Supply Chain Planning: An Essential Element of Success

Stephen DeAngelis

December 03, 2018

War hero and former President, Dwight D. Eisenhower, once said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.” That observation could just as easily have been made about supply chain operations. Like a battleground, the supply chain is complex and often shrouded in a situational awareness fog. Henry Canitz, product marketing director at Logility, describes the complexity faced by supply chain planners by noting, “The variety of products available through a growing number of distribution channels is truly amazing. Competition between brick and mortar and e-commerce retail channels, often within the same company, has led to a proliferation of products and services. … Today’s manufacturers face a long list of difficult supply chain challenges including increasing demand variability, inventory proliferation, manufacturing capacity constraints, increasing risks both nature and human based, more environmental compliance regulations, intense global competition, increasing customer expectations and a shortage of talent. To survive in today’s highly competitive global environment, manufacturers need to piece together the many parts of the supply chain puzzle to lay the foundation for more mature capabilities in the future.”[1] Little wonder supply chain planning is often perceived as wanting.

Planning horizons and insights

Planning is a fuzzy umbrella term that can only be understood when discussed in finer detail. In another article, Canitz notes there are at least four organizational planning horizons each requiring a different focus.[2] They are:

  • Strategic Planning: “Strategic planning focuses on longer-term decisions such as building a new plant, entering a new market, launching a new product line, acquisitions and/or divestitures.”
  • Annual Planning: “Annual Planning involves business decisions that take time: adding capacity, developing products, entering markets, hiring and training new people.”
  • Sales & Operations Planning: “S&OP works on a monthly basis and focuses on products at the family level to ensure adequate supply is available to meet expected demand.”
  • Sales & Operations Execution: “S&OE deals in weekly time slots at the SKU level to track how demand and supply match the plan and then adjusts when differences arise between plan and actuals.”

Planning for those planning horizons require different perspectives, different inputs, different foci, and different measures of effectiveness. Most articles about supply chain planning focus on the nearer term S&OP and S&OE horizons. With advent of the Digital Age, these planning processes are often discussed in terms of demand planning. The basic rationale behind demand planning is: With so much data available in near-real-time, companies should be able to provide planning insights that match market conditions. As Canitz notes, however, the supply chain is complex. Keeping track of all that complexity is beyond human capabilities. As a result, Craig Guillot (@cguillot) asserts, “From manufacturing plants and distribution centers to store shelves and consumers’ doorsteps, players across the supply chain are looking to automated technologies to boost efficiencies.”[3] That search for automated efficiencies extends into the planning arena. Jeff Bodenstab, Vice President of Marketing at the ToolsGroup, points to a Gartner survey highlighting the need for more automation in planning.[4] The Gartner survey found there are nine key planning issues users want addressed. They are:

1. “Too much planner intervention and not enough automation, resulting in low planner productivity.”

2. “Not getting timely plans/scenarios — plans are out of date by the time the planner sees them.”

3. “SCP systems are not performing or scaling enough at the enterprise level, let alone at the multi-enterprise level.”

4. “Planning is not granular enough to identify the real impact of execution events as they happen; resolution and time bucket aggregations obscure the real detail.”

5. “Inability to support execution of the agreed upon business strategy — there is a lack of automation, business rules and prioritizations in dealing with execution events, increasing the risk of decisions that deviate from corporate goals.”

6. “Planning is too isolated from the execution environment — there is latency in decision making while waiting for the plan to update overnight or over the weekend.”

7. “Hard to get people to use and/or collaborate in the SCP system.”

8. “Still too much Excel being used. Having to force-fit the SCP system’s process design to the organization, which limits process improvement opportunities.”

9. “Hard to try new ways of doing things.”

The solution for many of these challenges appears to be integrated planning leveraging cognitive computing capabilities.

Lifting the fog of planning

Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, suggests, “A business decision for supply chain planning should focus on the selection of the technology that can drive better business outcomes.”[5] She recommends nine concrete steps companies can take when deciding what supply chain planning tools they should buy. Any company wanting to improve their planning processes should carefully read her article. She concludes:

“I am very excited by the level of market innovation happening in the market today. We are at the juncture of software planning redesign. This includes:

  • Schema on Read.
  • Cognitive Computing.
  • What-if Analysis and Redefinition of Planning.

New solutions — Aera, Anaplan, Bluecrux, Enterra, Lokad, O9, Rulex, and — offer new possibilities. I also find the evolution of deeper optimization/machine learning within the John Galt, Gains Systems, Kinaxis, and ToolsGroup solutions promising. We are moving towards the autonomous supply chain and the redefinition of planning. It is a step change.”

Obviously, I’m pleased Cecere included my company, Enterra Solutions®, in her list of innovative companies providing new solutions. Canitz adds, “Because Integrated Business Planning involves multiple collaborative, cross-functional processes, it requires a single platform designed specifically to accomplish these tasks within one holistic shared process. This platform must provide collaborative workflow, configurable alerts, active messaging capabilities and powerful optimization algorithms to streamline and facilitate plan development. Also crucial is the flexibility to view data in varying time horizons from weekly to yearly, and from five years of history to ten years of projections.” A cognitive computing platform fits the bill.

Concluding thoughts

Although an autonomous supply chain remains a distant dream, cognitive technology advances continue to bring that dream into clearer focus. Improving planning through automation is an important step in that direction. Steve Banker writes, “I always thought the point of supply chain management was to intelligently globally optimize an integrated supply chain, so the term ‘integrated supply chain’ seemed superfluous. But the idea of a transformation driven by a logical end-to-end plan that allows projects to be logically sequenced makes a lot of sense. I can get behind that idea.”[6]

Footnotes
[1] Henry Canitz, “Solving the Supply Chain Planning Puzzle,” Logility, 23 August 2018.
[2] Henry Canitz, “Myopic and Hyperopic Supply Chain Planning,” Supply Chain Digest, 20 September 2018.
[3] Craig Guillot, “Planning paves the way to a truly automated supply chain,” Supply Chain Dive, 23 October 2018.
[4] Jeff Bodenstab, “The Nine Top Supply Chain Planning User Concerns,” ToolsGroup, 2 October 2018.
[5] Lora Cecere, “Yowza! A Nine-Step Decision Process to Help Guide Supply Chain Planning Selection,” Supply Chain Shaman, 24 September 2018.
[6] Steve Banker, “What is Integrated Supply Chain Planning?Logistics Viewpoints, 22 October 2018.