Planning Optimized – A Never Ending Journey

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Henry Canitz

Written by

Henry Canitz

Short bio

Hank is a former Logility employee and blog contributor. Supply Chain Brief

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