Robust planning: a new paradigm for demand chain planning

Abstract

Abstract This paper proposes a new paradigm for tactical demand chain planning (DCP), called robust planning, based on risk assessment of the supply and demand chain. The concepts of supply chain management (SCM), and its extension demand chain management (DCM), have been at the center of much recent research. One of the reasons for this is that, over the last years, a significant number of information systems have emerged, which claim to support the concept. The paper argues that these systems mostly adopt a myopic view of planning, based on pure deterministic planning methods. It demonstrates that such an approach fails to coop with the considerable uncertainty of the planning information. The proposed robust planning paradigm is then introduced and its impact explained, using the well‐known example of the beer game. It holds the promise of reducing the number of re‐planning cycles, through a better characterization of the expected service level performance over a medium planning horizon. Finally, a case study will show the value of robust planning in a European chemical enterprise.

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