I grew up in a time before people knew much about being eco-friendly or “Green,” so the concept of sustainability isn’t usually at the top of my mind. Just to level set, the Brundtland Commission defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” I care about the environment and doing what I can to minimize my impact. In fact, I often find myself surrounded by and admiring nature.

Younger generations who have grown up with the threat of global warming, holes in the ozone layer, greenhouse gasses, etc. have a much different focus on what it means to be eco-friendly. The topic of sustainability and being eco-friendly is discussed in K-12 education on a regular basis. In fact, it is not unusual for kids to come home and ask their parents what they are doing that benefits the environment. I would venture to say that, like myself, most parents find it difficult to respond with a good answer to that question. So, I started thinking about how supply chain management can impact the environment and concluded that supply chain managers are Green Superheroes.

Almost every supply chain improvement made to reduce costs has a beneficial side effect that contributes to the Greening the supply chain. Most improvements are made through more effective planning or more efficient operations. For example:

  • Optimizing a distribution network not only reduces logistics costs but, in most cases, reduces carbon emissions through fewer transportation miles and/or less inventory holding costs.
  • Higher forecast accuracy supporting a mature S&OP process allows a company to hold less inventory, run more efficient plants, and improve transportation efficiency. Better supply chain planning saves money but also reduces greenhouse gases and decreases your company’s carbon footprint.
  • Scenario planning enables a company to find the most efficient and effective solution to unexpected events, ensuring a high-level of customer service while minimizing costs. Often the lowest cost scenario is also the best one from a Green standpoint.

Following and supporting “Green Supply Chain” practices is important to a growing portion of the population and can positively affect brand awareness and market share. There is increasing evidence that in addition to a positive reputation, brands that follow and claim eco-friendly policies can charge more for their products. The results from another study reported that over 60% of Gen Z and Millennial shoppers prefer to buy from sustainable brands. Further, 50%+ of these younger shoppers are willing to spend up to 10% more on sustainable products.

Source: Nielsen Product Insider, 10/20/2018

As a supply chain manager, how do you start your journey to becoming a Green Superhero?
Unfortunately, an industry-accepted definition of a “Green Supply Chain” does not exist. So how does one build one? Is it enough to be eco-friendly in some processes, like transportation or manufacturing, to qualify your company as being Green? What about warehousing, inventory management and the efficient maintenance of your capital equipment? Must every supply chain function be eco-friendly, or can you focus on some areas of the supply chain and still be considered Green? There is no easy answer, however most experts agree that building a Green Supply Chain is like implementing other Supply Chain Improvement Projects: It’s a journey, Not a destination.

According to an article published in the MIT Sloan Management Review, for most companies, becoming sustainable involves a conscious and continuing effort to build long-term value for shareholders. The article listed characteristics of sustainability leaders:
1. They take a long-term view when making decisions.
2. They are willing to take measured risks in pursuit of sustainability.
3. They learn from the outside and are far more likely to encourage their employees to assimilate knowledge from sources external to their company.
4. They encourage their supply chains to adopt sustainable strategies.
5. They incorporate sustainability metrics into the capital budgeting process, develop solid valuation processes that take externalities into account, set clear targets for sustainability objectives, and establish targeted programs linking the objectives to business results.

A good place to start the journey of Greening your supply chain is to focus on initiatives that will improve operational efficiencies. Unfortunately, many efficiency improvement projects have a functional focus and just lead to inefficiencies in other areas of the supply chain. For example, maximizing plant efficiencies often leads to larger inventory holdings and less efficient distribution. Your ability to improve integrated supply chain efficiencies is greatly enhanced if you utilize a Supply Chain Digital Planning Platform like Logility. An advanced planning platform provides one place to visualize and analyze product, service, costs and sustainability information to enable intelligent tradeoffs.

Supply chain practitioners should measure and publicize not only the economic but also the ecological impact of supply chain improvements. Next time someone asks you what you have done to improve the environment, put on your Green Cape and tell them about your Green supply chain improvement projects.

An Imperative in Today’s Rapidly Changing World

In almost every supply chain publication, you will find an article discussing digital transformation. Industry analysts, consultants, solution providers, executives and practitioners are all focused on how to transition from a traditional, analog supply chain to a more digital supply chain. This has never been truer than it is today. Digital supply chain capabilities enable more agility and resilience; two supply chain characteristics that are especially important in dealing with unforeseen disruptions. As a supply chain practitioner, it is critical to understand what a digital supply chain looks like and how to ensure your supply chain is on the right transformational path.

 

What is Digital Transformation?

Digital Transformation involves a focused effort of activity across multiple processes that accelerate performance and deliver new value-added capabilities. Digital Transformation in supply chain operations usually involves the development of new tools, skills, and/or processes that target a step change in speed and/or agility.

Why is Digital Transformation Important?

Digital Transformation is one of the top concerns and areas of focus for C-Level executives. There is a growing awareness within senior executives that transforming supply chain capabilities to take advantage of the emerging areas of “Big Data,” “Artificial Intelligence,” “Advanced Analytics” and “Cloud Computing” provides a competitive advantage and reduces risk due to disruptions.

Supply chain leaders know there is a “War for Talent” to find and retain qualified personnel. It has been reported that there is only one qualified supply chain candidate for every seven openings, and this ratio is projected to increase before it gets better. The best candidates want to work with advanced technology platforms that allow them to spend more time analyzing problems and developing value-added recommendations. Digital Transformation of supply chain capabilities is critical to hire and retain the best talent.

Supply chain practitioners are asked to accomplish more with less, to be involved in more business processes and deliver more value-added capabilities while lowering costs and ensuring high customer service. Materials and components are sourced from even more remote locations and finished products are being sold into expanding regions and channels. The amount of external data continues to grow at exponential rates. Planning cycles continue to shrink, and customers expect shorter and shorter delivery times. All these pressures demand a step change in performance creating the need for Digital Transformation.

As a Supply Chain Practitioner, How Can I Facilitate a Digital Transformation?

The first step is to obtain C-Level sponsorship. Unlike most supply chain improvement efforts focused on managing and maintaining the current state and making incremental improvements, transformation involves multi-year, multi-functional efforts that can only be accomplished when embraced by top company executives. To gain executive buy-in develop a business case showing substantial hard and soft benefits.

Start with documenting the “As-Is” process capabilities and corresponding key performance metrics. This will lay the foundation for any future performance comparison and provide the starting point to develop benefits for transformation. Envision the “To-Be” process capabilities and desired performance metrics through benchmarking, group brain storming sessions, and alignment to business strategy and direction. Include envisioned capability cases to provide a vision of what the “To-Be” environment might look like. Develop a roadmap with critical milestones required to transition from the “As-Is” state to the “To-Be” vision. The trick is to have enough detail in this transition plan to execute against while still maintaining flexibility to adjust to new priorities and emerging technologies.

The skills people need to operate in the envisioned “To-Be” environment will be different requiring training and education. A focus on change management and employee development is necessary for successful transformation.

Conclusion:

The move to digital business capabilities is affecting all areas of a company including the supply chain. Today, technologies such as RFID, GPS and sensors have enabled organizations to transform their existing supply chain execution capabilities to be more flexible, open, agile and collaborative. Digital Transformation of supply chain operations is well underway in most industries today.

To be truly competitive in an increasingly volatile world, forward-thinking companies will need to transform their supply chain operations by investing in digital supply chain capabilities. The ability to improve customer service, reduce costs, minimize risk and enable company strategies through digital supply chain capabilities has caught the attention of executive management and supply chain practitioners must step up to meet this challenge.

Digital Transformation is an exciting opportunity for supply chain teams and requires the right combination of people, process, technology and data. At Logility, we have helped companies around the world transform and build resilient supply chains. Is your company embarking on a transformation journey? Have questions about how best to get started? Reach out to me on LinkedIn and let’s help you set the right path for your company.

 

 

 

The ultimate goal of a supply chain planning practitioners is often to optimize the capabilities of the company’s supply chain to meet customer requirements while minimizing costs and maximizing company performance. But, despite its importance, this goal is too often unreached—and if it is reached, it may last only a short time. Why? Because supply chains are ever-changing, driven by changing customer requirements, supply chain characteristics, industry dynamics, economic disruptions, and company objectives. We drive towards what we believe will be the optimal planning process, but predicting the future can be tricky, even for smart business technologists.

Just look at Thomas Edison. He believed direct current (DC) was the future of electricity—believed it so completely that he told Nikolay Tesla there was no future for alternating current (AC) electrical transmission systems. Or consider the founder of IBM, Thomas J. Watson, who predicted in 1943 that there was a world market for about five computers. Or 20th Century Fox executive Darryl Zanuck, who stated in 1946 that television wouldn’t be able to hold on to any market it captures after the first six months. (“People will soon get tired of staring at a plywood box every night.”)

Like those examples, predicting what supply chain challenges you will face in the future is problematic.

Of course, we should never give up trying to optimize supply chain planning, but I believe the key to success is to build resilient planning capabilities. By resiliency, I mean the ability to quickly recover from disruptive change and return to standard operating conditions without being overwhelmed or acting in dysfunctional or harmful ways. Companies can develop resilience by increasing redundancy, changing corporate culture, and improving flexibility.

Consider redundancy. Theoretically, a resilient supply chain can be built by creating redundancies—holding extra inventory, maintaining just-in-case capacity, having many suppliers, etc. While redundancy can provide some breathing room to continue operating after a disruption, typically it is a temporary—and very expensive—measure and leads to sub-optimal supply chains. Consider corporate culture. After a disruption, corporate culture is the factor that clearly distinguishes companies that recover quickly and profitably from those that falter. However corporate culture can rarely be controlled by supply chain professionals.

Now what about flexibility? When flexibility or agility is increased, the supply chain can both withstand significant disruptions and better respond to demand and supply fluctuations. Flexibility increases your ability to optimize. Flexible processes enhance a supply chain planning organization’s ability to adapt to changes and quickly adjust course towards optimal planning. In some organizations where procedures are set in stone it almost takes an act of god to deviate from those procedures. Organizations that follow guidelines are more agile and better positioned to embrace new paradigms.

Team flexibility enhances supply chain planning resilience. In today’s “war for talent” it is essential to hire people with excellent analytical, communication, and people skills. To retain talent, many supply chain organizations have instituted functional rotation programs to expose team members to various parts of the supply chain. Organizations have also adopted mentorship programs and formal succession planning processes to enhance retention. Finally, because the field of supply chain planning is always changing and advancing, it is essential that team members be encouraged to participate in professional organizations, obtain certifications and system knowledge and pursue advanced education. Some organizations offer monetary bonuses for training that leads to certifications.

An often-overlooked factor that greatly enhances flexibility and resilience is an integrated planning platform. An inadequate planning architecture hampers planning process optimization. Trouble results when the various systems involved don’t have the required capabilities, are set up in such a way that limits the ability to make changes quickly, and have inflexible integrations that invariably lead to lengthy workarounds using spreadsheets and other off-line tools.

In the recent Gartner research article “Getting Ready for the Future: Strengthen Your Supply Chain Planning CORE” Tim Payne wrote that supply chain planning leaders need the right mix of planning technology to ensure success. It is Gartner’s contention that all planning technology in the market, no matter what the vendor calls it, falls into one of the three planning categories of configure (to support company objectives), optimize and respond (when the company isn’t able to follow the optimal plan). All three of these categories need to be bi-directionally integrated. Gartner believes that the capabilities of each planning solution must be closely connected with the other solutions so that plans created in each can be aligned and synchronized. Gartner states that multi-enterprise planning is increasing and requires planning visibility of data across the supply chain, support for collaboration on plans and scenarios, creation of what-if scenarios, management of planning process workflows, support for performance management, and appropriate scale and speed in addition to the right functional capabilities.

So where is our journey taking us? In their July 2019 Report “The 2020 Strategic Supply Chain Technology Trends”, Gartner identifies the top 8 supply chain technology trends in 2020 as:

Hyperautomation: a framework to mix and match a vast array of technologies in the best possible way

Digital Supply Chain Twin (DSCT): a digital representation of the physical supply chain

Continuous intelligence (CI): which leverages a computer’s ability to process data at a much faster pace than people can

Supply Chain Governance and Security: an increasingly important macro trend, as global risk events are on the rise and security breaches impact companies on both the digital and physical level

Edge Computing and Analytics
: where data is processed and analyzed close to its collection point

Artificial Intelligence (AI)
: technology options that help companies understand complex content, engage in natural dialogue with people, enhance human performance and take over routine tasks

5G Networks: a massive step forward with regards to data speed and processing capabilities

Immersive Experience Technology: such as virtual, augmented, and mixed reality, has the potential to radically influence the trajectory of supply chain management.

Achieving an optimal planning state at most companies is a never-ending journey. Customer requirements are always changing. Supply chain operations change frequently to support changing company goals and objectives. Supply chain knowledge continues to expand. Supporting technology continues to grow its abilities to support automation, complexity, and advanced capabilities.

These many challenges are what makes supply chain planning fun and rewarding. All supply chain practitioners should reevaluate today’s advanced, integrated supply chain planning platforms, like the one offered by Logility. An optimized supply chain doesn’t just happen; it is planned. Logility can help you optimize your planning and leave the competition behind.

The vast amount of information vying for our attention can make your head spin. When you think about how much this has changed over the last 10, 20 or more years, it is quite dizzying. It has been 13 years since the iPhone was introduced. Just 10 years prior, I remember purchasing my first Motorola Flip phone, which looked like the picture here. In 1997 this was the pinnacle of mobile technology and you just had to have one. Without it you had to find a landline, a pay phone! There was no remote access to global information, AI-powered personal assistants, or apps to make every part of your day easier. How did we ever survive!?

If you could transport a supply chain professional from 20 years ago to the present day, they would not recognize today’s supply chain operations or the technologies we apply to try to solve supply chain challenges. That is because today’s supply chain operations are faster, more complex and less predictable than ever. Volatility due to shrinking order to delivery cycles, rapid shifts in distribution channels, SKU proliferation, global competition and more frequent disruptions that cause demand and supply fluctuations are all amplified in today’s “normal” business environment. Volatility has become a major challenge for companies across all verticals and managing this challenge in a cost effective manner can lead to significant and sustainable benefits including lower costs and higher customer service levels. Today’s supply chain periodicals and blogs are flush with discussions around continuous planning, concurrent planning, cognitive planning, resilience and disruption planning, demand sensing, sense and respond, etc. as ways of dealing with volatility.

Recently I was asked, “If we implement capabilities that enable continuous planning and quick response to unplanned supply chain events, do we still need periodic supply chain planning?” Most industries have moved towards pull-driven or demand-driven operations so logically there is a tendency to focus more attention on where demand is coming from, the customer. If we produce exactly what the customer wants and have it available where they want it, then everything is good, right? Well, unfortunately for most companies, replenishment lead time is longer than customer order lead time. In other words, it takes longer to produce the item then the customer is willing to wait for it. Therefore, some if not all of the replenishment has to happen prior to the customer’s purchase decision. This is where periodic planning becomes important.

Periodic demand planning provides the foundation for all periodic planning. Forecasted demand is used to determine when and what to purchase and manufacturer, and where to position it to meet projected customer demand at minimal cost. Aggregated forecasts along with production capabilities are used in Sales & Operations Planning (S&OP) to ensure longer term supply capabilities are sufficient to meet expected longer term demand projections. The S&OP process should be focused far enough into the future to make decision around people, process and capital investments in enough time to mitigate risks and maximize opportunities. Are forecasts perfect? No and they never will be. Unless someone invents a way to instantly make anything when and where it is needed (i.e., Star Trek Replicator) then we are stuck trying to predict future demand.

However, because forecasts are never perfect, we also need a way to deal with unplanned events. This is where continuous planning becomes essential. Customers will not wait a month, a week or even a day for you to run your periodic planning process to determine whether you can meet an unplanned request for a product. Consumers have been conditioned through instant access to everything to expect an immediate response to their question of “when can you deliver it?” If you can’t answer that question quickly and in a satisfactory way (short lead time) their business will be lost. So you have to sense a problem or opportunity, determine an optimal or at the very least a feasible solution, and then quickly execute a response.

Obviously, the answer to the original question is that you need both Periodic and Continuous Planning to be successful in today’s complex, fast paced volatile business environment. Periodic plans provide the starting point to meet company objectives through optimized supply chain operations. Optimized periodic plans provide the baseline for what is possible if no unplanned events were to occur. Starting with the optimal plan, continuous planning creates feasible derivatives to effectively respond to unplanned events.

Periodic and continuous planning are highly interconnected and it is essential that both are managed with the same integrated platform to capture differences between the plan and what is actually happening and ensure that reality and plans remain aligned. Does this map to your supply chain operations? What lessons have you learned through a mix of both Periodic and Continuous Planning? Let me know at blog@logility.com.

Recently I had the pleasure to sit down with our own Kevin McInturff, executive vice president of R&D following his fireside chat at Disruption RX with Mark Balte, senior vice president of product innovation. The two discussed the challenges companies have faced in the past year and the road ahead. I found the conversation fascinating and thought I would share a few excerpts of it with you.

One of the key themes at Disruption RX was the need to build a resilient supply chain. What are some of the steps you think companies need to take for this to be a reality?

First, companies need a new mindset. Disruptions large and small are nothing new. The problem has been in the response to them. A traditional planning approach says: “I know…if disruptions are more frequent, I’ll simply execute my (traditional) planning methods more often.”

This may sound good, but it isn’t. It leads to what Gartner calls “nervous planning” and what others have referred to as “highly-caffeinated planning.”

The paradigm requires learning to embrace known variability and reject the premise that we’re all at the mercy of uncertainty. Note that this approach acknowledges the certainty of disruptions…but now we’ll be ready with contingencies based on multiple scenarios produced using a digital twin of our supply chain.

Disruptions are not always a negative. How have you seen companies turn these challenges into opportunity?

You are right, often we forget that disruptions are rarely bad for everyone. For example, Logility customer Tillamook Creamery has used Logility for years to better respond to inevitable disruptions in its supply chain. During COVID-19, ice cream sales soared more than 30%!

During a wide-spread disruption, like that caused by Covid-19, a digital planning platform becomes even more valuable — allowing a company to make faster, and more optimal supply chain decisions. Put another way, it’s all about speed. The process automation capabilities in our platform allows planners to focus on value-adding activities and using fresh data to, for example, get inventory where it needs to be. This means optimizing the finite time a human planner must spend analyzing a situation and taking action to make a positive difference.

As the head of R&D, what are some of the areas your team is focused on?

One key area of investment is driven by our belief in putting the client at the center of our journey. Useful systems are the ones that get used — we never forget that real humans will be accountable for the utility of our solutions. For us, that means eliminating IT headaches with cloud-native, frictionless, easy-to-upgrade applications.

We’re also focused on making it easy for planners to incorporate new data elements quickly. We want to encourage rapid-fire creativity and never let the platform be a constraint. We’ve observed that this helps planners by freeing them to improve rather than simply automate. If you had asked someone in the 1800s how to improve transportation, they would have said a faster horse. That is a missed opportunity. We want planning professionals obsessing about a car, not faster horses. The happy byproduct is companies that adopt this philosophy will win the talent war, because true talent doesn’t want to just be busy; they want to question everything.

You joined the company about four months ago. What are your impressions so far?

What really impressed me was the drive and passion in everyone I meet, the level of expertise in advanced technologies like Machine Learning and the deep industry knowledge.

Logility is the perfect blend of foundational strength and desire to innovate. The product visionaries here never lose their footing. I find often that companies who are overly enamored with their own technology focus their efforts in the pursuit of the next shiny toy. The reality is more technology for technology’s sake does not always equate to value for the client. While others give in to the temptation to be led by their technology, we will always allow the voice of the customer to guide us toward solving real supply chain problems.

At the same time, Logility values innovation. We are leading the market in purpose-built and embedded AI-based capabilities that help companies automate planning and accelerate supply chain decision-making.

This is a brief review of Kevin’s session at Disruption RX. Make sure to visit this blog often as we post additional insights and session highlights from the virtual supply chain summit.

Synchronize, Align and Accelerate your Business through Advanced Sales & Operations Planning

The amount of change in supply chain management practices since I first became a practitioner more than 25 years ago is eye watering. Today supply chain practitioners operate in a world of ever-increasing complexity, data is doubling every 18 months and there is a wealth of knowledge in social media ready to be utilized. At the same time, there continues to be a shortage of skilled supply chain talent while operations run 24x7x365 at a faster pace and access to cloud-based systems from any device from anywhere means you are always connected. Whether you are operating high performance jets or a global supply chain, all of this leads to “Time Compression” which I believe is one of the biggest challenges we face today. It also offers one of the biggest strategic opportunities.

In this connected world an opportunity or crisis can emerge in an instant. Your C-suite leaders want increased speed and agility and they expect you to lead the way. The supply chain can’t wait until the end of the month or week or even day to respond. Customer expectations continue to increase, and they expect near-immediate response driven by companies like Amazon who are now even closer to offering 2-hour drone delivery.

Research shows that it still takes many companies over 6 months to create and deliver a new product to market. So, it seems supply chain practitioners still have some work to do. How do we speed up supply chain operations while ensuring synchronized and aligned planning across the entire end-to-end supply chain from “Concept Design to Customer Availability?” Integrated Business Planning.

In my experience, most companies have fragmented planning capabilities where longer term strategic (financial), mid-term tactical (S&OP) and shorter-term operational planning (S&OE) are all separate. Strategic, tactical, and operational planning efforts are run by different groups, use different assumptions and data, and rely on different systems! Strategic plans are tough to incorporate into an aggregate S&OP plan, and both plans often do not reflect the latest supply chain network and operational data. These disconnects and misalignments lead to missed opportunities, higher costs and increased operational risks. I am sure you have been in meetings where spirited discussions arise over whose plan is the best.

Advanced Sales & Operations Planning (S&OP), also called Integrated Business Planning, is a proven process to accelerate, direct and optimize strategic, tactical, and operational business decisions. Facilitated by a single planning platform, integrated business planning can unite short, medium, and long-term planning to drive better practices and closer teamwork among planning teams. All supply chain stakeholders get reliable answers faster. Forecasts and capacity plans become more accurate and synchronized. Alerts highlight plan deviations. Time is compressed. Trust improves. Short, mid and long term planning is done with confidence… all involved are less stressed, more productive, and more satisfied.

Companies today need to manage their entire supply chain effectively and efficiently from “Concept Design to Customer Availability.” Luckily, a convergence of advanced supply chain processes and capabilities, ‘Big Data’, and a tech savvy workforce, all enabled by advanced planning solutions run on powerful computers, makes the timing right to take your supply chain to the next level of speed and performance.

When I led supply chain operations at a Fortune 500 food company 20 years ago, I could only dream about seamless flows of information that enabled a collaborative S&OP process across teams, departments, continents, and even customers and suppliers. As Maverick said in the movie Top Gun, “I feel the need, the need for speed.” Do you feel the need to speed up your supply chain? Today you could speed up your supply chain by a factor of 10. It isn’t a dream or even a movie, it’s reality, and it’s a necessity. Now, you must take the next step forward.

Even under the best circumstances, developing production/sourcing plans three, six or nine months into the future with a high degree of confidence is difficult. During times of change and disruption it is nearly impossible to get an accurate plan. Huge sales and margin impacts hang in the balance. Once orders are placed, the ability to respond to changes quickly and optimally can mean the difference between profit and loss.

Today, many companies run separate processes for long-, medium- and short-term business planning. These individual plans are built from different data sets, based on varying business assumptions, displayed in different units and across different horizons and rely on different systems. It is not surprising that these separate planning processes produce very different results and generate very different recommendations. Trying to integrate these different plans after the fact is next to impossible. Details will be lost or miscommunicated in the data translation efforts leading to strategic plans that lack operational reality and operational plans that lack strategic focus.


Instead, efforts should be focused on generating a single, integrated business planning process supported by a single platform that enables intelligent multi-horizon planning. A platform approach drives closer collaboration between planning teams, ensures consistency from one planning horizon to the next and allows the team to adjust plans confidently and quickly as the market shifts. Handovers are seamless and everyone receives reliable answers sooner. Accurate forecasts and capacity plans are developed at the appropriate aggregation level and time horizon. It’s a win-win for the everyone involved.

Where once disconnected planners had to scramble to solve issues that were identified too late to effectively mitigate the situation, an integrated platform provides instant alerts to deviations from the plan. Lag time and opportunities for miscommunication and distrust decrease. The tendency to “order too much” also decreases, which helps to eliminate the creation of excess inventory buffers. Crucial long-term planning can be executed earlier with confidence, thus winning the race with competitors vying for capacity and resources at the same suppliers.

Consolidating the phased planning process improves communication, trust and responsiveness while also delivering a strategic advantage in the form of faster, more insightful “what-if” scenario analyses. This is what every supply chain planner wishes for: better analysis capabilities to solve problems before they happen, freeing up time to add real value to their company’s success.

Could your company benefit from an integrated approach to business planning over multiple time horizons and a comprehensive planning platform that supports short-, medium-, and long-range planning? If so, Logility can help.

Your Next Stop, The Twilight Zone!

I am a big fan of the original Twilight Zone television series, hosted by Rod Sterling. This original series, filmed in black & white, ran for five seasons on CBS from 1959 to 1964 and remains in syndication to this day. The series episodes start with a combination of eerie music, Rod Sterling’s instantly recognizable monologue narrative, and often strange geometric images on your TV screen all of which quickly catch your attention. Each Twilight Zone episode holds your attention with stories involving people who face unusual, extraordinary and often terrifying circumstances. This is the opening monologue for the 1st season, “You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. Your next stop, the Twilight Zone!”

Rod would introduce the first scene of each episode with something like, “You’re looking at a tableau of reality, things of substance, of physical material: a desk, a window, a computer. These things exist and have dimension. Now this is Jim Curtis, age twenty-six, who also is real. He is a supply chain planner for a mid-sized manufacturer of packaged food products. But in just a moment we will see how thin a line separates that which is real from that which is possible.”

Jim spends most of his day manipulating data and wishing he had the opportunity to really make a difference for his company. When Jim graduated at the top of his class from a leading business school with a degree in supply chain management he had high hopes, dreams even, of applying his hard earned knowledge to significantly improve his employers supply chain capabilities. He dreams of a day when the mundane aspects of his job are automated freeing him to focus on more value-adding activities. Turning in for the night after a rather boring and tedious day, Jim has a vivid dream of the future of supply chain planning. When he awakes the next morning, Jim is unaware that his world has already significantly changed.

Jim arrives at work before the rest of the supply chain planning team to get an early start on his backlog of data manipulation and system parameter maintenance. He is startled to see that someone had cleaned off his desk and bookshelf of most of his paper printouts. In fact, he is a bit panicked to find the printout he was working on is nowhere to be found. He dreads having to submit a new job to his IT department to print out last month’s shipment data and start over identifying shipment anomalies that will lead to forecast inaccuracies. Jim also notices that someone has given him a computer headset. With a sigh, Jim logs into his computer and slips on the headset. To his surprise his computer says, “good morning Jim, I have analyzed the latest shipment information and its impact on demand and supply and have identified the top opportunities for improvement”. Jim nearly falls out of his chair and is tempted to run back to the elevator. He thinks maybe he is still dreaming, and pinches himself to wake up.

Although Jim is dumbfounded, he decides to play along and responds by saying, “Ah sure, show me the top opportunities for improvement.” The computer responds, “I have identified a supply disruption due to a fire at ABC Packaging that will affect 20% of customers including 5 of our top 10 customers, would you like to see the best 3 scenarios for resolving this supply disruption?” Jim responds he does, and the Artificial Intelligence (AI) enabled solution displays the best 3 scenarios graphically and numerically in both volumetric and financial terms side by side. After partially recovering his senses, Jim evaluates the scenario tradeoffs and determines the best path forward for his company. Jim instructs the computer to select scenario 2 which involves sourcing the effected materials from an alternate supplier at a bit higher cost but still providing a positive margin. The autonomous supply chain planning platform executes scenario 2 and displays the new baseline plan for Jim’s review.

Jim is so mesmerized by the ease of use and power of the intelligence infused supply chain planning platform that he doesn’t notice his teammates arrive at work. When he finally takes a break he notices that all his teammates are all interacting in the same manner with this amazing supply chain planning platform. Time flies and Jim solves all the near-term supply chain problems that he is responsible for. He wonders what he will do for the rest of his day. He doesn’t have to ponder that question for long.

Knowing that Jim has completed his assigned activities for today the autonomous supply chain planning system asks Jim if he would like to analyze longer-term supply chain opportunities and risk scenarios to determine the best responses. The autonomous supply chain planning system is constantly analyzing new structured and unstructured data from internal and external sources to uncover opportunities and potential risks in the immediate, mid-term, and longer-term horizons. Many of these opportunities and risks are automatically responded to where there is a clear cut answer. Where the platform does not possess enough information and ambiguity exists, the platform engages its human counterpart for assistance. In this case, the autonomous supply chain planning platform has identified a dozen or so situations that require “human” input to determine the best response. This is where Jim can finally achieve his dream of using his deep supply chain knowledge to work on value-adding activities that significantly improve his company’s top and bottom lines.

Jim’s future supply chain planning world seems like something out of a Rod Sterling’s Twilight Zone episode but in reality the type of capabilities described in this post are already commercially available or will be in a few short years. Of course going from a manual, brute-force to an autonomous supply chain planning process overnight can only happen in the Twilight Zone. In the real world, it takes a well-thought-out journey involving incremental improvements in people, process, technology, and data. As with any journey often the hardest parts are setting a destination and taking that first step. Has your company developed their vision and a path to autonomous supply chain operations? Logility can help by working with you to develop your vision and path to autonomous supply chain operations and with taking every step along your journey.

Are we ready? And if so what’s involved?

The adoption of artificial intelligence (AI) and machine learning (ML) in supply chain planning is not a passing fad. AI and ML are fundamentally changing supply chain. There are early indications the COVID-19 pandemic has accelerated adoption rate as efforts to adapt to this disruption explore ways to make better decisions faster. Is your company ready to embrace artificial intelligence and machine learning capabilities? If so, what does that really mean and how do you get there?

Artificial Intelligence is the theory and development of computer systems ability to perform tasks that normally require human intelligence such as visual perception, speech recognition, decision-making and translation between languages.

Machine Learning is the study of computer algorithms that improve automatically through experience. It is seen as a subset of artificial intelligence. Machine learning algorithms build a mathematical model based on sample data, known as “training data”, to make predictions or decisions without being explicitly programmed to do so.

The Gartner Hype Cycle shows Machine Learning on the downside of the ‘Peak of Inflated Expectations’ and entering the ‘Trough of Disillusionment’. Gartner predicts that mainstream adoption of Machine Learning is at least five years away, potentially ten. However, as stated earlier due to COVID-19, mainstream adoption might happen much quicker.

Entering “Machine Learning” and “Supply Chain Planning” into your search engine of choice delivers nearly one million results over the last year alone. This is a topic that supply chain planning people are thinking, talking and writing about. As a comparison, the supply chain planning mindshare spent on Machine Learning is nearly the same as that spent on reducing costs, improving customer service and driving new revenue. Type “Cost Savings” and “Supply Chain Planning” and you get more than 1.1 million results over the last year. One could argue that Machine Learning could contribute to meeting cost, revenue and customer service goals, but clearly the focus today on improving supply chain planning capabilities through the adoption of AI and ML is a hot topic.

There is no doubt that your C-Level executives are looking to their supply chain leaders to produce quantifiable results showing how AI can improve their business in a reasonable time frame. Unfortunately, many early efforts to gain value from AI in the supply chain have failed. Most of these efforts involved the development of home-grown capabilities through add-on and disconnected solutions taking years of trial and error to find the right combination of algorithms and data to solve a problem and add value.

A better way is to start with purpose-built AI and ML capabilities that are embedded in your supply chain system of record and proven to solve a key problem and add value. Cognitive supply chain planning & optimization solution providers like Logility actively embed purpose-built AI and ML capabilities into their platforms. These solutions are now proven, through multiple customer adoptions around world and across industries, to quickly deliver value.

A great place to start your AI and ML journey is in demand forecasting. Much of the demand forecasting process can be automated. From data acquisition and data scrubbing through outlier smoothing, algorithm selection and parameter tuning all the way to segmentation, collaboration and causal parameter selection and tuning can be automated. Exceptions can be automatically identified and addressed through adjustable limits, active alerts, and collaborative workflow. The automation of routine tasks and the augmentation of analysis and decision making through AI capabilities is a reality today and frees up demand planning analysts to focus on value-adding activities.

Another way to quickly gain value from existing AI capabilities is found in software solutions that use algorithms to continually analyze the state of your supply chain and recommend or automatically execute plans to meet customer requirements. Optimization driven by algorithmic planning is a form of machine learning that relies on a set of provided information (supply chain facilities and capacities, transportation lanes and capacities, customer service requirements, profit requirements, orders, etc.) to automatically make optimal decisions.

“Within 5-10 years, the supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end work-flows and requires very little human intervention.”

– Harvard Business Review – Allan Lyall, Pierre Mercier, & Stefan Gstettner – June 15, 2018

Attaining the full benefits of artificial intelligence will be an evolutionary process. We must learn to crawl, then walk, then run. The introduction of advanced capabilities based on AI into most supply chain organizations will take time, but that should not stop supply chain professionals from planning for the future or taking advantage of the purpose-built solutions available today. Implementing algorithmic planning and optimization technologies today builds the kind of expertise and experience that will ease the adoption of advanced AI capabilities in the future.

Are you considering adopting AI capabilities in the area of supply chain planning? If so, what steps are you taking to get there?

The global food and beverage supply chain has been stressed to the breaking point by the COVID-19 Pandemic. In most countries since early spring, there has been an unparalleled wave of stockpiling by panicked consumers leading to near empty retail shelves. Shelter-at-home and the mandatory closing of non-essential businesses has led to restaurant bankruptcies in record numbers, pouring milk down the drain and fields of rotting produce that were destined for food service businesses. Plant shutdowns due to outbreaks of COVID-19 and widespread shortages of imported food products have further aggravated an already stressed out F&B supply chain.

The F&B Silver Lining
However, it is not all doom and gloom. F&B companies that invested in advanced supply chain planning systems prior to the pandemic have benefited from the ability to quickly pivot through simulations, what-if scenarios, and multi-variable segmentation, revenue and profit-based analysis. (For example, read the recent article in Supply Chain Dive, From Visibility Software to Pallet Picks: How Tillamook Planned Inventory as Demand Soared. Tillamook, a Logility customer, highlights how the right technology, people and foresight can turn this challenge into an opportunity.) These companies can quickly augment statistical forecasts with forward looking, market-based demand signals. During times of crisis, advanced-planning-systems have helped F&B companies gain market share and improve profits despite significant challenges. In fact, according to Euromonitor International, food and non-alcoholic beverages is the only consumer spending category expected to show positive growth in 2020.

So, with continued strong consumer spending on food and non-alcoholic beverages what changes should we prepare for post COVID-19? The pandemic has sped up the adoption of many trends that we saw prior to COVID, has led to the adjustment of existing priorities and the introduction of completely new priorities.

Changing Consumer
In one example, we saw the pandemic accelerate customer demand for plant-based meats due to the short supply of animal-based products. We also saw an increase of home cooked meals. The products and ingredients required to make home cooked meals has experienced a significant, and unexpected, increase in demand. Widespread fear of contracting the virus led to the rapid increase in direct-to-customer deliveries. It is estimated that 40% of essential items are now bought online. For most F&B companies, this amount of e-Commerce business was not normal pre-COVID, but it certainly is during the pandemic and may well be post-COVID as consumer behaviors change.

The Role of Traditional Forecasting
Traditional product forecasting is based on statistical time-series techniques that create forecasts using sales history. Unfortunately, when drastic changes in demand occur over short periods of time, as with the Coronavirus, the past is rarely a great predictor of the future, especially when trying to forecast down to the SKU/location level. A higher priority must be given to forward-looking data to sense, react and adapt to what is actually happening. Some F&B companies have placed more priority on developing demand sensing capabilities. Forward-thinking leaders will benefit post-COVID from these enhanced market-based demand planning capabilities.
Demand sensing is the translation of demand information with minimal latency to detect who is buying what products, which attributes are driving sales, and what impact demand-shaping programs are having. Demand sensing uses forward-looking inputs to augment a historical forecast to improve forecast accuracy and synchronize and align purchasing, manufacturing, and deployment operations to what is really happening in the supply chain. Typical demand sensing inputs that can be used to improve product forecasts include daily sales order history, daily point of sale (POS), syndicated data, market intelligence, social media, location square footage, foot traffic and even weather. Demand sensing helps F&B companies quickly respond to micro-market changes, to improve fill rates and reduce distressed product.

The System Challenge (and Solution)
It’s no secret that most food and beverage companies have fragmented planning capabilities. Longer-term planning (strategic and financial), mid-term planning (tactical and S&OP) and shorter-term operational planning (demand, inventory, purchasing, replenishment, and manufacturing) are not aligned or synchronized. These disconnected planning efforts are run by different groups, use different assumptions, are based on different data and run on different systems. Financial plans are tough to incorporate into S&OP and operational plans, and Financial and S&OP plans often don’t reflect the latest supply chain operational data. Disconnects and misalignments lead to missed opportunities, higher costs and increased operational risks.

What’s the answer? A renewed focus on advanced sales and operations planning, or what some in the industry refer to as Integrated Business Planning (IBP). IBP unites volumetric and financial information into one flexible planning and decision support process over operational, tactical, and strategic planning horizons. IBP drives better practices and closer teamwork among planning teams by creating smoother transitions between supply chain stakeholders. Everyone gets reliable answers faster which is especially important now. Forecast and capacity plans become more accurate and synchronized. Alerts highlight plan deviations, collaboration compresses process times and trust in the integrated plan improves.

For many F&B companies COVID has introduced a new priority to invest in advanced supply chain capabilities that enhance automation, agility and resilience through the adoption of workflow, advanced analytics, machine learning and artificial intelligence. Automation of routine supply chain tasks and speeding up decision making is essential if the industry is to evolve to accommodate much higher direct-to-consumer transaction volumes. F&B C-Level executives expect their supply chain leaders to prepare their company’s operations for the digital age. A new focus on advanced technology is needed to achieve the required digital transformation including in the areas of:

• Supply chain optimization technologies like inventory optimization, supply optimization and finite scheduling
• Supplier on-boarding and management capabilities
• Supply chain digital twins and real-time information to sense, analyze and respond faster to demand and supply variations

Veterans of the food and beverage industry know when times are good people eat and drink in abundance and when times are bad people eat and drink even more. The data seems to support this point of view. However, the COVID-19 Pandemic has shone a spotlight on some major supply chain weaknesses across all sectors of the F&B industry. As a supply chain practitioner, I believe the attention being paid to the supply chain provides a unique opportunity to push for needed improvements. Are you ready to lead the charge for the digital supply chain of the future?