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(but we will!) Selecting a new enterprise technology or supply chain planning software provider can be wrought with challenge and risk. Specifically: people have lost their jobs over poor technology selections and failed implementation projects.

This is especially true in supply chain planning & management platforms. Selection cycles can span months and implementations can take much longer.

A successful relationship with your vendor can last many years so companies may embark on supply chain planning implementations once every 10-15 years – or longer. As we’ve seen, it’s not uncommon for project owners to run a project like this just once in their entire career.

So, if you’re a supply chain leader or project owner, how can you ensure the success of your next major supply chain planning software implementation project?

After decades of supporting clients through successful selection and implementation projects, we are providing a shortlist of critical success factors to guide the selection of your next supply chain planning technology partner, to help you de-risk the decision, and ensure value creation.

There are things that nobody will tell you about these projects but will impact your ability to succeed. We’re here to spill the proverbial beans – the critical success factors, or essential components, of supply chain planning vendor selection success.

For more details on this guidance, check out a recent podcast with Bob Bowman of Supply Chain Brain and Logility’s own value creation expert Scott Abbate, EVP Business & Solution Consulting.

Getting Started: Make Value Your North Star

When it comes to selecting supply chain planning & operations solutions partners, the focus on delivering value should start even before the first vendor meeting.

And, while every supply chain planning vendor worth their mettle will focus on value creation and delivery (some of us actually mean it, and know how to deliver it), you don’t always have to wait for that first vendor conversation for this to happen.

Whether your definition of value includes on-time, in-full (OTIF), inventory reduction or optimization, transportation spend, speed of decision making, supply chain costs, net working capital, or a myriad of other value measures, you know your business better than anyone. You know your challenges, your pain points, your customer demands and demands on your margins. Document and agree to what your next supply chain planning technology must deliver for you.

At Logility, we have worked with clients across the spectrum, some coming to us with a value case drafted, others co-developing it with us based on our methodology. Both can work well. The important thing is: the business and value case must be an accurate reflection of outcomes your project will drive for the business, signed off with your executive committee.

That brings us to the crucial need to…

Stand up your executive steering committee from the get-go

Nobody likes surprises. And with projects as complex as end-to-end supply chain planning selection and implementations can be, it’s best to avoid them from day 1.

An executive steering committee will help you lock down what supply chain planning value looks like in your business. This committee is mission critical to the project’s success and serves as the conscience of the project in many ways, aligning value to the vison for the business.

At this point so early in a selection, the committee must begin to crystallize their desired outcomes, obstacles in the current state, measures of success, and readiness for organization change management. It sets the tone for guidance, engagement, and accountability – and reduces the risk of untimely surprises.

Your committee should consist of executive-level business stakeholders from areas impacted across the business and varies from project to project. Apart from the supply chain, operations, procurement and IT teams, also consider sales operations, finance and more.

Commit your brightest resource(s) to lead the project

This one is simple: dedicate your best and your brightest to run a project of this magnitude. They will be responsible for the day-to-day operations of the project, documentation of goals, milestones, and communications.

Here, it’s important to distinguish that, while the steering committee sets the direction, they stay out of the way of the day-to-day momentum. They’re not coming to all the meetings and they’re not involved in all the micro-decisions that get made. Too many decision makers will slow down a project, so the project lead must be savvy about when to include the steering committee vs. others.

Often, this person reports to a member of the executive team or C-Suite, but they have more operational day-to-day responsibility in the business.

To be coin-operated by value, be clear on your KPIs

Ensure the project is delivering value as agreed right at the inception of the project. KPIs help you benchmark whether you’re achieving the outcomes that equal value success.

KPIs also help you understand your starting point, so you can see where progress is happening down the road. They’re also how you will hold one another accountable.

To address this point, Logility’s prescriptive engagement process is designed with a highly interactive outcomes workshop, where project teams work with Logility experts to whiteboard or outline all of the outcomes they need from the project. Don’t be surprised if your whiteboarding session concludes with a hundred or more metrics and KPIs. Be sure to include people with perspective and a point of view to help you whittle down the priorities and themes.

From an outcomes workshop, supply chain technology buyers will have a catalog of important outcomes they must set their sights on as they drive the project forward. Our process demonstrates how this is the flipside of those outcomes is a value stream.

Part-and-parcel to setting confident, vetted KPIs, is the availability of, and access to, high quality data in your systems. KPIs are great, but the data that they’re used to measure must be reliable and accessible.

The Fast Track to Executive Buy-in and Rapid ROI

What’s the safest way to get started in modernizing your Supply Chain technology? Download now to learn about the 5 steps prescriptive engagement process.

Free Executive Brief

Common mistakes to avoid

It’s easy to get overwhelmed. Go into it knowing these projects take time and perseverance to undertake a selection process of this nature.

We also want to emphasize the importance of the value and business case. It’s challenging to write a business case for a large, complex expenditure. There is an art to it. Supply chain projects must compete with IT projects for other areas of the business. Tap into people with experience and successful track records of writing clear business cases. You also need to make it clear for your C-Suite why they should invest limited resources in ‘intangible’ software and not robots to automate their manufacturing processes, or factory expansions.

If the business case isn’t well defined, socialized, and approved before a vendor is fully engaged, it will cause undue cycles or risk inaction.

It’s also important to acknowledge that who you partner with matters. At Logility, we have been under singular ownership for nearly 50 years. We have developed a detailed prescriptive engagement process that enables us to think from the outside in, applying our knowledge to each client’s unique situation. We approach each project with this expertise, but also with empathy.

It’s our mission to enable each client to achieve their value goals and maintain value over the lifetime of our relationship. Selected your best-fit vendor? How can you ensure a successful implementation of supply chain planning software? What are those essential elements and common mistakes to avoid? Selected your best-fit vendor? How can you ensure a successful implementation of supply chain planning software? What are those essential elements and common mistakes to avoid?

We can walk you through it with our prescriptive engagement process. Download for our free Executive Brief: Prescriptive Supply Chain Planning” to Fast Track Executive Buy-in and Achieve Rapid ROI for more information.

Disruptions in supply chain operations are here to stay. They’re increasing in complexity and raising the stakes on the production and distribution of goods – pushing supply chain sustainability improvement initiatives to the back burner.

DENSO Corporation, a global automotive components manufacturer, is bucking that trend with tighter collaboration and a different outlook on supply chain disruption. According to the company’s Demand, Inventory, and Supply Planning Manager Mark Turk, this ever-evolving environment brings new opportunities for rethinking processes, redesigning organizational structures, and redefining business value.

“We decided to embrace the change because we realized that operating in silos is not ideal,” Turk shared during his session at Gartner’s EMEA Supply Chain Symposium/Xpo conference in Barcelona, Spain. “The experience pushed our teams to collaborate – from product development and management to sales and logistics – so we can develop ourselves and get ready internally to tackle any disruption.”

Finding opportunities to collaborate in every disruption

Market dynamics are churning out challenges faster than their assembly lines can keep up in this era of constant supply chain disruption. But instead of ignoring or reacting to disruptions, DENSO adapts its global manufacturing operations – involving 70,000 employees across 35 countries – to address them strategically and meet sustainability goals for zero emissions.

“Companies risk collapsing when they react to a disruption in ways that deviate from their mission and values,” warns Turk. “By working together, we are better equipped to avoid this mistake, inspiring trust among our people because we still walk the talk.”

Representatives from its sales, supply chain, and logistics departments come together to identify the disruption and its impact on costs, revenue, people, resources, manufacturing capacity, and customers. Then, the team members disassemble, returning to their respective organizations to discuss potential challenges with their experts and recommend viable options to tackle them. By the time the team regroups, everyone knows what’s needed to prepare the business and move forward.

It’s clear that communication and collaboration are essential to DENSO’s success. However, none of this work is accomplished through thoughtful conversation and manual assessments alone.

“With Logility at the center of our IT ecosystem, we can better control supply chain disruptions using advanced analytics that provide early detection and resolution,” Turk says. “And our supply chain will continue to perform efficiently despite the changes associated with digitalization, electrification, and sustainability.”

With this information, DENSO’s S&OP process is well-positioned to identify demand trends, new opportunities to seize them, and the right sales and marketing campaigns to win customers. Business planners can access the latest forecast, update changes in their supply chain systems, and receive alerts whenever stock levels of a particular automotive component are running low or in excess.

Planners also have better visibility to make critical decisions faster, such as expanding a warehouse or moving stock elsewhere to free up the operation. This information serves multiple entities and is being shared with DENSO’s management team and headquarters in Japan.

“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,” reflects Turk.

Meeting demand with sustainable products and operations

With Logility’s Digital Supply Chain Platform, DENSO believes it has the right technology to enable a solid and agile S&OP process to help build a high-growth and sustainable future.

Turk reports that the company “established €43 billion in revenue last year, which is a 10% increase over the previous year.” At the same time, the company has been making strides in reaching carbon neutrality by eliminating CO2 emissions from its manufacturing processes and promoting products powered by electricity and other mobility products.

To learn more about how clients like DENSO are responding rapidly to market disruptions watch our webinar on Supply Chain Predictions: Trends and Insights from Gartner Supply Chain Symposium 2023 on-demand. You can also learn more about Logility’s S&OP solutions by getting in touch here.

In an increasingly connected and dynamic global business landscape, unpredictability has become the new norm. Businesses are grappling with many uncertainties, from fluctuating market trends to unforeseen supply chain disruptions. This turbulence sends ripples through their sales and operations planning (S&OP) process, adding complex layers and challenging the essence of effective decision-making.

As these factors become increasingly prevalent, S&OP — the vital nerve center of an organization’s supply chain strategy — is being stretched thin. Companies find their tried-and-true forecasting methods falling short in navigating the stormy seas of demand volatility and supply chain risk. This is causing a seismic shift in the approach needed to ensure a resilient, agile, and effective S&OP process.

Despite 95% of supply chains needing to react quickly to change, only 7% can execute decisions instantly. This delay between planning and action hinders efficiency, leading to predictions of a fivefold increase in real-time decision execution adoption by 2028.

Enter the power of asking “what if.” By exploring “what if” scenarios, companies can proactively simulate and plan for different possibilities, turning unpredictability from a daunting challenge into a strategic advantage. This approach fuels decision-making with data, empowers businesses to pivot quickly, and fosters resilience in the face of uncertainty. It’s time to embrace the question “what if” in your S&OP process, and here’s how.

The “What If” in Sales and Operations Planning

“What if” scenario analysis represents a forward-thinking approach in sales and operations planning that allows businesses to anticipate possible future situations and develop response strategies accordingly. This method involves generating and examining scenarios based on altering key variables, like demand changes, supply disruptions, market shifts, and policy adjustments.

Central to “what if” scenario planning are the questions that can truly stretch the boundaries of the existing S&OP strategy. For example:

What if a key supplier fails to deliver on time?
What if there’s an unexpected surge in demand for a specific product?
What if a new competitor enters the market?
What if there’s a sudden change in government regulations affecting the supply chain?

By answering these questions, businesses can design a range of potential actions and responses, fortifying their business against future uncertainties in the supply chain planning and demand planning process. When properly executed, the integration of “what if” scenarios into S&OP brings a wealth of benefits, including:

Improved Forecast Accuracy

“What if” scenario planning improves forecast accuracy by considering multiple possible outcomes rather than relying on a single, linear projection. It allows you to test various assumptions and see their potential impact on your sales and operations, enabling you to make more accurate predictions in your demand forecast.

Better Risk Mitigation

Understanding different scenarios enables you to foresee potential risks and bottlenecks in your supply chain and inventory plan. By planning for these possibilities, you can proactively mitigate these risks before they become disruptive issues.

Improved Strategic Decision-Making

The insights derived from “what if” scenario planning provide valuable data for strategic decision-making. By simulating different scenarios, you can explore various strategic options and choose the one that aligns best with your business objectives and S&OP plan.

Reduced Lead Times

Scenario planning can also help identify ways to optimize processes and reduce lead times. By understanding how changes in various factors can impact your operations, you can develop strategies to streamline your supply chain management processes and improve efficiency.

Higher Profitability

Informed decision-making, better risk management, and improved efficiency are positive results of “what if” scenario planning that also boost your bottom line. By turning uncertainties into opportunities, you can enhance your company’s profitability.

Improved Inventory Management

Scenario planning can provide insights into potential changes in demand, helping you better manage your inventory. This reduces the risk of stockouts or overstocks, ensuring you maintain an optimal inventory level.

Challenges of Incorporating “What If” Without the Right Tools

While the concept of “what if” scenario planning is undeniably powerful, implementing it manually or using outdated tools presents many challenges.

Let’s start with the ubiquitous tool in sales and operations planning — Excel. While Excel may be great for simple calculations and data analysis, it quickly reaches its limitations when used for complex “what if” scenario planning. The data inaccuracies inherent in manual data entry, the lack of real-time data integration, and the inability to scale effectively can severely compromise the benefits of scenario planning.

Consider the sheer amount of data you need to analyze to simulate different scenarios for your operations planning process. This includes historical sales data, inventory levels, production capacity, market trends, and more. Manually collecting, cleansing, and analyzing this data can be extremely time-consuming, error-prone, and inefficient.

Additionally, Excel simply lacks the computational power to analyze multiple scenarios simultaneously and in real time. This limitation makes it difficult to respond quickly to business environment changes, undermining the agility that “what if” scenario planning promises.

Limited scalability is another significant challenge. As your business grows, your S&OP process becomes more complex, with more variables, data, and scenarios to consider. An Excel-based approach will struggle to keep up with this increased complexity, limiting your ability to make strategic decisions effectively.

Even beyond Excel, many older S&OP software systems lack the advanced capabilities to harness the power of “what if” scenario planning. They may not offer real-time data integration, advanced analytics, or seamless collaboration features. Without these, you’re missing out on the full potential of scenario planning, and consequently, your sales and operations planning process may fail to drive optimal results.

Overcoming these challenges requires a shift in mindset, moving away from manual processes and outdated tools, and embracing advanced, dedicated S&OP software. With the right tool, you can fully harness the power of “what if” scenario planning, optimizing your S&OP process to navigate the ever-evolving business landscape.

Harnessing the Power of “What If” in Sales and Operations Planning Process

In the modern business landscape, digital solutions are revolutionizing the S&OP process. These solutions offer capabilities beyond traditional systems, enabling businesses to perform in-depth “what if” scenario planning quickly and effectively to ensure their business planning efforts are successful.

Solutions like Logility, with robust capabilities for scenario planning, enable businesses to make the most of “what if” scenario analysis and ensure a smooth decision-making process that inspires cross-functional collaboration across all involved departments.

Digital solutions utilize real-time data integration to deliver a unified, accurate, and up-to-date view of your business. This means you can generate and analyze scenarios based on the very latest data, enhancing the reliability of your predictions.

When it comes to scenario simulations, advanced software can process complex calculations in a fraction of the time required by manual methods or basic tools. This ability to swiftly simulate and compare multiple scenarios allows decision-makers to respond proactively to changing market conditions.

Outcome visualization is another critical feature that helps businesses interpret and understand the results of various scenarios. These solutions simplify decision-making and ensure all stakeholders are on the same page by presenting data in an easily digestible format.

With these capabilities, businesses can focus on critical metrics and KPIs like demand forecast accuracy, inventory turnover, on-time delivery, order accuracy, total sales, gross margins, and working capital projections. Digital solutions like Logility can monitor these metrics in real time, facilitating a more proactive and responsive sales and operations process.

Beyond these immediate benefits, digital solutions are crucial in building sustainable and resilient supply chains. They empower businesses to anticipate disruptions, devise contingency plans, and adapt their strategies on the fly — all key to maintaining supply chain resilience and antifragile in the face of uncertainty.

For example, Logility can support the development of sustainable and resilient supply chains by enabling businesses to simulate and understand the impacts of different environmental, social, and economic scenarios to help synchronize efforts throughout the entire planning cycle. By gaining a clearer what-if picture, previous silos across the business can take more proactive and cohesive initiatives for more integrated business planning.

The ability to integrate real-time data, simulate diverse scenarios, and visualize outcomes are all critical to maximizing the value of scenario planning. As a result, these tools not only enhance Sales and operations planning but contribute significantly to building a more resilient and sustainable supply chain.

Transforming Uncertainty into a Strategic Advantage

Navigating today’s unpredictable business landscape demands a dynamic, forward-thinking approach to sales and operations planning , and harnessing the power of “what if” scenario planning is a cornerstone of that approach.

Through scenario planning, businesses can anticipate a range of possible future situations, improving forecast accuracy, mitigating risks, making strategic decisions, reducing lead times, and ultimately, enhancing profitability and inventory management. However, executing “what if” scenario planning effectively necessitates using effective planning software.

S&OP software provides real-time data integration and efficient scenario simulations and offers intuitive outcome visualizations. These capabilities empower businesses to focus on key metrics and to develop more resilient and sustainable supply chains, transforming uncertainties into strategic advantages.

Logility provides comprehensive capabilities designed to elevate your Sales and operations planning process to new levels of efficiency and effectiveness.

Explore how Logility can help you harness the power of “what if” to transform your S&OP process, drive business alignment, and thrive amidst uncertainty.

How often do you look at your supply chain and ask the question is this Optimized?

Supply chain network design is not something to do every 5 years (anymore). Your network changes yearly, quarterly, even weekly. Supply chain network optimization is the process of looking ahead every month or even every week and exploiting opportunities to cut your costs and deliver faster. Supply Chain Leaders know their worlds are evolving and changing quickly. Their challenge is melding network optimization opportunities into their planning process.

Logility sees that that best leaders know how to triage the use of their time and resources:

– What should my people start doing today?

– What should my people stop doing today?

– Where should we be looking for opportunities tomorrow?

If you can do this monthly or weekly, you are effectively engaging in Network Optimization. Network optimization allows you to pursue a path of aggressive improvement and optimum operational efficiency. Much like a martial artist conserves energy and each move leads to the next, the best way to manage a supply chain is to evolve it in such a way that it operates at peak efficiency today, but each move and change is choreographed to move it down the next step.

If this is not clear, think of it this way, Network Optimization is the exact opposite of an SAP implementation (2–3 years of installation and roll out before you can start to recoup the investment). Network Optimization is a way to:

Follow a defined roadmap to your overall strategic optimization.
Recognize many small, tactical opportunities to gain cost and service time efficiencies today, next week, and next month.
And, if done right, will feed back to the strategic vision and keep that roadmap current and meaningful.

Logility facilitates network optimization by providing a simple and fast platform to analyze changes small and large. Before Logility, organizations would embark on a 3–9-month project to model and optimize their supply chain to look at a major (Strategic) change. Small changes to customer dispositions and changes in capacity can be made part of the overall network model.

Supply chain Network optimization is unlike previous design tools in that your people can use it without extensive training. It can be configured to your business, data, and your specific optimization challenges.

Use Logility to do your network optimization for:

Changes in customer dispositions
Inventory re-positioning and floating constraints
On-boarding new suppliers or partners and evolving along a long-term road map

See an example of supply chain network optimization in this 90 second video:

For more more go to www.logility.com/solutions/

Supply chains large and small are under siege by constant supply chain disruption. Companies find themselves struggling to serve customers, source materials, manage costs, handle supply constraints and shortages and, above all, gain visibility into what’s next.

Thanks to technology, however, the headlines aren’t all bad. The latest generation of sales and operations planning (S&OP) applications are providing better tools for managing supply chains internally. And they’re enabling companies to plan collaboratively beyond the four walls of the enterprise. These new S&OP platforms utilize artificial intelligence (AI) and machine learning (ML) to support better, faster and more inclusive decision-making.

Following are five emerging areas of rapid development in S&OP, underscoring how companies today are using the technology, what they’re getting out of it, and why this new inclusive ecosystem approach to what was once a status process can be transformational.

1. Functional collaboration is essential.

The chaos of the last few years has been unprecedented. But for supply chain, there’s some good news coming out of the current environment. As a corporate function, supply chain is now front and center in the C-suite, no longer a secondary player in the boardroom.

At the same time, the C-suite is morphing to include more parties at the table — a greater cross-functional mix of players from all walks of the organization. Sales, finance, operations, marketing and supply chain are working together more closely than ever, ushering in the development of next-generation S&OP technology platforms.

The C-suite is investing in S&OP platforms that are capable of covering the supply chain end to end — designed, in essence, to work the fragility out of their operations and build in more real-time resiliency. Indeed, all internal and external resources must be coordinated and integrated for a successful aggregate plan.

2. Technology is increasingly in focus.

To operate in this new environment, enterprises now recognize the criticality of having a single data set — one version of the truth, designed with different “views” and supported by AI, ML, scenario planning and analytics, probability analytics and other smart decision and analytics tools.

Decision-making gets smarter when it’s augmented by powerful analytics, ML and AI. As Gartner analyst Amber Salley observed, “With the capabilities we have today, we can solve problems in a matter of seconds. We’ve come a long way.” Now S&OP platforms are hardwired with AI and ML, as well as gamification, pattern-recognition algorithms and scenario-building and assessment capabilities.

The bottom line: Managing with multiple disparate systems cobbled together through data translation layers and application interfaces is no longer sufficient to operate a world-class supply chain. And forget spreadsheets; they’re not integrated databases but rather reside on individual desktops and the like. As one consultant commented, “Why do people keep using them? Because spreadsheets are easy, and everybody knows how to use them.”

3. Process decision points are becoming more frequent.

Planning and process decision points are moving from, at best, a once-a-month schedule to a continuous flow. A set, rigid periodic planning cadence schedule is no longer sufficient.

The process of S&OP is rapidly transforming to a far more dynamic, real-time capability. Early versions of S&OP were about balancing supply and demand on an almost entirely tactical basis and, as noted earlier, reliant on spreadsheets. Spreadsheets were the tools most people used to muscle their way through this onerous tactical process.

Today’s S&OP platforms provide sense-and-respond intelligence analytics on both the supply and demand sides of the equation. As Gartner explains in a framework for designing a supply chain strategy and process matrix, this enables companies to gather data and transactions and plan, forecast, measure, decide, collaborate, design, simulate and execute operations.

These better processes, which consider longer-term, strategic goals as well as shorter-term tactical ones, can be much more focused on generating profitable growth. Advanced S&OP technology also empowers executives to look at the level of risk and take steps mitigate supply chain disruption.

4. Scenario planning is becoming vital.

Today’s S&OP technologies enable effective scenario planning. Companies can “game” different strategic scenarios and, using AI and ML, see how these myriad scenarios will play out in their supply chains. They can operationalize scenarios and aggregate or disaggregate them to see how they might impact performance and profitability throughout the enterprise. This eliminates or greatly reduces the risk factors involved in making strategic business decisions.

Scenario planning creates a proactive means of managing risk and results. Adoption of scenario-based planning moves businesses away from the old paradigm of waiting for something to happen and then responding — hopefully successfully — but always at a cost in the form of lost sales, market share, or business opportunity.

Despite these benefits, scenario planning is still in relative infancy. Gartner reports that supply chain leaders still aren’t sure where to begin developing their scenario-planning capabilities. Only 18% of companies rate as “excellent” their ability to use S&OP for running multiple scenarios to understand trade-offs. This represents a tremendous untapped opportunity.

5. External collaboration is becoming a competitive advantage.

Time was that S&OP was largely an internal cross-functional endeavor. Now, leading companies realize that they can be much more agile, efficient and profitable if they extend close collaboration beyond their four walls, to suppliers and customers. S&OP, in effect, is becoming a toolkit for helping to create and enable this end-to-end ecosystem.

The result is intelligent visibility into multiple tiers of the supply chain, thereby reducing the “surprise” factor and creating more predictive resilience. With the massive uptick in the rate of supply chain disruption, organizations must collaborate with suppliers and customers to tackle supply chain disruption more strategically and predictively.

AI, ML, scenario -planning, pattern recognition and analytics technologies are enabling better supply chain performance across the board and moving supply chains toward a more predictive business model that generates improved financial performance. As McKinsey & Company points out, over time, stronger supplier and customer collaboration can “reinforce an entire supplier ecosystem for greater resilience.”

How Logility Can Help

Headquartered in Atlanta, Logility is a leading supplier of optimized supply chain and retail planning solutions. Using insights gained from hundreds of successful customer implementations, Logility’s supply chain applications enable suppliers, manufacturers, distributors and retailers to collaborate and synchronize their demand management, forecasting, supply and inventory optimization, global sourcing, quality and compliance, product lifecycle management and production operations.

Sales and operations planning (S&OP) was created way back in the 1980s. But it is relevant to today’s world of supply chain disruptions and uncertainty?

S&OP has long served as an effective means of balancing supply and demand through integrating multiple functions of the business, with the goal of maintaining visibility into ever-changing customer demand. But traditional S&OP cycles, carried out monthly or quarterly, seem insufficient to deal with the rapid changes in the market that businesses are seeing today. So is it time to scrap the whole concept?

Sales and operations planning solutions — Sales and Operations planning solutions brings the entire team together and enables faster, more informed decision making

Far from it — S&OP remains a valuable tool for supply chains, but it needs to be rethought for our times. On an episode of the SupplyChainBrain podcast, we learn how that might be accomplished, with insights from Lachelle Buchanan, vice president of product marketing with Logility. She explains how S&OP can be adapted to account for shrinking planning horizons, and the need for scenario planning and cross-functional collaboration. Hosted by Bob Bowman, Editor-in-Chief of SupplyChainBrain.

The importance of predictable financials remains just as, if not more, significant today as it did 35 years ago. In the contemporary sales and operations planning (S&OP) process, a holistic approach involving people, process, and technology is employed to develop a business plan that can deliver the predictable financial outcomes sought by executives.

Discover more about sales and operations planning software here.

Good forecasting leads to good demand planning —and good demand planning means better profitability. That’s why it’s essential to be sure you’re equipping your organization with the right demand planning software.

When you choose the right solution, you can stay ahead of fluctuations in customer demand, achieve high levels of forecast accuracy, handle seasonality, and drive collaboration across supply chain stakeholders. To find the best solution for your business, you need the “what” and the “why”.

Here are our answers to some of the most common questions about demand planning software.

1. What is demand planning software?

Demand planning software forecasts how many of your products and services will be sold in the future. Your business can use it to create a demand plan, which will help you set inventory levels, plan production, create manufacturing schedules, and drive other parts of your supply chain.

Most demand planning software uses statistical algorithms, machine learning, and artificial intelligence to analyze historic data and look for seasonality or other trends in product sales. The software can then be used to adjust the forecast based on any additional information that’s available, such as promotions and other market changes. Demand planning software also allows the demand planner to review and adjust statistical forecasts based on any other information that may not be in the historic data. For example, the company may be entering a new market, or they may have experienced a natural disaster that dramatically increased or reduced demand for their products.

For midsized and large companies, it’s impossible for demand planners to generate a demand forecast manually for all their products. As companies grow and mature in their supply chain processes, demand planning software gives them the tools to automatically create, update, and manage the demand plan across their product line and then include that plan in their sales and operations planning (S&OP) process.

2. What are the benefits of demand planning software?

Demand planning software generates a forecast of the future demand for your products. You’ll need this forecast to create a demand plan. Your demand plan will take the forecast and add additional information and considerations to create a more actionable and operationally feasible plan.

It’s crucial for your demand plan to be accurate because it’s used to set your procurement and manufacturing levels. If your demand forecast is too high, you’ll carry excess inventory, which will increase your carrying costs. If your forecast is too low, you’ll experience stockouts, lost sales, and lower customer satisfaction. This is where demand planning software shows its value by automating many of the tasks your demand planners perform on a day-to-day basis—tasks such as bringing in historic data and creating a base forecast—and then providing a workbench to review and adjust the forecast. With a centralized system encompassing all these capabilities, your planners can effectively manage the demand plan for each product, while also delving into specific location and individual customer needs.

Before we go any further, it’s important to address a common objection. Many manufacturers ask, “Why do I even need demand planning software? Doesn’t my ERP system provide these same features?” It’s true that for an extra cost, some ERP vendors provide demand planning modules and even include applications that address other areas of the supply chain. But these modules tend to be add-ons to the ERP system rather than core functionality. As a result, they generally can’t produce the level of forecast accuracy that a dedicated demand planning solution can offer. Their feature sets also tend to be less comprehensive than what you find in a true supply chain planning platform that includes dedicated demand planning software.

3. Which companies should be using demand planning software?

Most new companies conduct their demand planning in spreadsheets. As their products and product lines become more complex and their sales increase, companies typically move to real demand planning systems that allow their planners to create and review forecasts and gather input from other departments.

There’s no hard-and-fast rule about when companies should begin using demand planning software. For example, we don’t believe that companies with more than a specific number of SKUs absolutely must make the transition. But we do recommend that when companies move past Gartner’s first stage of supply chain maturity, they begin evaluating demand planning systems. If your company is approaching this stage, or has recently surpassed it, you’ll probably notice that your products and product lines have become more complex and your demand planners are having increasing difficulty creating demand plans in the spreadsheets or software they have available to them.

4. Must-have features & capabilities of a demand planning software provider

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

Generate accurate forecasts. Your demand planners must be able to create high-quality forecasts using a variety of algorithms. The system should make it easy for them to include internal company data as well as any available external data. Your demand planning software should recognize that not all of your products are the same. Some might be seasonal, others might be non-seasonal, and still others can benefit from demand sensing, which involves making short-term adjustments to a forecast based on other attributes. Your system needs to be able to determine which of these algorithms and approaches will be best for each product, and sometimes even at the product-location-customer level. It should also provide error metrics to help you understand how accurate each forecast is. Using the demand planning software, your demand planners should be able to adjust your forecast—and even your historic data—and make changes while the software creates an audit trail. This audit trail will help other team members understand who made the changes and why.
Run your business on exception alerts. Don’t let your demand planners waste countless hours reviewing thousands of forecasts each year just to find which ones need special attention. Exception alerting calls your team’s attention to the forecasts that contain “out of bounds” data, so that your team can find the root causes and intervene before there’s a bottom-line cost to your business.
Perform product segmentation. Like exception alerting, product segmentation can save time for your demand planners. Once you’ve segmented your products, your demand planners will know how to divide their time because the demand planning software will automatically categorize the products to show which are in the top segments and should be given the most attention. Perform what-if analysis. What-if analysis enables your demand planners to evaluate how various hypothetical scenarios or changes would impact your demand forecast and the plans that are associated with it. With what-if analysis, your business can assess different possible outcomes and make informed decisions by simulating the effects of alternative assumptions or variables. Make sure your demand planning software enables you to create scenarios, make adjustments to data and models, simulate the impact of scenarios on your demand forecast, and evaluate outcomes for better decision making.
Phase in and phase out product profiles. Phase in and phase out profiles are an important aspect of demand planning that deals with managing the introduction of new products and the discontinuation of existing ones. It involves carefully transitioning from one product to another in a way that minimizes disruptions to the supply chain, inventory management, and customer demand. Your demand planning software should provide a robust way to ramp up or ramp down the demand as you introduce net new products, sunset old ones, or introduce new products that supersede existing products.
Report on and analyze results. Your software should make it easy to review your forecast and identify trends.
Create consensus forecasts. With consensus forecasting, you can generate a single, unified forecast by incorporating input and expertise from multiple stakeholders across your organization. By gathering diverse perspectives and knowledge, you can create a more accurate and reliable forecast than would otherwise be possible. Make sure your solution supports a high degree of collaboration and information sharing.
Integrate with your other business systems. Even the most sophisticated demand planning software won’t handle all your business functions. You’ll need to integrate your new platform with all the other systems you use to manage your supply chain, including supply planning, inventory planning, and manufacturing planning systems.

Questions to ask a potential demand planning software provider

As you research demand planning 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:

How long have you been providing demand planning in fully featured supply chain software? Newcomers to the industry are less likely to understand the unique challenges and pressures you face every day. Look for a partner that built its business around supply chain planning —not an ERP provider that recently launched a demand planning module.
Which industries do you serve? What types of companies do you work with in my industry? Not all companies face the same challenges. Look for a demand planning software provider that has a successful track record in your industry and specific niche of the world.
What’s your approach to forecasting? This question doesn’t just relate to algorithms. It also covers how the provider handles demand sensing for short-term changes as well as causal forecasting to incorporate other data that might influence the forecast.
Do you offer other supply chain planning products besides demand planning? As your company grows, you’ll want to be able to grow with the same vendor. Even if you don’t currently have plans to purchase additional modules, look for a provider that can deliver solutions to complement their demand planning software. You could save yourself from integration headaches down the road.
How do you create product location and customer hierarchies? A product location hierarchy classifies products based on their physical or virtual locations within your organization. It can help you manage inventory, track sales performance, and understand product distribution across different locations. A customer hierarchy organizes your customers into different levels or segments based on specific attributes or criteria. It can help you understand your customer base, target different customer segments effectively, and tailor your marketing strategies to specific groups. Make sure you’re comfortable with how your software handles these tasks.
Can you extract data from my internal system as well as include external data? As we mentioned earlier, your forecasts will be much more accurate if they incorporate both internal and external data. Make sure your new solution can interface easily with the wide range of systems in which you store data.
How do you handle adjustments to the forecast or historic data? Remember that it’s essential to find a solution that provides a thorough audit trail. You’ll want all team members to see which data was updated, when it was updated, and who performed the updates.
Can you run scenarios and perform what-if analysis? Without these capabilities, you’ll have little chance of determining how hypothetical scenarios and changes could affect your forecast and the plans associated with it.
Can you generate alerts to help my team identify which forecasts need extra review? Managing your business by exception can save countless hours for your demand planners and allow them to spend much more time on the areas of your business that need the most attention.
What volume of data and forecasts can you manage? You want to make sure your potential provider can scale to your size. How much bigger do you want your business to grow? Keep in mind that 10x growth doesn’t necessarily translate to 10x the volume of data and forecasts—it could mean 50x or 100x the volume as your company intensifies its focus on data to defend its newfound competitive advantage.
Do you provide role-driven access to the system? You want to be able to give different users with different rights access to different parts of the software.
With which ERP systems can you integrate? Make sure your ERP platform is on the list.
How well can you support the specific needs of my industry? For example, you’ll need to handle expiration dates in the food and beverage industry.
Do you support proportional planning? Proportional planning is important in industries such as consumer durables in which there are often related products. As you’re forecasting one product, you may need to keep in mind that to build that product, you’ll need several other products that can also be sold separately. Make sure your demand planning software allows you to forecast the base product and identify how many of the other products you’ll need to build it.

Tips for using demand planning software effectively

Getting the most out of your demand planning software is all about the quality of your data. Bad data leads to bad forecasts every time. Your top priority, then, should be to establish a reliable process for bringing good data into your system.

Just as importantly, make sure you can review the results from your prior forecasts. Seek to answer questions such as:

Which products forecasted well?
Which of our product forecasts were most inaccurate?
Which product forecasts do you need to adjust on a regular basis?

You can dramatically enhance the quality of your forecasting by using waterfall analysis to review past forecasts. Waterfall analysis allows you to compare previously generated forecasts to see if they’re getting better or worse over time to, giving you the ability to course correct forecasts.

Finally, make sure your demand planners constantly solicit input from other departments so that everything your business is doing will be included in your final demand plan. For example, your planners will need to know if the marketing department is planning a promotion for a particular product that will most likely drive up demand. The same is true when the sales team plans to push a certain product line aggressively.

Why use DemandAI+, Logility’s demand planning solution?

There are many reasons to choose Logility’s DemandAI+ demand planning software:

High scalability. This makes Logility an ideal platform for growing businesses.
Robust forecasting. Our solution provides a wide variety of artificial intelligence and machine learning algorithms that are compared to each other during the forecasting process to ensure you get the best results.
Ability to include casual data in forecasts. Rather than simply considering historic data, Logility uses future data such as pricing and other causal factors to refine your forecasts.
Advanced demand planning functionality. Logility includes all the critical features you need to see in a demand planning system, including scenario management, alerting, robust analytics, and profile planning.
Broad industry expertise. Logility has worked with many industries, including fast-moving and durable consumer goods, food and beverage, and soft goods such as apparel. Each of these industries has a slightly different need in its demand planning software.
Complete supply chain planning platform. Our demand planning solution is part of an advanced supply chain planning platform that covers the entire supply chain. Whether you’re already looking for a complete solution or want to start with demand planning and grow into a full supply chain planning system, we can cover the entire range of the supply chain for your business.

Find out more about Logility’s demand planning software or schedule a time to talk to one of our experts.

AI, Artificial Intelligence, is a word being thrown around these days to garner attention with little regard for if the usage is accurate. The true trending conversation is deeper and specific to Generative AI. But what does Generative AI really mean, especially for Supply Chain Planning?

Let’s start at the foundation of artificial intelligence. AI is a computer algorithm that behaves like biological intelligence based on historical data and information. AI has been around for decades, utilized throughout supply chain planning software for predictive and prescriptive decision making across all supply chain processes. Artificial Intelligence is expected to be part of your software functionality.

What makes the current conversation about AI different from the past? The advancements in technology, in particular scalability and faster access to numerous forms of data, have enabled and created exponential growth in AI adoption across supply chain organizations. Machine learning, deep learning, neural networks, generative AI, & reinforced learning are just the top five areas where AI is being leveraged. Consider, the recent advancement of Generative AI used for ChatGPT, a disruptive, conversational digital language that can inform, assist, advise or even automate supply chain processes. Companies can make faster and better decision making across their entire organization including its partner and supply eco-systems.

Three Ways Generative AI will Advance Supply Chain Planning

Awareness. In its simplest form, it allows users to ask a question and get information back. For example, a supply chain planner may ask the system to “Show me where I might have a single component that is part of these eight items?” While you can answer this without Generative AI with a query, the response requires a data analyst to review and analyze that query.

Generative AI provides a concierge mode for executives, decision makers, and layman users. By transforming the gymnastics exercise of searching for answers to conversational asking the user is instantaneously presented an answer which allows for further probing questions. Where you may ask the internet a question fifty different ways and never get the right answer, Generative AI can decipher and create bridge between the asked question and the desired answer.

Assistance. Generative AI for supply chain planning is an assistive technology allowing people to use their human language in a digital process. Think of it like a planner’s co-pilot. Planners can ask prompts like “make a forecast” to assist them in developing plans more quickly and accurately.

While supply chain planning experts have learned how to query, develop structures, navigate data, many of these folks are aging out of the industry faster than new talent can get up to speed. The new generation coming does not have the same expertise or experience with data analysis, but AI can allow them to get up to speed.

Advise. Traditional AI utilized in supply chain planning has focused on simply providing data results and planners would make decisions accordingly. Generative AI can take data further by interact with other AI methods and create recommendations for what products to promote, how much inventory to have on hand, and where to store it. Further, generative AI based systems could provide insight data about the short-and long-term impacts (or consequences) of potential decisions. It’s like guard rails for data analysis.

Planners ultimately can increase their forecast accuracy exponentially by combining the system advice with their own context of the market and business plans.

The question is no longer whether Generative AI will be part of every supply chain planning process but when. The supply chain industry has seen a lack of talent interest, primarily due to lack of awareness of the field and the demand for tech workers. While this can be concerning for the health of the industry, Generative AI can help to positively curve that trend and bring more talent to the market. Just as traditional AI is expected as part of your supply chain solution today, planners will soon expect the see power of generative AI as well.

3PL Selection—don’t let your people be penny wise and pound foolish

Are you looking at the big picture when you select a 3PL — do they fit with your supply chain strategy?

Third Party Logistics providers (3PLs) are many and diverse. Supply chain organizations often find themselves comparing price differences of 1–2% in service offerings, and they are missing the opportunity to save 5–15% in real costs. 3PL selection is a supply chain decision and an optimization opportunity. A good network study can compare 3PLs’ offerings in the terms you want to consider:

Total landed costs
Customer service time
Risk
Qualitative considerations

The best approach to 3PL selection is to start with a network study. This will identify not only the optimum footprint of sites, suppliers, ports of entry, and modes of transportation. What supply chain leaders will quickly see is that optimum is not a point but rather an area. For example, your optimum East Coast distribution point might be Charlotte, NC but anywhere from Atlanta, GA to Roanoke, VA is equivalent in terms of cost and service time.

The network study will give a zone of acceptability for a node. Then the task is simply to find 3PLs that can support warehousing and freight in that area. Using Logility’s network design optimization makes it easy to revisit each possible iteration of a network in order to know its specifics.

Watch an actual 3PL selection in this short clip:

With Logility, Supply Chain Leaders can make decisions and proceed with confidence that they have made the best overall decision regarding 3PL selection.

Read more about 3PL Selection and other supply chain solutions here: www.logility.com

Think you don’t understand supply chain?  Believe it or not, you do it all the time!

If you’re not in the supply chain industry, you might not think about supply chain planning daily, or ever. Steve Ungar, vice president with Logility’s Product Management group, shares his thoughts on supply chain in everyday life.

When I talk about my job to my friends, I mention the importance of managing a good supply chain.  Because of the heightened use of online shopping where everything seems to appear whenever you need it, their eyes glaze over when I talk about the supply chain industry.  What they don’t understand is supply chain is part of their everyday life, even when it seems like everything you need is available at the click of a few buttons.

Let me explain.

When it’s time to do grocery shopping, you do demand planning every time you put together a list of what you might need.

You’re at home scrolling through your delivery app thinking of what you need for this week.  You make chicken parmesan every week, so you know you need chicken, spaghetti, breadcrumbs, eggs, mozzarella, tomato, and wine.  How much of each do you need?  Since it’s just your family of 4 you need 2 pounds of chicken, 1 pound of spaghetti, a box of breadcrumbs, 2 eggs, 6 tomatoes, and a bottle of wine for the adults. 

Congratulations – you just made a demand plan!  After all, a demand plan is simply a forecast of how much product you need to meet demand.  In this case, based on your experience you’ve forecasted how much you need of each of the ingredients to make chicken parmesan to feed your family this week.

Then you remember you invited another family of 4 over for dinner, so you decide that’s a good time to make your chicken parmesan – after all, everyone loves your chicken!  You change your list (demand plan) to 4 pounds of chicken, 2 pounds of spaghetti, and since there’s now 5 adults and you drink more when you’re together you include 4 bottles of wine.  You’re now using causal factors to refine your demand plan. 

Causal forecasting uses factors external to the historic data to refine the demand plan.  In this case, doubling the number of people doubles the amount of chicken and spaghetti you need (causal ratio of 0.5 pound of chicken and 0.25 pounds of spaghetti per person), but there’s a larger causal impact on the wine so need proportionally more wine (causal ratio of 0.8 bottles per adult).

Since you’re getting wine for the party anyway, you check your pantry to see how many bottles you have in inventory.  You like to keep at least 8 bottles at all times because, well… you never know.  Wow, did you know you were thinking about safety stock? 

Safety stock is the minimum quantity of a product that you want to keep on hand, as a buffer to make sure you don’t run out.  Your demand plan will define how much product you expect to use, but your safety stock provides an additional safeguard in case the actual demand is higher than your forecasted demand.  This allows you to make sure your customers….  I mean your family…  never runs out of wine. 

Since you only have 5 bottles left, you’re below your safety stock level and need to get enough to meet your upcoming demand of 4 bottles – plus the 3 bottles needed to rebuild your safety stock.  These 7 bottles are your supply plan, which is how much product you need to make or acquire to meet your demand plan.  If you were going to pick up your groceries, you might start thinking about how long it’s going to be before you have time to go back for more and decide to get a total of 10 bottles.  Now you’re double dipping in supply chain knowledge. 

The time between this trip to the store and the next trip is lead time, which is how long it takes to make or acquire new products.  The longer the lead time, the further out you need to plan because it takes longer to rebuild your inventory. You can use your online grocery delivery app to expedite the delivery instead of going to the store yourself, but then you have to pay the delivery fee. This is similar to options in a real supply chain, where you can shorten the lead time through expedited shipping at an additional cost. 

Now that you have everything, it’s time to make dinner and you start figuring out how it’s all going to get put together. On the countertop, you put together the parmesan crust, dredge the chicken, and add the cheese. You could use the stove to make the chicken or the pasta, but you decide the chicken would be better in the oven while you cook the pasta on the stove. This is your manufacturing plan, which is the production and machine schedules used to meet your orders. In this case, the countertop, stove, and oven are all examples of manufacturing lines, and when you decided on cooking the chicken in the oven you were choosing the best line to produce your product.

You want to optimize your manufacturing plan to make sure everything finishes cooking at the same time. You don’t want the parts of your bill of material (BOM) getting cold (or increasing your carrying costs) while you finish cooking the rest of the meal (the finished good.) Since the chicken takes the longest to cook, you get that going in the oven first. Next, since the pasta and vegetables each take about the same amount of time, you start them together. Since you’ve taken the time to plan, all the food is done at the same time and it’s nice and hot.

Finally, it’s time to eat. You set the table, put out the plates filled with your delicious food, and fill the wine glasses (adults only!!!). While you sit there enjoying dinner with your guests, you think back on the entire supply chain that went into this dinner party. It really does happen all around you, not just at big companies.

Intrigued? Contact Logility or follow us on LinkedIn to find out more about how the supply chain works.

Blog Type: Blog