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Demand forecasting plays a crucial role in business success, as it helps predict customer demand and plan inventory effectively. However, traditional forecasting methods often fall short in accuracy. Fortunately, with the advent of artificial intelligence (AI), demand forecasting software has undergone a significant transformation. In this beginner-friendly blog post, I’ll explore how AI can improve demand forecasting and highlight the key concepts that will help you understand this exciting field.

Smart Data Analysis: AI algorithms excel at handling large amounts of data, such as sales history, market trends, and customer behavior. By using AI, demand forecasting models can identify patterns and connections within the data, leading to more accurate predictions.

Automated Learning: Machine learning algorithms automate the training process, reducing the need for manual intervention. AI systems continuously learn from new data, adapt to changing market dynamics, and fine-tune forecasting models in real-time, ensuring up-to-date and reliable predictions.

Understanding Customer Segments: AI-powered demand forecasting software allows businesses to divide customers into different groups based on factors like location, demographics, and purchase history. This segmentation helps personalize forecasting models and better understand unique demand patterns across customer groups.

Considering External Factors: AI algorithms effortlessly incorporate external factors like economic indicators, weather conditions, and social media sentiment. By considering these factors, demand forecasting models become more comprehensive and can capture how external variables affect customer demand.

Real-time Forecasting: With AI, businesses can achieve real-time demand forecasting, providing immediate insights into market conditions. By continuously monitoring and analyzing data, AI systems can detect demand fluctuations, adjust forecasts accordingly, and support proactive decision-making.

Predicting Future Trends: AI techniques enable businesses to move beyond historical analysis and make predictions about future trends. By leveraging machine learning, demand forecasting models can identify hidden patterns, anticipate emerging trends, and make proactive predictions, helping businesses stay ahead of the competition.

Improved Accuracy: One of the significant benefits of AI in demand forecasting software is improved accuracy. AI models use advanced statistical techniques and regression methods to reduce errors, resulting in more reliable and precise demand predictions.

Sensing Real-time Demand: Demand sensing is the ability to capture and respond to real-time demand signals. AI-enabled demand forecasting systems can sense demand signals from various channels, such as point-of-sale data and online sales. This enables businesses to quickly respond to changing demand patterns and optimize inventory levels.

Optimizing Inventory Management: Accurate demand forecasting with AI leads to better inventory management. By predicting demand more precisely, businesses can minimize stockouts, reduce excess inventory costs, and improve overall supply chain efficiency.

Influencing Demand: AI-based demand forecasting allows businesses to strategically shape demand. By understanding customer preferences and behavior, businesses can influence demand through targeted marketing campaigns, pricing strategies, and product promotions, resulting in increased sales and customer satisfaction.

Artificial intelligence has revolutionized demand forecasting by enabling businesses to leverage advanced analytics, automation, and real-time insights. By incorporating AI into demand forecasting processes, businesses can improve accuracy, optimize inventory management, respond swiftly to market changes, and make data-driven decisions. As a beginner, focusing on the key concepts mentioned above will provide you with a solid foundation to understand how AI can enhance demand forecasting in your business.

Still need more information? Head to our demand forecasting solutions page. If you’re ready to get started, contact us and we can walk you through first steps.

Supply chain planning plays a critical role in ensuring operational efficiency, customer satisfaction, and overall success. However, relying solely on Microsoft Excel for supply chain planning can expose businesses to a myriad of risks and limitations. Let’s explore the dangers of using Excel as the primary tool for supply chain planning and discuss the importance of adopting more advanced and specialized solutions.

Limited Data Handling Capabilities

Excel is a versatile tool for basic data management and analysis, but when it comes to handling vast amounts of complex supply chain data, it falls short. Supply chain planning involves numerous variables, such as demand forecasts, inventory levels, lead times, and production capacities. Excel’s row-and-column structure can quickly become cumbersome and prone to errors, leading to inefficiencies and incorrect decision-making.

For example, imagine a manufacturing company trying to optimize its production schedule based on demand forecasts. With Excel, any changes to the forecast or constraints require manual adjustments throughout multiple spreadsheets, making it difficult to maintain accuracy and consistency. The risk of errors increases as the complexity of the supply chain grows, making it an unreliable tool for effective planning.

Lack of Real-Time Visibility

Supply chain planning requires real-time visibility into inventory levels, production status, transportation schedules, and customer demands. However, Excel lacks the capability to provide real-time updates and synchronization across multiple departments or stakeholders. As a result, it becomes challenging to maintain accurate and up-to-date information, leading to miscommunication, delays, and increased costs.

Consider a scenario where a retailer relies on Excel to manage inventory levels across multiple warehouses. Without real-time visibility, it becomes difficult to track stockouts, anticipate demand fluctuations, or optimize replenishment. This can result in missed sales opportunities, excessive inventory carrying costs, and ultimately, dissatisfied customers.

Inefficient Collaboration and Communication

Supply chain planning is a collaborative effort involving various teams, such as procurement, production, logistics, and sales. Excel, however, is not designed for efficient collaboration and communication among these teams. Sharing and tracking multiple versions of Excel files through email or shared folders can quickly lead to confusion, version control issues, and data integrity problems.

Imagine a situation where a company needs to update a critical delivery schedule due to a production delay. With Excel, it becomes challenging to communicate the changes effectively to all stakeholders in real-time, leading to missed deadlines, customer dissatisfaction, and damaged relationships with suppliers and partners.

Limited Analytical Capabilities

Excel’s analytical capabilities are rudimentary compared to dedicated supply chain planning software. Analyzing large data sets, running complex optimization models, or performing sophisticated what-if scenarios becomes time-consuming and error-prone in Excel. Supply chain professionals need advanced analytics tools to make accurate and timely decisions based on various parameters and constraints.

For instance, a distributor might need to determine the optimal order quantities from suppliers while considering discounts, lead times, and transportation costs. In Excel, performing such calculations and optimization requires manual effort and is prone to errors. Specialized supply chain planning software, on the other hand, can automate these processes, reducing costs, improving accuracy, and providing valuable insights for decision-making.

Vulnerability to Errors and Data Integrity Issues

Excel is notorious for its susceptibility to errors, especially when managing complex calculations and formulas. A simple mistake in one cell can quickly cascade throughout the entire spreadsheet, leading to inaccurate forecasts, incorrect order quantities, and disrupted supply chain operations.

Moreover, Excel lacks built-in data validation features, making it difficult to enforce data integrity rules. This increases the risk of human error, duplicate entries, or inconsistent data, which can have significant repercussions on supply chain planning accuracy and reliability.

While Microsoft Excel is a powerful tool for various business applications, relying solely on it for supply chain planning can be risky and hinder operational efficiency. The limitations in handling large data sets, the lack of real-time visibility, inefficient collaboration, limited analytical capabilities, and vulnerability to errors all contribute to the dangers associated with Excel as a standalone planning tool.

To mitigate these risks, businesses should consider adopting specialized supply chain planning software that offers advanced features, such as real-time data synchronization, collaborative platforms, sophisticated analytics, and automated optimization. By leveraging modern tools specifically designed for supply chain planning, businesses can enhance decision-making, improve operational efficiency, and gain a competitive edge in today’s dynamic business landscape.

Your Comprehensive Guide to Production Planning Software

The benefits of production planning software vs scheduling are about the granularity of the plan: capacity plans (or master production schedules) are not granular and factor in less granular things, like high level capacity, forecasts, inventory, and transfer times. They are often done weekly, and that’s where production planning software will shine. Once you start scheduling operations down to the hour, that’s a job for production scheduling software. Here are a few of the commonly asked questions when searching for products.

1. What is production planning software?

Production planning software helps you determine how to run production based on your client orders, forecasts, and safety stock requirements. It enables you to figure out the “what,” the “when,” the “where,” and the “how many” behind all your manufacturing activities:

What: Determine the exact product mix you’ll need to produce to satisfy customer demand.
When: Create a production plan that’s realistic for your plants and teams.
Where: Get the most out of all your plants—not just the ones that happen to be located near the areas where customer demand is currently highest.
How many: Plan production down to the exact number of units that will enable you to meet current and forecasted demand.

Once your production planning software has produced all of this information, you can send it to your production scheduling system and determine the best sequence for making the products and the ideal use of your machines to ensure your plants run as efficiently as possible.

2. What are the benefits of production planning software?

The leading benefit of production planning software is that it enables you to create a master production schedule. This schedule gives you a detailed, time-phased representation of the quantities, timing, and sequencing in your manufacturing operations.

Your master production schedule also enables you to understand the constraints across your entire manufacturing network. Your network probably includes production plants, suppliers, and distribution centers. With production planning, you can not only create a capacity plan for your production facilities, but also make a warehouse plan that dictates how you should be transferring and storing products to meet demand signals at each distribution center. You can then create a supply plan that stipulates which materials you should be purchasing and how you should be moving them between facilities to keep your supply chain balanced.

All of the information in your master production schedule will be based on constraints. This is where production planning software excels over enterprise resource planning (ERP) systems. Although ERP systems often offer production planning capabilities, the plans they produce don’t always reflect your company’s constraints. An ERP may tell you that you need to make 1,000 units of a product this week, but it won’t take into account that you can only make 500 units in a day and that the materials you need are in a warehouse three states away—details that can have a dramatic impact on your production plan. By contrast, production planning software will help you use your production plants and your entire supply chain network to meet your demand on time at the lowest possible cost.

Another major benefit of production planning software is the ability to reduce planning cycle time. Even today, too many companies still plan production manually using spreadsheets. This approach forces teams to review every item and event throughout the production cycle. A production planning solution that lets you manage by exception can dramatically increase the efficiency of your planning team by allowing them to focus only on the areas that urgently need attention.

With production planning software, you can also optimize your inventory of raw materials and finished goods. With better signals about what your inventory should be, you can make smarter purchase decisions throughout your supply chain and plan production in ways that improve inventory turnover.

Better production planning will also help you improve customer service levels. Rather than constantly navigating the challenges of unexpected shortages and downtimes, you’ll be able to produce wherever and whenever you need to so that you can ensure you have the right products in the right places at the right time.

You can also use production planning software to increase production throughput. Suppose your factory produces pens in three colors: red, black, and blue. Every time you switch to producing a different color, you must clean out and reset your machines. This means you should strive to batch your orders for each color as much as possible so you can minimize changeovers and reduce nonproductive time. Production planning will enable you to look across your manufacturing facilities, understand demand patterns, and then sequence production of each color to hit your production targets with as few changeovers as possible. As you increase throughput and reduce nonproductive times, you’ll naturally increase your utilization of capital equipment too.

Consider how production planning software can help you reduce waste and obsolescence. The software lets you monitor shelf life closely to make the best use of your inventory. If some products are set to expire in three days, you can avoid shipping them to a customer. If you have a backlog of items with several months of shelf life remaining, you can focus on using up that inventory and slow down your purchasing of the raw materials these products contain. As you reduce waste, you’ll reduce labor costs because you’ll stop building products you don’t really need.

Your production planning software can also help you capture tribal knowledge. Detail schedulers typically have many years’ worth of information in their heads. What will happen to your business when they retire or get promoted? By capturing this information in software, you can systematize it and make it available to your next generation of employees.

And finally, good production planning can help you assess the impact of major supply chain disruptions. Over the past few years, we’ve all seen how turmoil in the global supply chain has made business more challenging for manufacturers. Rather than panicking and making sweeping changes to your operations, you can use your production planning software to evaluate the exact impact of each disruption in terms of demand spikes, materials shortages, or changes in the labor force. You can then take precise steps to protect your business.

3. Which companies should be using production planning software?

Consider using production planning software if your revenues are at least $150 million and you’re running a manufacturing business with multiple plants. The software will be ideal for you if you have alternate sources for each of your raw materials—in other words, a choice of at least two vendors from which you can buy each item in your supply chain. It will also be a good fit if you have more than one location in which you can make each of your products. When there’s a great degree of variability around your “what,” “where,” “when,” and “how many,” your company will realize the benefits of using powerful software, rather than spreadsheets, for production planning.

The benefits we’re discussing here aren’t limited to a particular industry. But we’ve found that most companies that benefit from production planning software are in the consumer-packaged goods, food and beverage, durables, life sciences, and chemicals industries.

4. Checklist of the must-have features and capabilities of a production planning software provider

Now that we’ve explored the high-level goals and benefits of production planning software, let’s run down the features your software should provide. Make sure your solution enables you to:

Model constraints. Every manufacturer faces machine capacity constraints. But you’ll also need to enter information about supplier constraints such as minimum and maximum purchase quantities. You’ll also want to configure your software to reflect your reality around lead times, costs, and alternate production.
Explode bills of materials (BOM). You’ve probably experienced the need to “explode” (or expand) a higher-level BOM into its constituent parts and subassemblies. This process allows you to understand the components you’ll need to build a certain product and the hierarchical relationship between these parts.
Track shelf-life expiry. Your production planning software can help you track shelf-life expiry by integrating functions such as inventory management, scheduling, and shelf-life tracking into one system. If your solution is connected to your inventory databases, it can automatically update the shelf-life status of items in real time. Your software can also generate alerts and notifications when the remaining shelf life of an item approaches a predefined threshold. By considering the remaining shelf life of products during scheduling, your software can help minimize the risk of producing more items than can be consumed or sold before their expiration.
Manage multiple users. More and more manufacturers are working in decentralized environments where users are logging in from sites across the country. Implementing the right production planning solution can give all your stakeholders visibility into production status at all your locations.
Integrate with other systems. You’ll also need your production planning software to integrate with your ERP platform. But consider that you’ll also want your software to be able to pull in critical information from manufacturing execution systems (MES) and other platforms. Make sure that any production planning system you consider offers an integration layer that makes it easy for you to import and export data across multiple systems and transform its format as needed. Your system should also offer certified integrations to the leading ERP and MES platforms to minimize work for your IT team.
Meet the unique challenges of your industry. Identify the biggest pain points for your specific type of manufacturing and make sure your new solution offers features to address them. For example, a manufacturer in the life sciences industry will want to see broad and deep functionality around managing patent expirations and streamlining new product launches.

5. Questions to ask a potential production planning software provider

As you research production planning software, be prepared to ask potential providers highly specific questions about the capabilities of their platforms and the results customers have achieved with them. Here are the questions we recommend:

Have you performed this kind of implementation before? Find out about your potential software provider’s track record of implementing their software for companies like yours. If it’s their first or second time, they’ll be learning along with you. Look for a provider that has a proven implementation methodology in place. Not only will they be able to bring your solution to life quickly and minimize your time to value, but they’ll also be able to share years of business expertise with you.
How experienced are your consultants? As essential as it is to choose the right software, keep in mind that it’s equally important to use your implementation as an opportunity to enhance your business processes based on the insights and experience of your provider’s seasoned consultants. Having a combination of best-in-class software and strategic business processes is what will take your production to a new level. Ask your potential provider if you can speak with some of their consultants before you make a final decision. Look for consultants who challenge your way of thinking and are clearly ready to do more than simply implement your software.
Are your planning and scheduling functions integrated? Some providers offer production planning software but only make scheduling features available through a bolt-on module or a solution offered by a third party. This approach requires an integration point, and integrations sometimes break. Avoid this hassle by looking for a solution that features integrated planning and scheduling. When you have planning and scheduling functionality available as part of your platform, you’ll only have one provider to deal with as you customize and upgrade your solution. You’ll also eliminate the chances that technical issues will prevent some of your team members from accessing the features they need as they plan and schedule production.
What kind of engagement process do you offer for new clients? There’s so much more to using production planning software than simply implementing a platform and providing basic user training. Many planners have been doing their jobs in spreadsheets for years or even decades. Transitioning an entire organization to a sophisticated production planning solution can deliver impressive benefits and an outstanding ROI, but it takes time.

Make sure you find a provider that’s committed to helping you go through the process the right way. Your provider should have a methodology for helping you formulate your project objectives, map out your ideal outcomes, identify your biggest obstacles and plan to how overcome them, and project the overall benefits you hope to achieve from the project.

6. Tips for using production planning software effectively

Even after you’ve chosen the right production planning software for your business, your job isn’t done. To ensure you have a successful implementation, make sure you:

Identify the outcomes you want to achieve with the software. Good production planning solutions are flexible enough to enforce a wide range of constraints. Stay focused on meeting your most important objectives with the initial implementation. Build out your constraints in a layered fashion by implementing your most important constraints—such as capacity—up front and adding new ones over time.
Watch for scope creep. During your implementation, stakeholders may be tempted to add to the original implementation plan. Keep in mind that when the scope increases, the extra work will likely lengthen your time to value.
Create a production planning center of excellence. To get the most out of your software, designate a person or small team who will develop a deep understanding of how the solution works and be ready to help others in your organization use it effectively.

7. Why use Logility’s production planning software?

There are many reasons to choose Logility’s production planning software. Here are just a few:

Logility is a thought leader in the production planning space. We’ve been in business for more than 50 years. When you work with us, you tap into the expertise of consultants who have been helping manufacturers thrive for decades.
Our supply chain planning software is prescriptive. When companies try to plan production manually, they often spend days or even weeks to come up with one answer. Logility provides multiple answers to any question so your stakeholders can choose the best direction for your organization. Our software not only saves you time and effort, but also enhances the quality of each decision you make.
Most of our products have been on the market for many years. Some of the world’s most demanding manufacturers rely on Logility. To continue earning their trust, we invest in making our solutions as robust as possible.

Our products are built to scale. That’s why Logility is an ideal platform for growing businesses.

Find out more about Logility’s production planning software here

In today’s rapidly evolving marketplaces, businesses need every advantage they can secure — and often, that edge lies in the effective alignment of executive leadership with supply chain operations. When the C-suite understands and integrates supply chain considerations into strategic decision-making, the results can be transformative.

However, achieving this critical alignment often stumbles over familiar hurdles: A limited understanding of supply chain operations at the executive level, objectives that diverge between strategy and operations, gaps in communication, a lack of shared KPIs, and the relentless pace of market changes. In addition, resource limitations can further challenge the effective integration of supply chain planning into the broader corporate strategy.

Despite these challenges, integrating supply chain planning into your corporate strategy isn’t just an operational imperative — it’s a critical strategic move that can drive your supply chain performance forward. So, how can companies overcome these obstacles and use supply chain operations as a strategic tool?

Let’s explore six strategies for fostering stronger alignment between your supply chain operations and executive leadership and, consequently, enhance supply chain performance.

Understanding the Challenges in Connecting Supply Chains to Corporate Strategy

Aligning supply chain strategies with the overall corporate vision requires overcoming several substantial challenges. Each of these hurdles presents its own unique issues that can disrupt alignment and hamper efficiency.

Limited Executive Understanding of Supply Chain Operations

One of the biggest challenges lies in the limited understanding among executives about the complexities and dynamics of supply chain operations. Without a detailed comprehension of how supply chains operate and contribute strategically to the organization, opportunities for efficiency improvements and strategic integrations are often overlooked.

For example, executives might underestimate the impact of accurate demand forecasting on reducing inventory costs, resulting in insufficient investment in necessary tools and technologies.

Divergent Objectives

A strong understanding of supply chain operations may still not be enough if the objectives of the corporate strategy and supply chain operations are not in sync.

For example, if a corporate strategy emphasizes market expansion, but the supply chain objectives are focused on cost reduction, this divergence can create friction, leading to inefficient outcomes and increased operating costs. In the worst case, this could result in insufficient resources for supporting new markets, tarnishing the company’s reputation, and losing customer trust.

Communication Gap

Without an effective communication bridge, crucial insights from the supply chain may not reach the executive suite.

For example, a crucial update about an impending supplier issue might not escalate appropriately, leading to uninformed decisions for inventory management that could result in stockouts or increased costs. Additionally, the lack of dialogue can create silos, which further exacerbates the disconnect between strategic decisions and operational realities.

Lack of Shared KPIs

Shared Key Performance Indicators (KPIs) serve as a common language of success, providing measurable objectives that align supply chain operations with the corporate strategy. Supply chain performance measurement is a universal way for all departments to be onboard with the supply chain process and how the company is performing. Without these shared metrics, the vision for success might differ between the two, causing further misalignment.

For example, if the executive team’s focus is on revenue growth, but the supply chain is evaluated on cost reduction, the misaligned KPIs can lead to conflicts and hinder the achievement of both goals.

Rapid Market Changes

In an increasingly volatile business environment, market conditions can change rapidly. The agility to adapt supply chain operations in response to these changes is crucial. Yet, if there’s a lack of alignment between supply chain management and executive leadership, it can be challenging to adapt swiftly.

For example, a sudden surge in demand may require prompt scaling of production, which, if not communicated effectively to the executive team, could lead to missed market opportunities.

Insufficient Resources

Effective alignment of supply chains with the corporate strategy demands adequate resources. These may include dedicated personnel for strategic planning, a suitable budget for necessary investments, and regular intervals dedicated to communication and strategy review sessions. In the absence of these, the alignment efforts can be severely hampered, limiting the ability of the organization to respond effectively to operational challenges and market opportunities.

Each of these challenges complicates the alignment process and directly impacts overall business performance and efficiency. Misalignment can lead to slower response times, longer lead times, increased costs, and missed opportunities — all of which directly hit the bottom line.

6 Ways to Overcome Challenges and Drive Executive Alignment in Supply Chains

Addressing the challenges in connecting supply chains to corporate strategy requires a multifaceted approach. Here are a few strategies to consider:

1. Enhancing Executive Understanding

Investing time and resources in enhancing executive understanding of the strategic value of efficient supply chain operations is pivotal. This can be done through regular supply chain briefings and workshops.

For example, a monthly ‘supply chain snapshot’ session could help executives grasp the current state, the operational hurdles, and the strategic impact of supply chain decisions. Additionally, involving executives in critical supply chain decisions could provide them with first-hand experience, reinforcing the importance of these operations in achieving business objectives.

2. Bridging the Objective Gap

Transparent and iterative strategic planning is required to align supply chain goals with corporate objectives. This necessitates the integration of supply chain objectives into the overall business strategy.

For example, if the business strategy aims for growth through customer satisfaction, the supply chain strategy could focus on reducing delivery times for customer orders, enhancing product availability, and meeting customer demands when applicable.

3. Improving Communication and Collaboration

Establishing open and regular communication channels between executives and supply chain teams is essential. This can be achieved through regular cross-departmental meetings, shared dashboards that provide visibility into supply chain operations, and collaborative initiatives.

For example, a shared digital dashboard that provides real-time insights into inventory levels, demand forecasts, and delivery timelines can facilitate informed decision-making at all levels.

4. Establishing Shared KPIs

Shared KPIs act as a bridge between strategy and operations. These KPIs should encompass both operational and strategic metrics.

For example, a KPI like ‘On-Time Delivery’ reflects the operational efficiency of the supply chain, while ‘Contribution to Revenue Growth’ showcases the strategic impact of supply chain decisions.

5. Managing Rapid Market Changes

A flexible and responsive supply chain is key to managing rapid market changes. This requires investment in agile supply chain systems, real-time data integration, and robust scenario planning capabilities.

For example, leveraging advanced supply chain planning software that enables real-time demand forecasting and dynamic scenario planning can empower supply chains to adapt swiftly to changing market conditions, including changes in the cost of goods, raw materials, and other potential bottlenecks.

6. Allocating Sufficient Resources

Sufficient resources must be allocated to align supply chains with corporate strategy effectively. This includes dedicated personnel for strategic planning, a budget for investing in necessary tools and systems, and time for regular communication and strategy review sessions.

For example, appointing a ‘Supply Chain Strategy Officer’ who liaises between the executive team and supply chain operations could prove instrumental in driving alignment.

With these strategies in place, businesses can overcome challenges and foster effective executive alignment, paving the way for efficient and resilient supply chains that align seamlessly with corporate strategy.

The Impact of Effective Executive Alignment on Supply Chain Efficiency

Effective alignment between supply chain operations and executive leadership can revolutionize your business and surpass customer expectations. When the challenges are addressed, and executive alignment is achieved, businesses can unlock unprecedented supply chain efficiency and performance. Here’s how:

Optimized Decision-Making: When executives understand the strategic value of the supply chain, decision-making processes are enhanced. Leaders can make informed strategic decisions considering corporate and operational perspectives, ensuring a cohesive strategy that propels the business forward.
Enhanced Agility: Businesses foster a more agile supply chain by aligning objectives and establishing shared KPIs. Rapid response to market changes becomes possible, minimizing disruptions and ensuring continuity of operations. This agility enables businesses to stay ahead of competitors and seize new market opportunities.
Increased Efficiency: Effective communication and collaboration between executives and supply chain teams can streamline processes, reduce redundancies, and foster innovation. This results in increased operational efficiency, cost savings, and, ultimately, higher profitability.
Improved Performance: Businesses can boost their overall performance with sufficient resources dedicated to strategic planning and supply chain management. This can be seen in the form of improved on-time delivery rates, enhanced inventory turnover, and more accurate demand forecasting.
Long-Term Resilience: When supply chains are integrated into corporate strategy, companies are better equipped to navigate volatility and uncertainty. This results in long-term resilience, enabling the business to weather challenges and emerge stronger by focusing on continuous improvement.

Effective executive alignment in supply chains is not just a matter of good business practice — it’s a strategic imperative that directly drives supply chain efficiency and business performance. In an era of rapid change and increasing complexity, achieving this alignment is more critical than ever.

The Power of Integrating Supply Chains into Corporate Strategy

In the world of business, ensuring executive alignment with supply chain operations is not just a checkbox to be ticked — it’s an essential aspect of thriving in a volatile, unpredictable marketplace. From bridging the gap between corporate and supply chain strategies to facilitating effective communication and collaboration, driving executive alignment can truly revolutionize your business performance.

Your business can overcome these hurdles by adopting strategies like enhancing executive understanding of supply chains, bridging objective gaps, improving communication, establishing shared KPIs, and dedicating sufficient resources to alignment efforts. The payoff is substantial: optimized decision-making, enhanced agility, increased efficiency, lower costs, improved performance, and long-term resilience are all within reach.

Modern supply chain solutions like Logility can be invaluable partners in this journey. Logility’s end-to-end supply chain planning platform is designed to support businesses in driving executive alignment, offering solutions that bring together all aspects of supply chain management and corporate strategy.

Remember, in today’s fast-paced business environment, achieving executive alignment in your supply chain could be the competitive edge that sets your business apart. So take the leap, explore how Logility can support your alignment journey, and step into a future of enhanced supply chain performance.

Smarter, Not Harder: How to Climb Every Peak in Supply Chain Planning

Supply chain planning is like a grand mountaineering expedition. Every step is meticulously mapped out to manage immediate needs and challenges while uncovering and navigating intricate risks hidden within each layer.

But instead of reaching just one peak, supply chain planners must climb four – service, inventory, cost, and sustainability. Each one has its own unique conditions, complexities, risks, and opportunities. Yet, all of them must be conquered before planners can triumphantly plant their flag of supply chain excellence.

According to Logility’s senior business consultant Hans Vethuizen, a dynamic supply chain planning journey calls for the right platform – a base camp supporting the needs of the entire supply chain planning process.

“The strength of a comprehensive digital supply chain platform lies in the primary supply level and extends remarkably to the fifth tier. It offers unparalleled visibility, traceability, and disclosure – the true essence of each product’s journey from origin to delivery,” says Vethuizen at this year’s inNOWvate Supply Chain Event.

Coordinate every step with insight and action

Companies using a platform that synergizes service, inventory, cost, and sustainability stand at the precipice of a highly progressive approach to supply chain planning.

Take, for example, PVH. The fashion house of iconic brands like Tommy Hilfiger and Calvin Klein transparently manages and navigates the full spectrum of its supply chain – from cotton farms and fabric mills to yarn spinners and final product manufacturers. Even before importing and selling any item, every step addresses complex challenges amplified by regulations dictating the origin of goods and ethical sourcing and labor practices.

“PVH’s dedication reverberates across its landscape of supply chain elements and complexities through Logility’s Digital Supply Chain Platform,” Vethuizen shares. “While earning consumer trust and practicing environmental stewardship, the company guides the way to the future of responsible business practices.”

Underpinned by the Logility platform, these achievements include superior inventory equilibrium through peak planning seamlessly interwoven with an unwavering commitment to eradicating waste and obsolescence. Moreover, the platform casts a bright spotlight on the crucial benefits of visibility permeating the multi-tier supply web.

Unveil a world of optimization and progress

Effective supply chain management involves numerous factors, including the number of suppliers. The average volume, rising expenditures, and varying price arrangements for each item across multiple suppliers further complicate the procurement landscape.

“The versatility of an end-to-end platform, like the Logility platform, offers a unique advantage,” Vethuizen emphasizes. “It comprehensively connects every supply and demand node, enabling a detailed assessment of how demand can impact a company’s resilience index. Planners can then pinpoint revenue at risk due to a high resilience index, transcending the conventional scope of multi-sourcing strategies.”

Recognizing supply chain resiliency also depends on meeting compliance standards, companies leverage the platform to gain well-rounded multi-tier visibility into supplier adherence to internal company policies and government mandates.

“Compliance spans various dimensions such as environmental sustainability, quality, and security. This broad spectrum must be captured fully, including metrics on energy consumption, water usage, and overall environmental impact,” explains Vethuizen. “The platform’s ability to aggregate these metrics into a cohesive sustainability score offers a nuanced evaluation of supplier practices.”

Leverage a confluence of visibility, planning, and sustainability

The digital supply chain twin framework is another pivotal capability the Logility platform offers to model and optimize supply chains. Businesses can streamline operations by digitally representing nodes, routes, constraints, and demands while reducing costs and increasing service quality.

Vethuizen affirms, “The digital supply chain twin’s holistic approach harmonizes operational efficiency and sustainability goals. Creating scenarios within the digital supply chain twin opens avenues for informed decision-making, such as optimal placement of new distribution centers or analyzing the impact of potential disruptions.”

Comparing scenarios extends the framework’s utility, providing insights into various facets, such as cost, service time, and environmental footprint. For example, some businesses link QR codes to products to elevate the transparency and accountability of their supply chain origin. Through the Logility platform, supply chain planners can access a trove of information that helps assure a product’s authenticity and reinforce regulatory compliance and sustainability KPIs.

Quantifying carbon emissions at each supply chain node elevates the product’s digital passport. Businesses can leverage this data to communicate their offerings’ environmental, security, and quality impacts. Tangible proof of sustainable practices positions companies to foster brand loyalty and expand market share among a consumer base valuing eco-conscious products.

Scale every peak with resilience and vision

In the realm of supply chain planning, conquering every peak demands a blend of strategic foresight, analytical acumen, and collaborative spirit. The supply chain planner fortifies an organization’s resilience and charts new horizons to achieve even greater heights in the dynamic landscape of global commerce.

Combining sophisticated concepts and technologies, the Logility platform equips supply chain planners and the rest of the business with a comprehensive grasp of supply chain dynamics. This insight empowers companies to integrate operational efficiency with compliance and sustainability, cultivating customer loyalty and a more sustainable planet.

Just as mountaineers leave their mark on conquered summits, those who master the peaks of supply chain planning with Logility’s platform leave an indelible imprint on their industry’s competitive landscape.

When it comes to implementing supply chain planning and operations solutions, success relies heavily upon an organization’s ability to identify and document its desired value measures and outcomes, and to align those with its solutions provider. Here are five critical practices that supply chain and business leaders should incorporate in the process of developing project goals – and avoid a painful implementation.

1 Co-develop a business case with vendors.

It’s important to plan a supply chain technology implementation carefully and to understand that the vendor and the client are partners on a journey to realize value for the client organization.

That’s why both the client and the vendor should have a clear understanding of the real-world problems the client faces, how the software is going to help fix those problems, and, therefore, which software components are crucial to the effort. That meeting of the minds is critical in seeking out a software vendor and to the success of the eventual implementation project.

The outcomes of brainstorming sessions between the client and vendor teams should be documented in a joint business case. The absence of such a well-thought-out document could risk delay in the approval of the project at the executive level, leading to the loss of project benefits. Agreeing on a joint business case, by contrast, reduces the chances of misunderstandings between the two partners as the implementation process moves forward.

2 Identify data availability and data gaps.

Certain categories of data should be available or must be available for specific types of supply chain technology implementations. Master data, for example, provides a foundation for understanding how and what to measure for a particular supply chain and what is possible to measure for a particular technology implementation. Transactional and customer-facing data, such as transportation data and manufacturing and purchase orders, are important for generating demand signals and calculating demand variability.

The presence — or absence — of required data is going to have an impact on the metrics being used to measure the success of the project. In other words, the data available for use in the project is going to inform the realistic goals for the implementation. Setting goals without understanding what data is available and required risks sending the project and its metrics off course.

Supply chain planning technology requires a data-rich environment, and it’s important to understand what data is there to support the desired outcomes and how to compensate for data gaps. Ensuring that the necessary data is readily available will support supply chain planning and decision-making and will increase the odds that the project will achieve its planned measures and metrics.

3 Align on goals and KPIs.

Supply chain projects at different organizations will inevitably be focused on divergent aims. Some organizations will want to focus on improved forecasting. Others will be looking for solutions to operating in a constrained supply environment, while still others will want to improve their order fulfillment processes. And some will want to achieve all these goals and more!

The goals of any given project dictate what is going to be measured and how success is defined. That’s why it’s important for all project stakeholders, among both vendors and users, at the executive level and on the implementation level, to be aligned on goals and key performance indicators (KPIs).

Supply chain projects call for continuous improvements to an organization’s capabilities, and that means that goals and KPIs represent moving targets. Stakeholders at all levels need to check in periodically on where baselines have moved in order to reset goals.

It’s impossible to improve what is not measured and it’s impossible to improve processes and capabilities if those goals are not shared across organizations, all of which necessitates an alignment of goals and KPIs across the vendor and client enterprises.

4 Understand your baseline data on current-state KPIs.

Like having a clear line-of-sight on your available data for measurement, understanding your baseline data is the starting point of a supply chain technology implementation, and provides an indication of where a project needs to go. To set achievable expectations, it’s important to identify an accurate and realistic baseline against which to draw KPI measurements.

Baselines often change between the time of initial discussions and the point when project implementations get underway, because project teams often tweak project requirements in the interim. For example, the project team may opt to implement a different type of planning process, which would use different types of data and/or different measurements of data than are currently being tracked. Over time, baselines get fine-tuned to match the desired future state, making it possible to measure improvement over time.

Supply chain technology implementations are fundamentally dynamic processes. The go-live moment is not an end in itself, but a milestone on a much longer journey, representing the point at which the system is up and running, data is flowing, and the people are using the software. But the value realization of those activities, the ultimate goal of the project, only comes later on down the road. The touchstone of any supply chain technology implementation always is and needs to be continuous improvement.

5 Hold one another accountable.

Taking the documentation of goals and measures into the realm of action means ensuring that the decisions made during the course of an implementation are all driving toward those documented and agreed-upon goals. Vendors need to encourage their clients to push toward the right goals and KPIs, and the client needs to keep the vendor on track toward achieving the client’s desired state.

The natural conflict between demand and supply provides an analogy to this sort of mutual accountability. Demand teams might claim that increased supply would have resulted in better sales. Supply teams might contend that more accurate demand plans would have better enabled them to achieve manufacturing and supply targets.

The cross-pollination of KPIs promotes the mutual accountability between vendor and client that is required for successful implementations. Sometimes that’s going to make for some uncomfortable conversations. But these are to be expected during implementations, and it’s a good idea to keep in mind that the purpose is to increase the probability that the outcomes everyone is striving for will be achieved.

Logility: Working with Supply Chain Organizations to Ensure Measurable Results

Logility, Inc., a leader in prescriptive supply chain planning solutions, through its Logility Digital Supply Chain Platform, uses artificial intelligence and advanced analytics to provide end-to-end supply chain capabilities that automate planning, accelerate cycle times, increase precision, improve operating performance, break down business silos and deliver greater visibility.

When Logility first engages with a potential client, “The ‘why’ is the most important thing we look at,” says Evan Flinn, a Logility solution architect. “We want to know why the company is soliciting an RFP for supply chain planning software.”

That inquiry allows Logility’s team to understand the business challenges the potential client is facing. “The implementation becomes all about getting to the client’s goals,” says Flinn.

Once Logility kicks off a project, it convenes a value realization session. “That’s where we talk about success measures and start to find ways to define them,” says Flinn. “Then we’re able to advise the client about where we think we can find value and how we would measure outcomes.”

Understanding the client’s maturity level — how far along they are on the path to supply chain improvement — is key to that effort. “Reasonable outcomes are going to vary,” Flinn explains, “depending on whether they are already using a planning system or if they’re coming to us with no system.”

These efforts help to ensure success, as Logility and its clients embark on their journey together. “The roadmap for the journey includes prioritizing outcomes, to provide clients with an idea of time to value,” says Flinn. “Time to value is value in and of itself.”

This special report was developed in collaboration with The SupplyChainBrain Podcast. Listed to the audio here:

Efficient inventory optimization starts with choosing the best software. It is important to note different terms that can often be mistakenly used interchangeably in conversation, yet have distinct meanings.

For example, Inventory optimization software is different from inventory control software. The latter is designed to help you track inventory levels and manage targets. These are crucial functions, but they’re not what we’ll be discussing in this article. With inventory optimization software, you can plan your entire inventory holistically. You work to gain a deep understanding of your key drivers so you can prioritize your areas for improvement in ways that align with your corporate strategy.

1. What is inventory optimization software?

Inventory optimization software enables you to navigate variances in supply and demand by creating and managing inventory policies that help ensure the availability of your products. It empowers your business to respond to changing customer needs and maintain a steady stream of revenue even in challenging market conditions.

A good inventory optimization solution will provide advanced tactical and strategic planning to help you manage your total inventory in ways that maximize availability and margins at a minimum cost. This optimization will answer two questions simultaneously:

What’s the optimal mix and form of materials we need to keep at each location and in each time period?
What are our optimal buffer locations of SKUs throughout our network, and what service commitments will we need to make in between the locations?

Your solution should provide holistic capabilities for setting the right inventory strategies and executing on them in an adaptive manner while constantly evaluating and measuring variabilities and other root causes. In other words, your software should help you manage your inventory rather than tactically planning it.

The best inventory optimization software will provide multi-echelon inventory optimization (MEIO) capabilities. With MEIO, you can take a holistic approach to optimize inventory levels across multiple levels or echelons within your supply chain network. These echelons can include suppliers, distribution centers, and retail locations. You determine the optimal allocation and replenishment policies for inventory at various stages of your supply chain based on demand variability, lead times, cost constraints, and other factors.

2. What are the benefits of inventory optimization software?

With inventory optimization software, you can quickly achieve a major improvement in your inventory costs. By using the right software, you can develop a resilient strategy to optimize your margin and working capital. Within a few months, you can optimize 70 to 80 percent of your inventory, leading to a 10 to 15 percent reduction in inventory costs and a 2 to 5 percent increase in fill rates.

It’s important to take a focused, staged approach to inventory optimization. Rather than trying to tackle the entire challenge at once, it’s best to optimize the areas that matter most to your company. Here are the steps to take:

Understand where you have deficiencies. Inventory optimization isn’t just about reducing stock—it’s also about right-sizing your inventory to close gaps and avoid missing out on revenue.
Gradually remove excess inventory from your system. You’ll need to be careful here because you don’t want to make any drastic moves that result in plants getting shut down. You’ll also need to keep in mind that some of your excess consists of low-demand items that you’ll nevertheless want to keep in stock.
Evaluate alternate production and distribution scenarios, postponement and sourcing strategies, and segmented availability options. These tasks can help you customize your final product mix based on the changing demands of your market.
Gain visibility into the root causes of your inventory requirements. Here, you can determine to what degree forecast inaccuracy and risks in your replenishment process are affecting your requirements.
Make trade-offs between your key drivers so you can identify areas for further improvement.

3. Which companies should be using inventory optimization software?

Inventory optimization software is most appropriate for midsize and large enterprises that manage a finished goods inventory (FGI) across distribution centers and third-party logistics (3PL) provider facilities. Even businesses with a limited number of local distribution centers or 3PL facilities can benefit. In simpler networks, having the right inventory in the right place will be critical if service targets are high and demand and supply variabilities are significant. With no intermediate buffer, companies must plan carefully. Otherwise, a fire at a single distribution center could set back sales for months.

In more complex multi-echelon networks, your inventory optimization should also take into account the form and function of the inventory you’ll be holding. At each point in your network, the goal will be to hold inventory in the form that enables you to serve customers at the lowest cost and with the highest levels of availability. Achieving the optimal balance here will require many tradeoffs. You may need to shift inventory to upstream locations where the value-add and differentiation are less. You may decide to require smaller holdings in your FGI and more in your raw material and work-in-progress (WIP) inventories at the upstream echelons. There will also be opportunities to coordinate material availability in ways that address potential disruptions.

The bottom line is that for midsize and large enterprises, inventory optimization right-sizes stock levels in all forms while making the supply chain even more responsive.

4. Checklist of the must-have features and capabilities of an inventory optimization software provider

Now that we’ve explored the high-level goals and benefits of inventory optimization software, let’s run down the features your software should provide. Make sure your solution enables you to:

Generate consistent, robust results that account for all your business policies. There are many details in your supply chain plan, and when you run them through your inventory optimization software, you shouldn’t experience major surprises. The results may vary somewhat, but they should be easy for you to explain in a boardroom meeting.
Create exception-based flows. Across businesses that produce products, planning is becoming more centralized. Organizations must stay on top of the changes despite having fewer resources for the task. Using an exception-based flow enables you to concentrate on unexpected results in the areas that matter most. You can then trust your software to handle the more routine tasks.
Perform MEIO calculations across your entire network. You’ll need this feature to help you optimize your levels of raw materials, WIP, and FGI.
Perform what-if analysis, simulations, and scenarios. The ever-changing nature of the supply chain requires you to be able to plot several potential paths through the future and prepare for each one.
Create time-phased stocks and seasonal profiles. Most inventory optimization software can’t help you optimize service levels with respect to seasonality. Look for a solution that can.
Optimize service levels and use guaranteed service. Your software should do the calculations to ensure you’ll meet your service levels for customers.
Go live quickly and integrate with other solutions easily. Every day of delay represents a day of lost productivity.
Support comprehensive analytics. Your software should serve as a starting point for deep analysis by feeding your analytical systems.
Support postponement policies and optimize safety stock positions. As we described above, your solution should give you precise control over when you finish your products and where you pool inventory.
Tie network design to inventory planning and optimization. The best inventory optimization software will provide a network design tool that helps you decide where to put your warehouses and plants, what kinds of transportation you’ll need to run to support them, and how all of this ties back to your inventory policies—and overall costs.
Consider campaign production and other operational constraints.
Deal with long-tail items and intermittent demand by using artificial intelligence (AI) and machine learning (ML) to make better decisions.
Account for shelf life while planning for targets. Especially if you’re in the food and beverage or life sciences industries, you’ll want a solution that understands how the shelf life of your products will be consumed and how your inventory policies should reflect this reality.
Support lot sizing, economic order quantity (EOQ), lot size increments, and minimum and maximum inventory levels.

5. Questions to ask a potential inventory optimization software provider

As you research inventory optimization software, don’t just rely on the marketing materials vendors provide. Be prepared to ask potential providers highly specific questions about the capabilities of their platforms and the results customers have achieved with them. Here are the questions we recommend:

What is your typical time to value? Can you provide a fast prescriptive outcome?
Your software provider should be able to make you a promise of helping a specific part of your business achieve a specific result within a definite time frame. They should also embrace agile techniques to get your first module live as quickly as possible. Do not accept proposals from vendors that claim their customers’ results vary too widely to make any specific estimates. Your provider should take the time to understand your business well enough to promise specific results.
Can you provide visibility into inventory causes?
Your solution should help you understand and identify the factors that impact your inventory levels. These factors can include demand variability, forecast accuracy, supply variability, order management and fulfillment, seasonal or promotional activities, and production and manufacturing efficiency.
Do you provide extensive sensitivity analysis and what-ifs to help shrink analysis lead time?
Sensitivity analysis will help you gauge how much your variables are affecting the output of your inventory scenarios. After identifying the most critical variables that are influencing your results, you can focus your efforts on managing and controlling these efforts more effectively.
How easy is it to set a postponement scenario?
Postponement scenarios can be complex to understand, but your software should make it easy to set them up once you’ve determined them.
How can we set up service levels for FGI, WIP, and raw materials?
Setting service levels is one of the most common—and most critical—tasks you’ll need to perform in your inventory optimization software. Be sure your provider offers a simple, intuitive workflow.

What happens with segmented policies on customer-facing nodes?
Your business may face stringent fill rate requirements with some of your larger customers, while other customers may have lower standards. Your inventory optimization software should enable you to segment your FGI to ensure you’ll have the inventory you need to meet the requirements of your most important customers. There is a temporal aspect to segmentation as well: you may also be thinking about having higher availability during the high season.
Can we time-phase the network and automatically propagate demand?
To time-phase your network, you’ll need to align the timing of your supply chain activities and processes to ensure smooth, efficient operations. Make sure your software allows you to coordinate procurement, production, inventory management, transportation, and order fulfillment in ways that help you meet customer demand while minimizing your costs and lead times.

To propagate demand, you’ll need to distribute or allocate demand signals across the various stages of a supply chain network through lead times. Your software should serve as a hub that disseminates information about customer demand from the point of sale or customer order entry to the different levels of your supply chain, including suppliers, manufacturers, distributors, and retailers. When you propagate demand automatically, each entity in your supply chain will have visibility into demand requirements and will be able to plan and execute their operations accordingly.
Can they optimize around the working capital budgets? What about inventory positions?
Your solution should help you achieve time and cost reductions while staying within the working capital budgets and inventory positions you’ve provided.

6. Tips for using inventory optimization software effectively

Any inventory optimization software implementation should begin with strong alignment between corporate objectives and inventory policies. For example, suppose you have a corporate objective of expanding market share. You’ll need to have high product availability, which means you’ll end up with a large inventory and the high working capital that goes along with it. You also won’t be able to take much advantage of postponement because you’ll be under constant pressure to have finished products ready for customers.

Or suppose your corporate objective is market protection. You’ll need to have short lead times so you can easily replenish products. You may also work with 3PL companies to handle postponement. Once again, your working capital will be high, but your customer service levels won’t need to be as high as in the previous scenario because you’re not trying to break into a new market.

As you begin optimizing your inventory, strive to:

Assign a strong project leader who has authority and extensive business and technical expertise.
Build an in-depth business case that lays out the many benefits of MEIO.
Gain cross-functional executive approval by aligning your project with corporate objectives.
Develop a change management program to gain buy-in from all levels of the organization.

Starting just before the implementation and continuing through the project:

Educate your team on how MEIO works and what benefits you expect it to deliver.
Communicate openly about change. For example, if you’ll need to reduce factory utilization because you have too much inventory in the system, make this clear to people up front.
Encourage feedback on how to improve MEIO capabilities.
Align your performance incentives to support system-wide inventory improvements. Make these incentives available not only to deployment personnel, but also to transportation, factory procurement, and anyone else who has control over working capital.
Define and staff new roles to achieve full value from the new MEIO process and solution.

To create value throughout the project:

Create a culture for data-driven decisions rather than gut-feels. Get out of the mentality that “you need X amount of inventory to service” and let the data speak for itself.
Build confidence by ensuring the accuracy of your data. Have a relentless commitment to accuracy and validation from day one, and set expectations accordingly.
Manage change effectively. Over-communicate, get closer to your users, and keep the door open to criticism. Give people time to digest and allow them to buy in. Your critics may become your biggest proponents.

7. Why use Logility’s inventory optimization software?

As you research inventory optimization software, consider what Logility has to offer. Logility is one of the creators of the inventory optimization field with research dating back to the late 1990s at the Massachusetts Institute of Technology (MIT). Over the years, Logility has developed a successful, no-risk, outcomes-first methodology to maximize benefits while staying on top of the risks. After decades of finding out what works and what doesn’t in the field of inventory optimization, we have continuously built out our solutions using AI and ML to bring crucial innovation to the supply chain planning industry.

Our more recent development includes extended inventory optimization capabilities, InventoryAI+ available to clients and prospects.

Unlike most inventory optimization software, Logility’s InventoryAI+ is both strategic and tactical. On one hand, Logility helps you determine the best deployment for your inventory and gives you an optimum set of policies from a cost and availability perspective. But the solution also executes on those policies, using changing data, changing demand variability, and other master data changes. With Logility, you can stay on top of supply chain dynamics as you create and manage your inventory policies. This can translate to greater availability, faster responses to customer needs, steadier revenues, and more consistent margins.

Find out more about Logility’s inventory optimization software, InventoryAI+ or schedule a time to talk to one of our experts.

Disruptions are the norm in supply chain planning leaders. Customer demand and expectations are persistently evolving and increasing in complexity and risk, creating challenges and disruptions unlike anything businesses have encountered before.

And the stakes are intensifying. Gartner research reveals that 60% of chief supply chain officers (CSCOs) are under pressure to make real-time decisions faster, more accurately, and consistently. Yet, few have a sales and operations planning (S&OP) process, as well as the reporting tools and integrated, coordinated network of partners, that’s comprehensive and responsive enough to keep up.

Attending this year’s North American and European Gartner Supply Chain Symposium and Xpo, it’s clear that digital supply chain initiatives are critical to modernizing the supply chain function. The premier gathering of trailblazers and industry experts – including Logility customers PPC Flexible Packaging and DENSO Corporation – discussed three top trends driving key initiatives that are pushing the boundaries of the global supply chain.

Plan for sustainability purposefully

Supply chain planning leaders are becoming more accountable for delivering well-defined environmental and social sustainability key performance indicators – most focused on Scope 3 categories.

“Today’s organizations are quickly moving beyond greenwashing, and many companies worldwide are integrating sustainability into the fabric of their supply chain operations. This push is especially strong in the European Union with some of the recent legislation,” says Lisa Henriott, senior vice president of Product Marketing at Logility.

While tackling all 15 categories all at once is unlikely for most organizations, supply chain leaders can select the most relevant ones for their function and business to get started. Access to publicly available environmental, social, and governance (ESG) information can be leveraged throughout the planning process.

But that’s the first step: the supply chain must also communicate and collaborate on that information to fully enhance the S&OP process to not only mitigate risk but also support sustainability improvement.

For example, DENSO Corporation connected advanced analytics to its ERPs, CRMs, and business intelligence applications to transform data into meaningful insights. The automotive part manufacturer now takes appropriate actions to expand the sustainable impact of its S&OP process while simplifying and accelerating enterprise-wide reporting and auditing of published goals.

“We can now decide when to act to mitigate risk in the future. By visualizing our future stock levels, we can prepare for economic shifts in each region such as inflation, trade restrictions, and geopolitical events – as well new sustainability compliance mandates and changes in our competitive landscape,” reports Mark Turk, Demand, Inventory, and Supply Planning Manager at DENSO Corporation.

Step up decision-making by rethinking S&OP processes

Well-known, traditional planning paradigms – like integrated business planning, S&OP, and sales and operations execution – are rapidly becoming outdated and replaced with a more holistic approach. Supply chain planning leaders are orienting their operations toward a greater focus on people, processes, and decisions.

According to Gartner, this level of decision-centric planning is challenging supply chain organizations to rethink how they plan for the future and use technology as an enabler. Scott Baldwin, vice president of Sales at Logility, is also seeing more companies take action by “tying together their planning, forecasting, and replenishment activities into a unified platform for collaboration and efficiency.”

For PPC Flexible Packing, customer collaboration is the name of the game. Angie Taylor, vice president of Sales Operations at PPC Flexible Packaging, shares that “[external customers] have a way of looking at information to help them make their best calls on future planning. By creating those views and insights for them, we are enabling the success of others while helping itself plan the business for long-term growth.”

Although changes in people’s behavior don’t come naturally, enabling technology is a critical success factor. “Technology may only contribute to 10% of the S&OP effort itself,” Taylor observes, “but without the right technology, 90% of these initiatives are probably doomed to fail.”

Overcome uncertainty with resilient supply chain planning

The gradual obsolescence of traditional planning tactics is largely due to its inability to cope with complexity and uncertainty. Instead, supply chain planning leaders need a more resilient approach that uses and combines new and emerging technologies.

An immediate need for most supply chains, especially in the food and beverage industry, is to prevent constrained availability of their products at a time of intense and unpredictable changes in weather conditions worldwide. Producers are impacted by poor yields in the fields, soaring costs in growing and transporting crops, and fewer growers to source from. Meanwhile, logistics services are navigating more intense storms, deteriorating roadways, and overcrowded ports.

“With a macro-view of climate impacts, supply chain planning leaders can create more-effective processes and best practices to respond to these risks,” mentions Mark D’Cruz, director of Business Consultant at Logility. “This results in an intersection of people exhibiting the right behaviors and sustainable business processes built around best practices and enabling technology.”

Balancing Sustainability with Profitability Executive Brief

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Lets face it, the world is complex and growing more everyday. The list of supply chain challenges is never stops. Without help, opportunities are lost, costs heighten, and risks increase. Steer through the complexity with the scenario planning and advanced S&OP.

Learn more about S&OP in our executive brief: Optimize Your Decision Making with Advanced Scenario Planning, or get started advanced S&OP here.

Just think about the last time you brought your car in for service only to hear, that the part required to fix the problem was not available and had to be ordered from a central warehouse. It would take a few days at least. How how did you feel about that?

These things happen and aren’t uncommon. The result is, of course, an unhappy customer, likely looking for another service provider or third party. It may not seem like a big deal to the company, but it can snowball into one just by word of mouth.

The first example leads to potential loss of sales, which is difficult to quantify, unless your company keeps track of customer repetitive buys and/or inquires, which could be fulfilled directly. We know happy customers talk about his or her experiences to 4-5 people, but you can expect an unhappy customer to double that number.

The other factor to weigh in is additional revenue, which can be generated by improving customer satisfaction. There are simple metrics, which indicate the linkage between parts availability and additional sales. The rule of thumb says for every percentage point of service part availability, revenue grows ¼ of a percent. This is relatively simple to measure, and advanced inventory optimization makes it possible to optimize the service level based on customer and product segmentation.

A happy customer is more likely to return, and your wallet share also increases. According to research by Peter Kriss, the increase of customer satisfaction score from 7 to 8 in transactional business gives 30% more revenue per customer. Since after-market business mostly buys for need, the increase is smaller, but just think what would it mean for your operations, if you get 5% more sales per customer?

Another factor of revenue increase of customer satisfaction for the service parts business of an OEM (original equipment manufacturer) is the link between new product sales and service customer satisfaction. Remember, that the largest part of the lifetime of the product is the time when it is serviced. Ignoring aftermarket customer satisfaction also puts your new product sales at risk. Afterall, sales reliability and service quality is both in B2C and B2B; a very important factor in investment decisions.

It is time to start looking at your own services business from the customer perspective. It is already an unpleasant experience to unexpectedly need service, and missing the critical part to complete makes the experience more of a disaster.

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The key driver of effective post-sale support is service parts management. How can we do a better job of planning for products that have intermittent demand? Find out in this white paper

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Learn how you can get ahead of this curve and build an agile supply chain with a digital supply chain planning platform like Logility. Have you looked into inventory solutions? Read more about inventory optimization in this blog or download a free copy of our Executive brief: Rightsizing Inventory in a Cash Conscious Economy.

Blog Type: Blog