In the past, many companies relied solely on enterprise resource planning (ERP) systems for collaboration and data tracking in their supply chain management. However, as the industry has evolved, some companies have begun using using ERP systems for their planning and forecasting. Unfortunately, this was typically not flexible often or adequate so whole functions started to rely on well built spreadsheets highly dependent on human resources to stay relevant over time.
While this approach may initially seem convenient, it can quickly become messy, disjointed, and disconnected. This can lead to a lack of clarity and accuracy in data tracking and sharing, and ultimately raises more questions than it answers.
ERP and more recent APS (Advanced Planning Solutions) are actively focused on this pain by providing a single, cloud-based planning platform to centralize and enable collaboration and data tracking across the entire supply chain. This can help prevent disruptions and ensure timely and accurate data sharing among all relevant stakeholders.
These new solutions are great in comparison to Excel especially for mature and large organization with complex matrix of roles and responsibilities across product categories, geographies, customers, and more.
However, even if these planning solutions are real-time, they are not designed to dispatch information, activities, workflows, routines, and more to bring data and insights to life. Often, they require planners and managers to manually go into the system, check their static reporting views, and decide if action is needed. If it is, they must then manually add stakeholders based on customers at risk or supplier delays and the factory team involved, and start chasing people around to make changes. Then if they have time, they document for future reviews and continuous improvements.
In fact, these systems only add more information and insights without giving people more time to act on them. Let's explore this issue further.
What are the main Supply Chain Planning Processes?
Supply chain planning is the process of planning the production and distribution of a product from raw material to the consumer. This process includes four key components: supply planning, production planning, demand planning, and sales and operations planning (S&OP).
- Supply planning involves determining the most effective way to fulfill the requirements created by the demand plan, with the goal of balancing supply and demand to achieve the enterprise's financial and service objectives.
- Production planning focuses on the allocation of resources, including employees, materials, and production capacity, to optimize manufacturing processes within the company.
- Demand planning is the process of forecasting demand to ensure that products can be reliably delivered. Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with changes in demand, and increase profitability for specific channels or products.
- Finally, S&OP is a monthly integrated business management process that enables leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.
Supply Chain Planning is often seen as a data optimization game.
Supply chain planning is not just about optimizing data and having a great planning system, but also about aligning people and providing them with the means to act on insights. This is because, without the right people in place to interpret and act on the data, the planning system will not be able to function effectively.
Additionally, having clear processes and tools in place for people to act on insights ensures that any necessary actions are taken in a timely and effective manner, ultimately improving the efficiency and effectiveness of the supply chain.
Relying solely on data optimization without considering the context can have negative impacts on customers.
For example, if a company focuses only on optimizing inventory levels based on historical data, they may end up with excess inventory that is not aligned with current market demand. This can lead to increased holding costs and potentially even markdowns or waste, resulting in financial losses for the company and a lack of availability of desired products for customers.
Of course, you need a planning system, focused on resilience and not perfection.
In the world of supply chain management, the most resilient plan is often considered to be the best, even if it isn't the most optimized. This is because, in the face of disruptions and changes in demand, a resilient plan allows the supply chain to continue functioning effectively and adapt to new challenges.
Sure, an optimized plan may be efficient and cost-effective in normal circumstances, but it may be less able to withstand disruptions or changes in demand. This can lead to increased costs and inefficiencies in the long run, ultimately resulting in lower profitability and customer satisfaction.
So, it's important for companies to focus not only on optimizing their supply chain plans, but also on building resilience and flexibility into their processes and systems. This allows them to effectively navigate challenges and adapt to changing market conditions, ultimately resulting in a more successful and sustainable supply chain.
Artificial intelligence won’t replace managers, but managers who work with AI will replace managers who don’t.
Along with new technologies and practices comes the need for a supply chain leader with a new set of skills. To lead the way into a transformative future, they need to combine technical and business knowledge with collaboration and communication skills. The ability to influence department leaders that partner with supply chain is key, as well as the skills to interact intelligently with leaders across the organization is essential, because supply chain initiatives often reach across business units. And strong business acumen is a must-have, you’ll be more effective working with your counterparts in finance, sales, and marketing if you can speak their lingo.
The effective supply chain leader of tomorrow is tech-savvy and comfortable working alongside the world of “machines.” Some have said that artificial intelligence won’t replace managers, but managers who work with AI will replace managers who don’t. This highlights the transformation taking place in supply chain: humanity is essential, but so is technology. And this leader is a storyteller—digging into the countless layers of the supply chain to find the issues and weaving the right story together to help solve them.
Are you ready to take your supply chain beyond its limitations driven by outdated ERP systems and spreadsheets? By effectively adapting to the supply chain digital revolution and following the steps to connected supply chain planning above, you’ll be ready to collaborate and orchestrate supply chain planning across the enterprise, quickly adjust to market changes, and reap benefits, including lower costs and increased efficiency.
