supply Chain Planning and Optimization (SCP&O): Oracle SCP&O is a cloud-based supply chain planning solution that helps companies to improve their forecast accuracy, optimize inventory levels, and reduce costs. SCP&O uses machine learning and artificial intelligence to generate N+2 global plans that take into account a wide range of factors, including demand trends, supplier performance, and transportation costs. [Link: https://www.oracle.com/applications/supply-chain-management/supply-chain-planning/]
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Logility Voyager Solutions: Logility Voyager Solutions is a cloud-based supply chain planning solution that helps companies to improve their forecast accuracy, optimize inventory levels, and reduce costs. Voyager Solutions uses a variety of advanced algorithms to generate N+2 global plans that take into account demand variability, supply constraints, and transportation lead times. [Link: https://www.logility.com/solutions/voyager-solutions/]
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Blue Yonder Luminate Planning: Blue Yonder Luminate Planning is a cloud-based supply chain planning solution that helps companies to improve their forecast accuracy, optimize inventory levels, and reduce costs. Luminate Planning uses machine learning and artificial intelligence to generate N+2 global plans that take into account a wide range of factors, including demand trends, supplier performance, and transportation costs. [Link: https://www.blueyonder.com/solutions/supply-chain-planning/]
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Infor Supply Chain Planning (SCP): Infor SCP is a cloud-based supply chain planning solution that helps companies to improve their forecast accuracy, optimize inventory levels, and reduce costs. SCP uses a variety of advanced algorithms to generate N+2 global plans that take into account demand variability, supply constraints, and transportation lead times. [Link: https://www.infor.com/solutions/scm/supply-chain-planning/]
These tools and products can help companies to implement N+2 global planning and improve their supply chain resilience.
Additional Resources:
Related Terms to N+2 Global Planning:
- Demand Planning: Demand planning is the process of forecasting future demand for products and services. Demand planning is a key input to N+2 global planning, as it helps companies to determine how much inventory they need to have on hand to meet demand.
- Supply Planning: Supply planning is the process of planning how to meet demand for products and services. Supply planning takes into account factors such as supplier capacity, lead times, and transportation costs. Supply planning is another key input to N+2 global planning.
- Inventory Optimization: Inventory optimization is the process of determining the optimal level of inventory to hold in order to meet demand while minimizing costs. Inventory optimization is a key component of N+2 global planning, as it helps companies to ensure that they have enough inventory to meet demand without overstocking.
- Supply Chain Risk Management: Supply chain risk management is the process of identifying, assessing, and mitigating risks to the supply chain. Supply chain risk management is an important part of N+2 global planning, as it helps companies to identify and mitigate potential disruptions that could impact their supply chain.
- Supply Chain Resilience: Supply chain resilience is the ability of a supply chain to withstand and recover from disruptions. Supply chain resilience is a key goal of N+2 global planning, as it helps companies to ensure that their supply chain is able to continue to operate even in the event of disruptions.
Other related terms include:
- Global Supply Chain Management: The management of the flow of goods and services from suppliers to customers on a global scale.
- Integrated Business Planning (IBP): A process that brings together all aspects of business planning, including supply chain planning, demand planning, and financial planning.
- Sales and Operations Planning (S&OP): A process that aligns sales and operations plans to ensure that the company has the resources it needs to meet demand.
- Master Production Schedule (MPS): A detailed schedule of what products will be produced, when they will be produced, and in what quantities.
- Material Requirements Planning (MRP): A system that calculates the materials and components needed to produce a product, and when they are needed.
These terms are all related to the process of planning and managing the supply chain to ensure that companies have the products and services they need to meet demand, even in the event of disruptions.
Prerequisites
Before you can do N+2 Global Planning, you need to have the following in place:
- Accurate and timely data: N+2 Global Planning requires accurate and timely data on demand, supply, and inventory levels. This data can come from a variety of sources, such as point-of-sale systems, enterprise resource planning (ERP) systems, and customer relationship management (CRM) systems.
- A robust supply chain planning system: N+2 Global Planning requires a robust supply chain planning system that can generate N+2 global plans. This system should be able to take into account a wide range of factors, including demand variability, supply constraints, and transportation lead times.
- A cross-functional team: N+2 Global Planning requires a cross-functional team that includes representatives from sales, marketing, operations, and finance. This team is responsible for developing and implementing the N+2 global plan.
- A culture of collaboration: N+2 Global Planning requires a culture of collaboration between different departments and functions. This is essential for ensuring that everyone is working together to achieve the common goal of improving supply chain performance.
- A commitment to continuous improvement: N+2 Global Planning is an ongoing process that requires a commitment to continuous improvement. This means regularly reviewing the N+2 global plan and making adjustments as needed.
Once you have these things in place, you can begin to implement N+2 Global Planning.
Additional Considerations:
- Executive support: N+2 Global Planning requires executive support in order to be successful. This is because N+2 Global Planning can require significant changes to the way that the supply chain is managed.
- Resources: N+2 Global Planning can require significant resources, both in terms of time and money. It is important to have the resources in place to support the implementation of N+2 Global Planning.
- Change management: N+2 Global Planning can require significant changes to the way that the supply chain is managed. It is important to have a plan in place to manage these changes and ensure that they are implemented smoothly.
By carefully planning and preparing, companies can successfully implement N+2 Global Planning and improve their supply chain performance.
What’s next?
After you have N+2 Global Planning in place, the next steps are to:
- Implement the N+2 global plan: This involves making changes to your supply chain operations to align them with the N+2 global plan. This may involve changes to your inventory levels, supplier relationships, and transportation routes.
- Monitor the performance of the N+2 global plan: Once the N+2 global plan is implemented, you need to monitor its performance to ensure that it is meeting your objectives. This may involve tracking metrics such as inventory levels, customer service levels, and supply chain costs.
- Make adjustments to the N+2 global plan as needed: The N+2 global plan is not a static document. It should be reviewed and adjusted regularly to ensure that it is still meeting your objectives. This may involve making changes to the plan in response to changes in demand, supply, or transportation costs.
Additional Steps:
- Continuous improvement: N+2 Global Planning is an ongoing process that requires a commitment to continuous improvement. This means regularly reviewing the N+2 global plan and making adjustments as needed.
- Scenario planning: N+2 Global Planning can be used to develop scenario plans for different potential disruptions. This can help companies to be better prepared to respond to disruptions when they occur.
- Collaboration with suppliers and customers: N+2 Global Planning can be more effective when companies collaborate with their suppliers and customers. This can help to improve forecast accuracy and ensure that everyone is working together to achieve the common goal of improving supply chain performance.
By following these steps, companies can ensure that their N+2 Global Planning efforts are successful and that they are able to achieve their supply chain goals.
Long-Term Benefits of N+2 Global Planning:
- Improved customer service: N+2 Global Planning can help companies to improve customer service by ensuring that they always have the products and services that their customers need, even in the event of disruptions.
- Reduced costs: N+2 Global Planning can help companies to reduce costs by optimizing inventory levels, reducing supply chain disruptions, and improving transportation efficiency.
- Increased agility: N+2 Global Planning can help companies to be more agile and responsive to changes in demand or supply. This can help companies to gain a competitive advantage in the marketplace.
Overall, N+2 Global Planning is a valuable tool that can help companies to improve their supply chain performance and achieve their business goals.