More than ten years ago, when David was in business school in North America, a professor said,, if a person can’t do design, sales, finance, personnel, production, warehousing, logistics, then let him do procurement; If you can’t even spend money, then I’m really sorry, only to roll up and leave. This was the case in the United States decades ago, and with the prevalence of global sourcing and outsourcing strategies, the status of procurement has risen dramatically, and this is no longer the case. However, in some extensive local enterprises, the status of procurement is still very low, which is a typical ‘purchase management’.

At that time, David was training a company’s procurement and planning team. This is an electronic enterprise with more than 10 billion dollar revenue, and there are more than 130 people in the procurement and planning team, and I systematically explain supplier and supply chain management to them. During the chat, the planning team complained again and again: there are few people and low value. When asked what they usually do, one planning manager said that his team spends 50% of their time expediting goods, while another manager says more, and 60% of the time struggles with material shortages. What’s worse is that I finally trained a planner, and as soon as there was a vacancy on the procurement side, I jumped ship. Planning to switch jobs to procurement? So the plan is a person’s last stop at these companies? Think about it, if half of the plan is spent urging materials, who wants to do it for a long time?

However, for companies and supply chains, planning is much more important than just reminders, it is the engine of the supply chain, driving the three executive functions of procurement, operations and logistics, which can be said to be the most important function in supply chain management. If the plan is not in place, it must be implemented to make up for it. If you are one step behind the plan, you will be three, five, or even ten steps behind in execution. Take the above company as an example, if more than 50% of the planning team’s time is spent urging goods, how much time will be really spent on planning and forecasting? If the planning and forecasting are not in place, it will inevitably cause more shortages, so that the planning department spends more time chasing materials, and as a result, less time is spent on planning, resulting in more inadequate planning and forecasting, leading to a vicious circle in the entire supply chain. Similarly, the same problem can be caused by the lack of qualifications and competence of employees in the planning function.

In this company, where the planning function has such a big impact, why is no one willing to do it? I think the key reason is that the company doesn’t recognize the importance of the plan and give it the right functions. For example, some companies believe that all plans are wrong, especially in the electronics and FMCG industries, where demand fluctuates drastically, so they can do whatever they want, and in the end they still have to perform functions to make up for it, and to strengthen it is also to strengthen the executive functions, such as spending more money and hiring better employees in the procurement department in order to better drive suppliers to fight fires. This is common not only for some local companies, but also for some companies in North America.

For example, there is a high-tech company in Silicon Valley, with annual sales of billions of dollars, and most of the senior managers responsible for procurement have an average working experience for more than 10 years, most of whom have graduate or MBA degrees, but the planning department is a typical old, weak, sick and disabled: some planners do not even have a bachelor’s degree, and they have made plans for twenty or thirty years, and they can’t even use Excel sheets. The company’s idea is very simple: procurement is an external function, the work object is the supplier, it is difficult to deal with, and it must be done by highly qualified people; Well, it’s an internal function, and it’s easy to talk between internal functions, so you can just make do with it. No, the plan has become a retirement home for the old, weak, sick and disabled waiting for retirement, or a freshman training camp for freshmen who have just graduated from school. The results were dramatic: the plan got worse and worse, the procurement faced more and more problems, and the more and more difficult it becames, so we had to hire more and more qualified people, and instead built the strongest procurement team in the industry. The company’s supply chain performance is good and industry-leading, but in my opinion, the return on investment would be higher if the program was strengthened.

Speaking of which, David remembered that around 2010, David attended a large annual meeting, and after giving a speech, David went to the side to listen to other speeches. The keynote speaker is a director in charge of the supply chain from a large local computer manufacturer. The director was talking to the effect that all plans/forecasts were wrong and had to be compensated for by executive functions such as procurement. Because most of the people here are their customers, the director may be trying to please the audience, and the overall feeling is ‘Customer, it doesn’t matter how bad your plans and forecasts are, my supply chain is highly responsive and can handle it’, David has been responsible for global planning and forecasting for more than 10 years in his own career, and David has learned that you can’t expect perfect plans and forecasts, because various factors determine that plans and forecasts cannot be 100% accurate; But even though all forecasts are wrong, there is a big difference between being more wrong and being less wrong, and you can’t abandon your plan because it can’t keep up with the changes. Just as all human beings are born to die, but you can’t just lie down and die. When it comes to planning, it’s better to do something than nothing.

This also applies to the broader program. The so-called broad sense refers to the fact that general things are planned first, then executed, and the plan is revised around the implementation. There is a proverb in English, a fool with a plan can beat a genius without a plan. There is a lot of talk about Western management. Planning is actually the essence of Western management. The so-called management is actually planning and control, that is, planning first, and then implementing around the plan and improving the plan according to the implementation. If we talk about the gap between local companies and European and American companies, I think the biggest thing is planning. Listen to me.

The enterprise is generally divided into three tiers. At the strategic level, the CEO sets strategic goals; At the tactical level, professional managers translate strategic objectives into layered plans, and feedback the feasibility of the strategy to the strategic level for adjusting the strategy. At the execution level, the junior staff put the plan into practice and feed back the executability of the plan to the tactical level for adjustment. The combination of three layers, from strategy to tactics to execution, is a common enterprise management model.

At the strategic level, most of our entrepreneurs come from reckless backgrounds, are full of street smarts, have vision, have the courage, dare to seize opportunities, and dare to take risks. It is precisely because of these entrepreneurial entrepreneurs that they have created rapid economic development for more than 30 years. In European and American enterprises, CEOs are more professional managers, especially large and medium-sized listed companies, in terms of courage and foresight, and our entrepreneurs do not have to fight—- which is also the essential difference between professional managers and entrepreneurs. Therefore, at the strategic level, our CEOs are generally stronger than those in Europe and the United States.

Taking the executive level as an example, our grassroots employees are far better than the ‘aristocratic’ employees in Europe and the United States. Take my personal experience as an example, when David was in the industrial world of Silicon Valley, David managed the global team, and the same thing was handed over to Asian employees in Singapore, Korea, Japan, etc., and David replied three days later, saying what had been done, what was still continuing, and what needed support; When handed over to employees in Europe and North America, they often get back a bunch of reasons after three days, each of which is why they can’t do it. Therefore, at the implementation level, small enterprises are better than Europe and the United States.

So what are the advantages of European and American companies? At the tactical level, that is, at the level of professional managers. What does a professional manager do? Professional managers do management, simply put, two things: planning and control, that is, to refine the goal into a plan, and improve the plan according to the implementation. In my opinion, the key to the competitiveness of European and American companies lies in the professional managers—- who effectively compensate for the shortcomings of the strategic and executive levels through sound planning. David has been a professional manager in North America for more than 10 years, and I know this very well. Professional managers are like military advisors, strategizing, and strategizing is planning. If the strength of an entrepreneur is strategy and direction, the strength of a professional manager is to refine the strategy into a plan. For example, the entrepreneur says that the annual revenue will increase by 30%, and the professional manager formulates an implementation plan after careful planning, telling the CEO whether it is feasible and what the cost is. Just like a commander and a military advisor, entrepreneurs and professional managers complement each other and benefit each other.

Planning is a shortcoming for small companies. In the past ten years, David has been in contact with a large number of small l companies, and David has been deeply impressed by the lack of planning and organization of some companies. In the words of one of my United States partners, the plan is changeable, and the day and day change to ‘the short-term plan is 4 p.m., the medium-term plan is this Thursday, there is no long-term plan’—- the good things that were talked about in the afternoon meeting, but the next morning changed because of the sentence above. The plan is changeable, on the surface, it seems to be seizing the day, and time is not waiting, but in fact, there is no time to do things well at one time, but there is time to repeat things several times to do it well’, three steps forward, two steps back, back and forth. Employees are busy like ants, but they are not efficient, and the problem lies in the plan: there is no time to ‘measure once’ (plan), and the one that could have been cut (execution) can only be cut twice. What appears to be an execution problem is actually a planning problem; It seems to be a problem with the employees, but it is actually a problem with the management.