Page 357 - Orlicky's Material Requirements Planning

336 PART 3 Managing with the MRP System

different business strategies and handle the needs of different industry sectors within and
beyond manufacturing, including retail and services. A number of key themes have
emerged.

Integrated Reconciliation
The development of integrated reconciliation has highlighted the importance of financial
involvement and leadership early in the process and has changed the agenda from a vol-
ume discussion to a business one. It is about reconciling different views. There is added
value in discussing different views and the reasons for them. It increases the under-
standing of what the numbers mean, which focuses attention on the assumptions under-
pinning the numbers, along with opportunities and vulnerabilities. The conversation is
principally about what has changed since the last review and why. Without assumptions,
the conversation is why have the numbers changed. When the focus changes from just
numbers to assumptions, the need for marrying forecasting with foresight becomes even
more apparent.
Here are some of the questions involved in integrated reconciliation:

1. What is the impact of integrating new activities, demand and supply, on the
business (not just the supply chain)? What are the emerging issues and gaps?
What are the opportunities and risks? You must have volume and value infor-
mation and assumption changes to answer these questions. Understanding
these questions leads to an imperative that finance is an integral part of all five
steps, whereas in many examples of S&OP, finance is added at the pre-S&OP
meeting and the S&OP meeting.
2. What scenarios are important to make better decisions in the future?
3. What decisions should we make and which ones should be escalated to the
senior management review?
The step is not a meeting as such but an iterative process run by a senior cross-func-
tional team in the business. The team highlights key issues and decisions required for the
senior management team. In fact, the team determines the agenda for senior business
management review. Participants in integrated reconciliation are the future executives in
the business. This exercise is seen as a key training ground for the next generation of pres-
idents and vice presidents. This is fundamentally different from the pre-S&OP meeting in
traditional S&OP, where the main focus was on volume and its impact on resources.
Understanding integrated reconciliation has directed a broadening of the scope of new
activities, demand and supply management. Integrated reconciliation as a process leads
directly into the senior business management review, which focuses on understanding
change: What is our current performance? What decisions are still outstanding? And
what decisions have been made already in integrated reconciliation? The business agen-
da also raises further questions: Are we on track with the business plan? And are we still
on track with our strategic intent?