Supply Chain Planning is hot and it’s not just hype

For those of you who have lived and breathed working in the supply chain of companies it is difficult to get away from planning and the difficulties they have faced over the years. From being forced to use legacy systems which were set up in generic ways (more accounting focused in some instances) to trying to?justify results to senior leaders who have no knowledge of the black box. It has not been an easy road, having to love Excel to being subservient to a commercial or marketing team who could suggest anything with the consequences feeling solely owned by the supply chain at times. Throw in those?S&OP meetings where it felt yours to continue to edit and update during / after then repeat, Groundhog Day comes to mind.

The pandemic has brought supply chain into focus I hear every day, but it is still the same challenges, recent times have merely pushed them to extremes. From having to address questions coming from running out of inventory to not having enough leading to senior leaders challenging whether you are in control. As we know, this is not simple and the view has been changing and whilst it may not be in the rear view for all, the role of planning and its importance within supply chain is shining brighter than ever before. Much of this change is being led by the advancement in planning tools that are being developed at speed which can plug and play in the cloud without companies having to embark on long painful implementations.

Triggers for new planning tools include (not exhaustive):

• Pandemic has shown how fragile supply chains are and without good planning businesses face financial uncertainty
• Renowned legacy tool (i.e., SAP APO) being retired within next 3 years?
• Inability to plan beyond short-term windows (less than four weeks in three clients I’ve worked with in last year which isn’t great when supply lead times can include sourcing from Far East)?
• Reliance on limited data to inform decision making (last year’s actual sales (not demand) and estimate of uplift across all products seen)
• Working off excel can be very costly, high errors and not intuitive to collaborating with colleagues / partners let alone finding the time to open attachments and understand them (not all collaborators know what they are looking at!)
• Too many plans in a business all with different numbers to drive decision making?
• Meeting cycle (S&OP) slow and cumbersome when capabilities to plug and play on workflow available?

The capabilities that underpin these advancements in planning are being driven using data sets (structured and unstructured) aligned to multiple variables to inform demand with sophisticated multiple algorithms (machine learning) and ability to bring all interested parties together in one place to collaborate.?With data sets we obviously have moved beyond first moves of weather temperatures, last year’s sales, and promotions where it seems that this was revolutionary only a matter of years ago. Data in either form can now be collected relatively easily, and the discovery is where the value is either added or lost. For example, take evolution of weather data, you can get via multiple sources to feed plans to build foresight on the harvest of suppliers in various regions therefore proactively securing supply.?

In time I expect we will move on from machine learning (identifying patterns) to system learning and adapting which takes it into artificial intelligence realm but for now the tools on offer are the former. (challenge those who say differently, ignorance and confidence is equally high with supposed experts in this area!)?This supported with refreshing the planning process by being able to proactively manage it using workflow management, doesn’t just speed it up but engages colleagues collaboratively on one platform working towards one plan.?

The interesting points here are now you are better informed with a more educated plan what will you do… in other words does being better informed flow through to improved decision making firstly? It would be amiss not to point out that this will be a difficult change and require organisations to overcome behavioural gaps and I doubt whether senior leaders will ever trust a black box therefore “explainable ML / AI” (in time) will become so critical to gain buy-in and adoption. Further, is the supply chain planning organisation structure outdated and what does the new version of it look like? Breaking down silos, refreshing what the function needs to look like aligned to capabilities to empower collaboration is merely the starting point.

Then to benefits, whilst they can be impressive like all things your starting point and story are unique to you. I would recommend conducting a quick proof of concept ingesting past and present monthly data to see what the system would and could recommend differently with your data as well as understanding inputs that drive planning intelligence supported with a business case aligned to metrics that matter to your stakeholders.?

I would expect benefits to include some of the following (not exhaustive):

Financial Impact:

• Improved sales?
• Reduced markdowns
• Less capital tied up in unwanted or unneeded inventory

Business Impact:

• Creation of one plan that all functions get behind
• Proactive management of business and quicker responses to challenges
• Improved forecast accuracy (within reason but still a forecast so inherently will be wrong!)

Planning Team Impact:

• Empowering the roles within “Planning” function – moving from spreadsheet crasher, fire-stopper, and data chaser to master of insights, orchestrator, proactive executer, and brand builder
• Reduce number of interventions and updates required
• Ability to run scenarios within one system that can be collaborated on them

Main conclusions I have drawn to date are that there are tangible benefits from modernising planning and capabilities that bring hindsight and foresight together through one tool to empower the team. I am reminded of the law of diffusion of innovation which Everett Rogers described in his 1962 book, and predict we are about to see a great rush for demand to move to this new paradigm of planning.??

I estimate that the market is transitioning from “early adopters” to “early majority” during next two – three years based on conversations with clients and providers. It’s moving beyond hype rapidly fuelled by the pandemic and the rush to not be left behind.?

We are living through a fundamental shift in supply chain with a planning revolution at the centre of it in my opinion… how exciting!?