The best made plans of mice and operations managers can go awry. A factory gears up for production of an item when the customer suddenly halves the order quantity. Or product from overseas encounters a port delay, jeopardizing a delivery commitment.

Accommodating those changes has, until now, been a two-step process because planning software and execution packages such as warehouse management systems were not integrated. That is beginning to change, however.

As a direct result of increasing time pressures brought on by supply chain variability, planning and execution software packages are beginning to be married together. 'We're starting to see a convergence of the decision support function found in planning software with transactional functionality found in the execution side,' says Karen Peterson, an analyst with the Gartner Group (203-964-0096, www3.gartner.com). 'Companies have begun to understand when there's a deviation from plan, they can be presented with a set of possibilities to fix the problem that has occurred.'

Although vendors have begun the work of linking these two types of software packages together, they're still in the nascent stages of convergence. 'The vendors have immature solutions,' adds Peterson. 'We are still at the very beginning of this.'

As a general rule, planning and scheduling software use historical data to guide manufacturers on the quantity of a particular product needed to meet anticipated demand. 'The first thing manufacturers recognize is that they need a consistent and disciplined planning process,' says consultant Jamie Hintlian, a partner in the supply chain practice at the Accenture Consulting office in Boston (617-454-4466, www.accenture.com). 'Fundamentally, they need a single number forecast, not multiple ones.'

But forecasts often change between the time when the production plan is set and when the factory builds the first lot of product or the distribution center ships it. 'As the velocity of the supply chain has increased, the delta between planning and execution has shrunk dramatically,' explains Dwight Klappich, a program director with the Meta Group in Stamford, Conn. (770-350-7953, www.metagroup.com). 'Twenty years ago, you saw people planning quarterly or monthly. Now with 24-hour turnaround, that planning and execution horizon occurs within one day. Companies need more adaptive solutions that respond to change.'

When problems do arise in the supply chain, they're first detected by execution software applications: the order management system (OMS) that oversees purchase orders; the warehouse management system (WMS) that manages inventory in distribution centers; and the transportation management system (TMS) that monitors the flow of shipments. For example, the OMS can notify that a customer has canceled an order, TMS can red-flag a missed carrier pickup, or the WMS can signal that an item has gone out of stock. 'The alerts generate a new set of execution activities, such as making things or putting things in distribution centers,' explains Steve Banker, an analyst with ARC Research in Dedham, Mass (781-461-9100, www.arcweb.com). 'You can then start to tie plan from execution. You can either expedite to keep things on track or begin looking for alternatives.'

Suppliers of advance planning and scheduling (APS) packages have begun taking advantage of these developments to integrate planning and execution. Some have begun monitoring inbound transportation for material procurement and checking that the material arrives at its designated time. Darren Ward, i2's vice president of product management for logistics products (214-860-6000, www.i2.com), notes that planning systems can reschedule manufacturing plans on the basis of the new visibility as to when the material will be available. 'If the inbound shipment will be delayed by two days, I need to reschedule my plant line with another run on material that will be available,' Ward explains.

Order changes can also trigger a plan revision. For instance, if a customer decides to increase an order from 100 to 200 widgets, then the planning software can communicate to a supplier or co-manufacturer that additional materials are needed to meet the new customer order quantity. 'In most cases, the plans are updated several times a day,' says Jeff McKinney, senior vice president at Manugistics Group Inc. in Rockville, Md. (301-984-5215, www.manugistics.com) 'Although as certain thresholds are crossed, human intervention is generally required (to authorize the change).'

Advance planning and scheduling suppliers aren't the only ones striving to create adaptive solutions. Enterprise resource planning (ERP) suppliers are also moving to include the capability for planning changes in their suite of applications. Components are being built into their software to track key events and trigger an alert if a change takes place. 'If a purchase order gets canceled, you trigger a rescheduling,' says Michael Lipton, director of supply chain management consulting for SAP America which is based outside Philadelphia. (610-661-4600, www.sap.com.)

Along with ERP vendors, other software makers have come along to provide specialty solutions that facilitate planning adjustments. These vendors specialize in software that often sits on top of an ERP system. They would detect a change to a shipment date, for example, and then prompt the ERP system to revise its forecast plan.

Finally, software packages known as either event management or supply chain process management have emerged, offering the capability to generate electronic alerts when something goes awry. These software solutions provide a bridge between planning and execution systems and could facilitate adapative planning. 'Supply chain process or event management software provides real-time visibility into events on an exception basis on key KPIs (key performance indicators),' explains Banker. 'These tools can collapse the chasm between planning and execution applications.'

Although it's now possible with alerts for vendors to make automatic adjustments to the plan, most companies still put more trust in a human operations manager than a computer. The decision to make an adjustment still has to be made by the planner. 'There's no reason from an application perspective why it couldn't be automatic,' notes Karin Bursa, vice president of marketing for Logility Inc. in Atlanta (404-364-7576, www.logility.com). 'Most companies don't want the automatic adjustment to occur.'

Few if any companies have moved toward automatic plan adjustment. 'It may be possible to automate this process so that no human involvement is required to initiate the solve,' says Dave Strothmann, a product marketing manager in advanced planning solutions at J.D. Edwards in Denver (303-488-4000, www.jdedwards.com). 'But I am not aware of anyone actually using the software in that manner today.'

Before planning systems start to make automatic adjustments, they'll need to develop filtering systems that can determine the severity of alerts. Otherwise, the planning system would become hyperactive, constantly revamping factory production to every little change. 'The scheduling systems will have to filter out 'noise' if you want the systems to make adjustments automatically,' says Klappich.

Such systems would require a high degree of business intelligence programmed into them to weigh the tradeoffs. For instance, the business rules in the software might specify that production plans should be modified for only a corporation's key customers. 'It's a complex area because of the different rules for each customer,' Klappich explains. 'It's codifying all the business rules.'

John Fontanella of AMR Research (617-542-6600, www.amrresearch.com, ) agrees with Klappich that planning systems confront an enormous task in processing real-time data and making correct adjustments to their forecast and production plans. 'For planning systems to be effective, they have to find every variable,' says Fontanella, 'Imagine the math formula to take into account all the variables and devise a plan.'

Although planning systems are starting to receive alerts about problems from execution systems, most industry experts contend that the software solutions lack the cognizance to make the requisite changes to the plan or forecast. 'The alerts are a good first step,' says Peterson of Gartner. 'But doing a full replan after an alert is coming in the future.

Despite the software vendors' initial efforts towards convergence between planning and execution systems, for the time being, most corporations will look to the operations manager in charge to make the final decision as to whether the production or forecast plan should be altered. In short, a human being rather than a computer is still regarded as the best judge as to the necessity of change and the appropriate corrective action. 'Humans still have to intervene on an exception basis,' says Strothmann of J.D. Edwards. 'I don't see enterprises ready to automate the process continuously in real-time and drive changes to the supplier without human intervention.'

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