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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.

Supply chain planning has become a critical factor for organizations aiming to gain a competitive edge. To meet the challenges posed by rapidly evolving customer demands, market volatility, and global disruptions, businesses are turning to advanced technologies. One such technology, generative AI, is emerging as a game-changer in the realm of supply chain planning; poised to revolutionize supply chain planning by enabling organizations to make data-driven decisions with unprecedented accuracy and efficiency.

What is Generative AI?

Generative AI is a Large Language Model (LLM), a type of AI that can create new content. This content can be text, images, or code. It is trained on a large dataset of existing content, and it learns to generate new content that is similar to the content it was trained on. It a wide range of potential applications. It can be used to create new products, services, and processes. It can also be used to improve the efficiency and effectiveness of existing processes.

Generative AI seems will likely transform the way organizations plan their supply chains. Here are 3 examples:

Enhanced Demand Forecasting

Accurate demand forecasting is the cornerstone of effective supply chain planning. Generative AI algorithms have the potential to revolutionize this process by leveraging vast amounts of historical data, market trends, and external factors to generate highly accurate predictions. By employing deep learning techniques, generative AI models can recognize patterns and correlations that may elude traditional forecasting methods.

Take for example, a leading consumer electronics company utilizing generative AI to predict demand for its products during the holiday season. By analyzing past sales data, social media sentiment, and economic indicators, the enhanced machine learning model forecasts the demand with a significantly higher precision. This leads to optimized inventory levels, reduced stockouts, and enhanced customer satisfaction.

Optimal Inventory Management

Managing inventory efficiently is a perennial challenge for businesses, as excess stock ties up capital, while stockouts result in lost sales opportunities. Generative AI brings a fresh perspective to this problem by enabling organizations to strike the right balance between supply and demand.

By analyzing historical sales data, market trends, and supplier performance, generative AI coupled with machine learning algorithms can identify optimal reorder points, safety stock levels, and replenishment schedules. This proactive approach to inventory management minimizes holding costs, reduces waste, and ensures timely availability of products to meet customer demand.

For example, a prominent apparel retailer employs generative AI to optimize its inventory management. By analyzing a variety of factors such as customer buying patterns, seasonal trends, and sales promotions, the AI system accurately determines the appropriate quantities to order and when to replenish. As a result, the retailer reduces excess inventory by 15%, leading to significant cost savings and improved profitability.

Streamlined Logistics Operations

Efficient logistics operations are crucial for supply chain success. Generative AI is proving to be instrumental in optimizing transportation routes, reducing lead times, and enhancing overall logistics efficiency.

Generative AI can help you navigate your data better. Using it as part of your optimization solution, you can consider multiple variables, such as shipment volume, product characteristics, and geographical constraints, to determine the most cost-effective and time-efficient routes for transporting goods. By minimizing distances traveled and avoiding traffic congestion, organizations can significantly reduce transportation costs and improve delivery performance.

As an example, an international shipping company utilizes generative AI to optimize its global freight network. By considering factors such as shipping volumes, vessel capacities, and port capacities, the enhanced machine learning model generates optimal shipping routes that reduced transit times by 20% and fuel consumption by 15%. This not only improves customer satisfaction but also results in substantial cost savings.

Through advanced demand forecasting, optimal inventory management, and streamlined logistics operations, businesses can achieve significant cost savings, improved customer satisfaction, and a competitive advantage in the market.

Organizations must embrace this transformative technology to stay ahead of the curve. By harnessing the power of data and AI, businesses can unlock hidden insights, mitigate risks, and unleash the full potential of their supply chains. The era of intelligent supply chain planning is here, and those who adapt and embrace generative AI will undoubtedly thrive in the ever-evolving business landscape.

A good logistics strategy will move material by the most economic modes within the constraints of service time and ship life. Logistics strategies enable businesses to understand cost, service, and sustainability to make plans for the future through models, optimization, and simulations.

Logility Network Optimization allows you to build an value a variety of potential logistics strategies and craft road-maps to build appropriate networks around these strategies — with the best available facts. Our tools help you develop a sound logistics strategy by identifying ideal warehouse and distribution location centers, building in new distribution networks, new ports of entry, and new modes and 3PL providers. We identify the viability and value of tactics such as zone skipping and cross docking.

Logistics strategies need to be fluid, able to change as priorities and situations on the ground dictate, such as responding to natural disasters. Locations shift as product lines, customers and countries are changed, added, or removed. These are tactical decisions that explore cost effective strategies and high performance solutions across transportation and warehousing.

Through an effective logistical strategy, you can look to improve supply chain management, while maintaining a flexible and adaptable mindset. Logility’s flexible system allows you to analyze distribution networks effectively through changes in suppliers, mergers and divestitures, organizational problems like inventory control, new product line introduction, and growth or changes in demand.

Through cloud technologies, we maintain real-time information to provide you with accurate data, enabling informed decisions that ultimately shape your supply chain to meet objectives.

Create your logistics strategy with Logility, and bring reality to your goals. Go directly to the Logility Network Optimization model and try to find the best Logistics Strategy for yourself.

 S&OP and Multi-Horizon Integrated Business Planning

Manual supply chain processes are a real headache. Creating and comparing business scenarios in spreadsheets are fruitless exercises in glancing in the rearview mirror rather than looking ahead at the opportunities and risks emerging on the horizon. And next to impossible is creating plans in a timely manner when monitoring unrelated KPIs across multiple disconnected sources of data.

Supply chain organizations are no strangers to this frustration. As they approach an integrated business planning (IBP) level of maturity in their sales and operations planning (S&OP) process, they are quickly realizing that their traditional tools and techniques are falling short. In webinar, 3 Ways to Pivot Faster with Multi-Horizon Integrated Business Planning , Logility supply chain experts share their thoughts:

“The problem companies face is not having their systems or processes integrated to manage their data well,” observes Lachelle Buchanan, Vice President of Product Marketing at Logility. “They aren’t making decisions effectively – everything happens in isolation.”

Ultimately, companies must balance demand and supply quickly and responsively while choosing the right model to minimize financial implications. While historically easier said than done, this goal can be attained through a modern supply chain platform that enables flexible scenario planning across strategic, operational, and lead-time horizons.

Envisioning a path to a future-ready supply chain with S&OP

For decades, companies have relied on S&OP as a decision-making process that matches demand and supply to align supply chain plans and business strategies. In most cases, this approach has become an agent of change that dramatically reduces costs and improves customer service.

However, the typical process flow cannot push past the challenges getting in the way of running a highly effective S&OP process and realizing the associated benefits. Such steps include innovation and strategy review, demand review, supply review, financial integration, and executive business review. However, the ability to plan the business across multiple time horizons is often still missing.

“When looking at KPIs inside one S&OP horizon, the level of customer service most likely hits a floor and never leaves it,” shares Matt Gorman, Senior Business Consultant at Logility. “Suppose you have one distribution center in Los Angeles. Your customer service and operational costs will always be impacted by your need to ship orders across the country.”

Identifying where you can improve that reality requires a clear-eyed evaluation of the network design and how it needs to perform across many horizons. Do you want to build new facilities? Is another distribution center needed on the East Coast of the United States? A good S&OP process will quickly onboard new suppliers and vendors to satisfy the various requirements for setting up the network for success as the business expands?

According to Gorman, that level of clarity and open-minded analysis, delivered through multi-horizon integrated business planning, paves the way to the S&OP maturity of a resilient supply chain. “One of the things we hear in the market today is the desire to assess the network more as part of the S&OP process. That’s where business groups use these long-term strategies around customer service on a month-to-month basis – rather than every three years as done in the past – to pivot their fulfillment capabilities quickly,” he reflects.

Putting to work an advanced approach to planning

Multi-horizon integrated business planning delivers what its name implies – planning and scheduling optimization across multiple time domains, from the short term to the medium and long term. This, of course, is an advancement in planning precision, looking at models to not only set staffing levels but measure the network design and fine-tune it continuously to optimize service levels and minimize operational costs.

Assessing historical data from yesterday and real-time data from today can give your supply chain organization a complete picture of its performance, rising risks, and emerging opportunities to plan for tomorrow. With an S&OP solution, you can easily create scenarios that flexibly reflect various real-world factors that affect the supply chain, such as shifts in demand, raw material availability, internal and external production capacities, costs, and pricing strategies.

Furthermore, multi-horizon integrated business planning facilitates the analysis and comparison of multiple scenarios all at once from an adaptable and meaningful perspective. This tactic enables a cross-functional alignment of key performance indicators, including projected fulfillment, capacity utilization, revenue, and profit, as well as anticipated missed future demand and profit.

Continuously empowered to look ahead, your supply chain leaders and the rest of your executive leadership team can seamlessly align their operational plans with an aggregated view of what’s to come across different time periods in the future.

Learn how multi-horizon integrated business planning enables you to adapt quickly to changing market conditions, reduce operational risk, and gain a competitive advantage in today’s fast-paced business environment. Watch our webcast “3 Ways to Pivot Faster with Multi-Horizon Integrated Business Planning.“

**3 Ways to Pivot Faster with Multi Horizon Integrated Business Planning – Download a free recording here.**

Picture this: You’re a seasoned sailor navigating uncharted waters. You’ve got a trusty map based on old routes, but the sea’s currents constantly change, and new obstacles keep popping up. You quickly realize your old map just isn’t enough anymore. Sounds familiar? That’s precisely what demand forecasting feels like for many businesses today. Enter causal forecasting.

Think of it as your upgraded, super-detailed map. It’s not just about what happened in the past but also includes current factors like market trends, promotions, and even the weather. All these elements can help you predict where demand is heading.

Unfortunately, many companies hesitate to use causal forecasting, thinking it’s too complicated or resource-hungry. And the result? They’re stuck with inaccurate forecasts, ending up with too much or too little inventory, missed orders, and unsatisfied customers. That’s why we’re here to break it down for you and show why it’s high time you included causal forecasting in your demand planning toolkit.

What is Causal Forecasting?

https://player.vimeo.com/video/828398058?h=4b18b1fc45

Causal forecasting is an artificial intelligence (ai) enhanced predictive forecasting technique that goes beyond traditional time-series forecasting. Rather than relying solely on historical data, causal forecasting models also incorporate various factors or causal variables that can influence the forecasted quantity.

Let’s consider a simple example—daily sales of ice cream. It’s a given that these sales won’t be consistent throughout the year. A traditional forecasting model might look at last year’s sales metrics to predict this year’s. But what about other significant influences, like the season, the average temperature, or even the day of the week? That’s where causal forecasting comes into play.

Causal models would consider these factors, allowing a more nuanced and accurate forecast. So, instead of making blanket predictions based on past sales, a causal forecast for ice cream might predict higher sales on hot weekends in summer and lower sales on cold weekdays in winter. This type of forecasting provides a more detailed, accurate view of future demand, helping businesses to plan more effectively and avoid costly mistakes.

What are Causal Models?

Causal models, also known as explanatory models, are a type of forecasting method that incorporates variables that might influence the quantity being forecasted. They’re based on the idea that the variable to be forecasted (the dependent variable) is affected, or caused by, one or more other variables (the independent variables).

For example, the sales of ice cream (dependent variable) could be influenced by the average temperature (independent variable), the day of the week, the season of the year, promotional activities, etc. These models utilize artificial intelligence to determine relationships and correlations between these variables to create more accurate and dynamic forecasts.

Causal models often use techniques such as regression analysis or clustering to estimate the relationship between the dependent variable and the independent variables, which can be a linear or nonlinear relationship.

These models are particularly useful when forecasting in conditions where historical data may not be a reliable predictor of future outcomes, or when external factors are known to influence the forecasted variable.

The Power of a Comprehensive Approach

Over fifty years ago, Harvard Business Review was already emphasizing the critical importance of causal forecasting in the world of business. While the core principles they discussed remain valid, the evolution and sophistication of technology since then, particularly AI and machine learning, have significantly enhanced our ability to incorporate causal factors, making forecasting more accurate and transformative than ever before.

Causal forecasting shines in its ability to integrate these external factors affecting demand, delivering a comprehensive, reliable forecast. This method captures current conditions and probable future trends, aligning forecasts with market realities and informing strategic decision-making.

Especially in industries where external factors like seasonality, economic indicators, and promotional activities have a significant impact, causal forecasting enhances forecast accuracy. Coupled with demand sensing—providing real-time data and market signals—causal forecasting becomes more robust and adaptable, increasing the forecast’s precision.

The ability to quickly adjust forecasts and respond to changing market conditions is crucial in today’s rapidly evolving business environment. Causal forecasting can help businesses adapt to changes faster, can proactively manage risks, seize new opportunities to stay ahead of the competition.

Powerful Reasons to Embrace Causal Forecasting Now

Foresight is more valuable than ever in today’s rapidly changing business environment. When employed effectively, can give you that crucial edge. Here are the top three reasons you shouldn’t wait to incorporate causal forecasting into your operations.

1. Supercharge Your Forecast Accuracy

Traditional forecasting methods often fall short as they rely predominantly on historical data. Causal forecasting, on the other hand, brings external factors like market trends, seasonality, promotional activities, and more into the mix. This holistic approach leads to precise predictions that align more closely with reality. By leveraging Logility’s advanced machine-learning capabilities, you can seamlessly incorporate these causal factors into your forecasting process, achieving unprecedented accuracy.

2. Minimize Overstock and Understock Situations

Causal forecasting allows you to manage your inventory more efficiently, leading to substantial cost savings. By accurately predicting demand, you can maintain optimal stock levels, reducing the need for last-minute expediting costs due to stock-outs. Additionally, you can reduce overstocks and lower inventory levels mean reduced holding costs, freeing up resources for other strategic initiatives. With Logility’s demand planning software, you can integrate causal forecasting into your supply chain strategy, driving down costs while ensuring you’re always ready to meet customer demand.

Overstocks and understocks are costly scenarios that can harm customer relationships and affect profitability. Causal forecasting helps you sidestep these pitfalls by generating accurate demand forecasts, enabling you to effectively align your supply with customer demand. This means fewer wasted products, fewer missed sales opportunities, and more satisfied customers. Logility’s powerful forecasting technology supports this by incorporating real-time data and causal factors, giving you the tools to stay one step ahead and maintain the perfect inventory balance.

With Logility’s demand forecasting software, you’re armed with the insights to make proactive, data-driven decisions that drive profitability and customer satisfaction.

Stepping into the Future

The power of causal forecasting is undeniable. It enhances forecast accuracy, lowers expediting and inventory costs, and reduces over/understock situations. Manufacturers can supercharge their predictive analytics capabilities by embracing innovative technology that supports it, like Logility. Don’t wait to reap these benefits. Incorporate causal forecasting into your demand planning today and better prepare for tomorrow’s market realities.

Learn how Logility can streamline your efforts and get you started on your journey for a more optimized supply management system.

The first fully web deployed, SaaS Supply Chain Design Service – Logility Network Optimization

Logility network optimization is fully web deployed.

Logility built its Network Optimization for serverless (100% web deployment) for one reason: accessibility. We want our users to have full and complete access to their Supply Chain Design models anywhere and everywhere. They should be able to:

Work where and whenever they wish
Collaborate in conference rooms and over web meetings
Feel confident their data and models are safe and secure
Know that they are accessing the most powerful computing power that can be mustered

The last bullet is key. Logility actually needs massive computing power to do what it does — solve massive optimization problems, give you great answers, and present powerful analytics. Most companies do not wish to purchase the hardware and software required to run powerful models — Logility provides this on demand and at an economical subscription rate.
Logility also wants to take network design out of the “Engineers Playground” and put it into multiple hands. Feel free to share models with your colleagues.

See how Logility Network Optimization is constructed in this model or in this video:

In the constantly changing world of logistics and manufacturing, “what if” Analysis is the key component of finding the optimized supply chain. Supply Chain Leaders are constantly exploring options that currently do not exist. They need to know what a change could and should look like. What if analysis gives them a window into the future. Leaders want to consider what would happen if they….

Add another distribution point
Consolidate production into one site
Change up the supplier mix
Re-route via a different port
The list goes on

The shortcoming of enterprise and planning systems is their link to current operations. They are very good at quantifying what happened and are “OK” at quantifying what might happen if a supply chain operates in the same way into the next period. They are very bad at planning their own evolution into a different supply chain. What if analysis requires the rapid addition of new logistics routes, operations in new regions, and the flexibility to make these models consistent and believable.

Logility is a leader in doing exactly this. What if analysis was at the core of our functional specifications when we laid down the framework for our platform, network design optimization. We have explored the best practices and methods to quantify the costs and lead times of new lanes, new ports, new sites. We also look at what if questions that are more subtle: What if load sizes are changed, delivery frequencies increased or decreased, inventory held at one location or another.

It might be impossible to avoid supply chain disruptions, but leaders don’t have to avoid exploring new way of approaching supply chain network optimization. They can see for themselves:

Come to Logility to answer your “What if…” questions with this video on managing disruption with our network optimization solution.

If you’re just starting your journey of supply chain sustainability, you may be standing at the precipice full of questions. What is Supply Chain Sustainability? Does it have value for my business? How does it help me gain a competitive advantage?

Logility’s, Lachelle Buchanan, shared her thoughts on the importance of supply chain sustainability and the benefits of leveraging supply chain sustainability planning software.

What is Supply chain Sustainability?

Let’s take a look at the basics and answer the question, what even is “supply chain sustainability”?

Supply chain sustainability is the integration of environmentally and socially responsible practices into supply chain management, aimed at reducing the environmental and social impact of the supply chain while also creating long-term value for all stakeholders.

Businesses are increasingly aware of the impact of their operations on the environment and are seeking ways to reduce their carbon footprint and adopt sustainable practices. Moreover, social and environmental issues can significantly impact business operations and reputation, and sustainable practices can mitigate such risks.

The growing demand for sustainable products and services is another driver of supply chain sustainability. Consumers are becoming more aware of the environmental and social impact of products they buy, and they are increasingly looking for products that are sustainably sourced and produced. By adopting sustainable practices in the supply chain, companies can meet this demand and gain a competitive advantage.

There are several key strategies that companies can use to promote supply chain sustainability.

One is adopting a lifecycle approach to product design and development, which involves considering the environmental and social impact of the product at every stage of its lifecycle.
Another is working with suppliers to promote sustainable practices throughout the supply chain, such as setting sustainability standards for suppliers, conducting audits, and providing training and support.
Adopting circular economy principles that minimize waste and maximize reuse and recycling of materials is another effective strategy.
Companies can promote supply chain sustainability by engaging with stakeholders, soliciting feedback, providing transparency around supply chain operations, and collaborating to identify opportunities for improvement.

What is the Financial Impact of a Sustainable Supply Chain?

The financial value that companies can gain from implementing a sustainable supply chain is significant and diverse. Research consistently demonstrates that companies with sustainable supply chains tend to outperform their counterparts financially.

Let’s explore some concrete examples of how this can be achieved:

Cost savings: By integrating sustainable practices into the supply chain, such as minimizing energy consumption, waste, and emissions, companies can realize substantial cost savings. For instance, optimizing operations for energy efficiency can lead to reduced energy bills, while effective waste management can lower disposal costs.
Improved resource efficiency: Sustainable practices contribute to improved resource efficiency, reducing the need for raw materials, water, and energy in the production process. This results in lower input costs and enhanced overall efficiency within the supply chain.
Lower risk: Embracing supply chain sustainability mitigates risks associated with environmental and social issues like climate change, water scarcity, and human rights violations. By minimizing these risks, companies can avoid costly disruptions to their supply chains and prevent reputational damage.
Enhanced brand reputation: Companies with sustainable supply chains enjoy the benefit of an enhanced brand reputation, fostering increased customer loyalty. As consumers become increasingly concerned about environmental and social matters, they are more inclined to support companies that demonstrate a genuine commitment to sustainability.
Access to new markets: Sustainable supply chains create opportunities to tap into new markets. For instance, companies producing sustainable products can target consumer segments that prioritize environmentally friendly options, such as the growing green consumer segment.
Regulatory compliance: Maintaining a sustainable supply chain ensures compliance with environmental regulations, effectively averting potential fines and penalties.
Improved access to finance: The financing landscape is evolving, with investors and lenders showing a growing interest in funding sustainable businesses. Companies that have sustainable supply chains often enjoy better access to finance and lower borrowing costs compared to those with unsustainable practices.

Research consistently demonstrates that companies with sustainable supply chains tend to outperform their counterparts financially. For instance, a study conducted by CDP revealed that companies with strong environmental performance exhibited higher return on equity (ROE) compared to their peers. Additionally, the Harvard Business Review found that companies excelling in environmental and social performance tended to have higher market value and lower cost of capital.

Implementing sustainable practices in the supply chain offers numerous financial benefits. Such as cost savings, improved resource efficiency, risk reduction, enhanced brand reputation, access to new markets, regulatory compliance, and improved access to finance. These benefits not only create long-term value for stakeholders but also contribute to the development of a more sustainable and resilient economy.

Ready to decide your next step in your Supply Chain Sustainability journey? Check out the Balancing Sustainability with Profitability Executive Brief to get started: https://www.logility.com/executive-briefs/balancing-sustainability-with-profitability/

The 7 impacts of Supply Chain network optimization

In today’s globalized economy, supply chain network optimization has become a vital priority for businesses across various industries. Supply chain network optimization is the process of strategically designing, analyzing, and improving the flow of goods, information, and finances from suppliers to end customers.

By implementing effective optimization techniques, you can gain a competitive edge, enhance operational efficiency, and maximize profitability. Let’s explore the numerous benefits that supply chain network optimization brings and how it can revolutionize your business.

1. Enhanced Operational Efficiency

One of the key advantages of supply chain network optimization is the significant enhancement in operational efficiency it offers. By streamlining and optimizing the network, you can reduce lead times, improve order fulfillment rates, and increase customer satisfaction. For example, through accurate demand forecasting and efficient inventory management, you can minimize stockouts and overstocks, ultimately reducing carrying costs and maximizing cash flow.

2. Cost Reduction and Savings

Supply chain network optimization allows you to identify cost-saving opportunities throughout the entire supply chain. By analyzing transportation routes, storage facilities, and production locations, you can minimize transportation costs, reduce warehouse expenses, and optimize manufacturing processes. The data-driven approach of optimization also enables you to negotiate better deals with suppliers, leading to lower procurement costs and improved overall profitability.

3. Increased Visibility and Transparency

An optimized supply chain network provides increased visibility and transparency across all stages of the supply chain. By leveraging technologies such as advanced analytics and artificial intelligence, you can track and trace the movement of goods, monitor inventory levels, and analyze real-time data. This enhanced visibility not only improves decision-making but also enables timely identification and resolution of bottlenecks and disruptions, ensuring a smooth flow of operations.

4. Flexibility and Agility

Network optimization enables you to build flexible and agile supply chains capable of adapting to dynamic market conditions. Through scenario planning and simulation, you can evaluate the impact of various factors such as changes in demand, disruptions in supply, or market shifts. This proactive approach allows you to respond quickly, make informed decisions, and implement necessary adjustments to optimize performance.

5. Improved Collaboration and Integration

Supply chain network optimization fosters collaboration and integration among various stakeholders in the supply chain ecosystem. By aligning goals, sharing information, and standardizing processes, you can enhance communication and coordination with suppliers, distributors, and logistics partners. This increased collaboration leads to reduced lead times, improved forecasting accuracy, and ultimately, better customer service.

6. Competitive Advantage and Market Differentiation

An optimized supply chain network serves as a powerful source of competitive advantage and market differentiation. By delivering products faster, at a lower cost, and with higher quality, you can attract and retain customers in a fiercely competitive marketplace. Moreover, optimization can support sustainable practices, such as reducing carbon emissions through route optimization or implementing green packaging solutions, which appeal to environmentally conscious consumers.

7. Improved Risk Management

Supply chain disruptions, whether caused by natural disasters, geopolitical events, or supplier failures, can have severe consequences for your business. Network optimization provides risk management capabilities by identifying vulnerabilities, developing contingency plans, and diversifying your supplier networks. By creating a robust and resilient supply chain, you can minimize the impact of disruptions and ensure continuity of operations.

Embracing the data-driven approach of supply chain network optimization is not merely an option but a necessity for businesses seeking long-term success in the global marketplace.

Supply chain network optimization offers a multitude of benefits for businesses aiming to excel in today’s fast-paced and complex business landscape. By enhancing these benefits, you can achieve a competitive edge, maximize profitability, and deliver superior customer experiences. Embracing the data-driven approach of network optimization is not merely an option but a necessity for businesses seeking long-term success in the global marketplace.

For more from our experts visit out LinkedIn, or check out our recent webinars on network optimization, advanced S&OP, and AI-first demand forecasting.

Turbocharge Your Supply Chain Network Design with Network Optimization

Today, decisions around alternate suppliers, warehouse locations, or transportation, must be made in days – not weeks or months. Read this executive brief for key benefits of network optimization.

Executive Brief

The Gartner Supply Chain Symposium/Xpo conference brings thousands of supply chain executives together. Instead of enjoying world-famous theme parks, and nightlife in Orlando, Florida this year, attendees explored new ideas and technology investments that drive business growth and create more resilient supply chains.

Various speakers discussed important topics that are top of mind for every executive, such as supply chain resiliency, digitalization, and sustainability. However, when Angie Taylor, CSCP, Vice President of Sales Operations at PPC Flexible Packaging LLC (PPC), shared the stage, she reached the heart of every supply chain challenge.

“The S&OP process is only about 10% technology. Changing people and their behavior is, without question, the hardest part of the process,” Taylor said. “When the 10% is handled effectively, the remaining 90% – a combination of change management and process transformation – gradually falls into place and gets decision-makers on the same page. But without the right technology and tools, S&OP processes will likely fail.”

Taylor makes a valid point that all supply chain leaders need to hear. Supply chain organizations often fall into the trap of criticizing past performance and acting to that assessment. But to be truly effective, they must focus on resolving ongoing issues and bringing departments together to make decisions aligned with accurate sales forecasts and meaningful service-level goals.

And the results speak for themselves. PPC’s proudly provides exceptional services to its customers and meets expectations for on-time, in-full deliveries. The company is now operating with a 14.8% higher fill rate and a 38% increase in forecast accuracy.

Embarking on an S&OP Journey of Customer Collaboration and Business Growth

Getting stuck in a cycle of reacting to the past while ignoring emerging risks and opportunities can happen to any business, including PPC. The make-to-order flexible packaging business has built a 45-year legacy of designing, manufacturing, and delivering innovative, food-grade packaging for companies like Costco Wholesale, Hill’s Pet Nutrition, The J.M. Smucker Company, Kellogg’s, and Mars Petcare.

“Ensuring that every customer wins is a core value of PPC. And my job is focused on rallying our workforce and leading that philosophy,” Taylor shared. “We consistently preach that we should commit to reality-based promises for our customers. No one wants to get a commitment on a delivery date or product performance, only to not receive it at the end of the day. So, we must stand behind what we say and commit to it.”

From film technology and graphics to materials and construction, consumer goods brands worldwide regard PPC as a high-stakes partner. Some packaging innovation projects can take upwards of a year to create a shelf presence that acts as a silent salesperson while complying with food-grade regulations. More importantly, everything PPC does has to be top-notch to deliver that value to customers while keeping food in that packaging safe.

“At PPC, collaboration is the name of the game – and this includes our internal organizations like operations or finance – as well as our customers,” Taylor further explains. “We need the best data to understand how our customers want to plan their business, make the best calls on future planning, and determine the packaging attributes and compliance legalities involved in satisfying them.”

From Taylor’s perspective, unraveling the complexities of the flexible packaging business required not only the right technology, but the right partner. For PPC, that realization led to the selection of Logility sales and operations planning (S&OP) solutions that directly address its needs.

Leveraging a Supply Chain Digital Twin

With Logility S&OP solutions, companies can continuously improve and evolve their S&OP processes. For example, PPC’s operations team accesses valuable information that paints a picture of future needs and how to optimally utilize labor resources and capital expenditures to support customers at the highest level.

This view – called a digital twin – acts as a virtual mirror of physical supply chain operations so the business can run multiple what-if scenarios before they begin making any changes. The digital twin covers critical S&OP areas, including demand planning, replenishment planning, supply planning, and advanced production scheduling.

“We’re now able to generate real-time insights for our customers,” Taylor recalls. “I think that’s been one of the best things about the Logility solutions: enabling the success of others and helping us plan our business for long-term growth.”

“PPC’s S&OP transformation journey has been made possible by the support of our partnership with Logility,” Taylor concludes. “We now have the toolset, processes, and information we need to fulfill the needs of our internal teams and external customers while boosting our maturity with Logility’s industry experts. And at the end of every day, I know Logility is continuously invested in the success of our projects.”

Blog Type: Blog