This one is also an entire bridge exam topic that CPM's must take for the CPSM and is an example of how the CPSM pushes the "Board" (read "C" suite) for supply management. For example,instead of just "gloom and doom" in the current recession it charges supply managers to think about reviewing the strategic situation with respect to their function. Thus, if working capital is suddenly short and banks are not lending then is your plan agile enough? Are you able to put every buyer on trying to re-negotiate contracts for both quantities and payment terms making sure that suppliers don't collapse and supplies don't suffer. In other words:
- is your plan flexible?
- is it execution oriented?
- and is the plan being monitored ? -to deal with whatever is happening in the market, in your business within whatever resources you have
Elements of the operating plan include forecasts,budgets,staffing and metrics measuring how well you are doing. Examples of cost effectiveness metrics include cost changes and cost avoidance. If for instance you can line up your supplier to supply only when you have an order you have avoided both the inventory holding cost and the uncertainty of an order that will actually use the inventory.