Supply Chain Wars: Episode IV – A New Hope
Ok, I will admit it, I am a Star Wars fanatic. I have seen all the movies at least three or four times and some of the older ones dozens of times. I have been at the theater for opening night for many of these epic movies including Episode IV: A New Hope in May of 1977 (yes, I am that old). I have also read 100s of Star Wars books from a multitude of authors. I guess it was just a matter of time until my love of Star Wars met my love of supply chain management.
So what is continuous planning and why is it the ultimate new supply chain weapon? Glad you asked…
Continuous planning is the ability to use near real-time information from your extended supply chain to modify demand, replenishment, supply, purchasing, manufacturing, inventory deployment and distribution plans. Continuous planning enables a quick and optimal response to unplanned supply chain events like an unexpected order, a late supplier delivery or a sudden surge in demand from unexpected weather patterns.
Volatility in the supply chain continues to increase due to channel fragmentation, mass customization, longer supply chains, shorter delivery expectations and a general shift of market power to the customer. Companies can no longer exclusively rely on monthly and weekly periodic planning to ensure the right product is at the right place and time to satisfy customer requirements. Don’t get me wrong, periodic planning is still important to establish the optimal baseline plan. Continuous planning augments periodic planning by being able to plan and react within the periodic planning cycle. [See the recent post: Periodic versus Continuous Planning]
Sounds great, right? Well, getting to efficient and effective continuous planning requires a different organizational mindset, additional people skills, new processes, and yes, enabling technology. Organizations have to embrace the fact that periodic planning is only the starting point and that continuous planning can reduce costs and improve customer responsiveness. A concept first theorized by Helmuth Karl Bernhard Graf von Moltke, the chief of staff of the Prussian Army in the late 1800s who famously stated, “no plan survives contact with the enemy” is very relevant to supply chain planning where the enemy is unforeseen and unplanned events.
To be effective in a continuous planning process, planners need the ability to analyze the effects of an unplanned event and quickly develop recommendations on the best path forward. Simply following a pre-described repetitive planning process is no longer adequate. Planners need to understand company objectives and priorities, channel and customer requirements, and product characteristics not to mention capabilities and limitations across the extended supply chain. A rich background in analytics and the ability to create and use simulations, scenarios, and tabular and graphical data analysis capabilities is critical to determine an unplanned event’s impact on the business and make recommendations that are easily understood by management.
Continuous planning processes need to be connected to periodic planning processes, based off the same data, the same assumptions and the same enabling technology. The optimized periodic plan is the starting point for continuous planning activities. The same supply chain “digital twin” that was used to create the optimal periodic plan should be used to analyze the unplanned event and determine the best response. Executed responses for unplanned events should feed back into the periodic planning process so that the next periodic plan is based on the most updated information.
New continuous planning processes need to be supported by enabling solutions to ensure fast and efficient response to unplanned events. Since periodic and continuous planning should use the same enabling technology the system should conform to requirements laid out by Gartner for a Supply Chain Planning System of Innovation including;
- Supply Chain Master Data Management (MDM) to provide consistent, harmonized, and standardized data across the end-to-end supply chain
- Common Data Platform to enable visibility and analysis across functions
- In-Memory Processing to enables the update of real-time information and fast analysis
- Mobile Device Support to provide 24×7 visibility to unplanned events
- Process Automation to enable collaborative work-flows, configurable limits and intelligent alerts to improve response times and to enhance cross-functional decision-making
- Advanced Visualization to enable visual analysis and easily understood recommendations
- Advanced Analytics to enable rich analysis using predictive, prescriptive and cognitive analytic tools.
As Yoda said, “Already know you that which you need.” In this case I think we all know we need continuous planning. Continuous planning by itself might not have the capability to restore peace and order to the entire supply chain, but it is a step in the right direction. Considering the hyper pace at which things happen in the supply chain galaxy today, I think the time has come for continuous planning. Stayed tuned for the next episode of Supply Chain Wars and as always I encourage your feedback and comments at firstname.lastname@example.org.