Sales and operations planning (S&OP) has been a longstanding practice for businesses across nearly every industry. However, this critical supply chain process has been under enormous stress lately from departmental silos, complex trading partner networks, and geopolitical turmoil. Meanwhile, planners skilled to handle these challenges are in short supply – especially as supply chain leaders retire in record numbers.
Yet, as supply chain innovators, we also know the rich history of applying technologies to continuously resolve these challenges and optimize S&OP outcomes. And fusing Generative AI with machine learning algorithms is quickly becoming part of that legacy – delivering a modern, more inclusive, and intuitive S&OP paradigm.
According to experts in our webinar, “How AI-Driven Insights Can Save Your S&OP Before it is Too Late ,” advanced AI technologies, such as ChatGPT and Narrow AI, have an incredible capacity for translating complexity into informed decisions that drive profit and growth. Additionally, these technologies can connect and align cross-functional teams – such as sales, marketing, finance, and supply chains – in ways that allow businesses to stay ahead of the constant flow of supply chain disruption.
Piet Buyck, Senior VP Solution Principal at Logility, “Whatever [businesses] do is driven by the plan they make. And the better the plan, the better we can be as a company in creating revenue, reducing market capital, and reducing costs. AI can help with that.”
The transformation of planning, sensing, and forecasting
A key area in the S&OP process where AI is particularly transformative is demand. By moving beyond conventional, backward-looking methods, planning can forecast demand and inventory at the speed of the market.
“Demand and S&OP is not only about repeating history. It’s also about understanding what’s going to happen, which is your forecast,” Buyck observed. “If you understand what drives your demand and which levers you can use to address market share or increase profitability, then you come to a true demand plan.”
While S&OP drivers and objectives may differ from business to business, the process is relatively the same. Planners strategically examine procurement and sourcing practices and align production and distribution to meet product demand. However, certain aspects of the process may take more priority than others depending on their strategic focus and evolving market dynamics, for example:
- Cost leadership: Selling relevant products accurately is critical to maintain optimal stock levels and efficient production.
- Customer intimacy: Ensuring all components are available when needed helps create comprehensive services that address customer needs.
- Growth-oriented: Increasing investment in buffer inventory in specific markets may help support and scale expansion.
With AI-enabled S&OP planning solutions such as Logility’s DemandAI+, companies can take advantage of every peak and valley in their demand trends to make the right assumptions and best decisions and deliver optimal outcomes – with speed, agility, and confidence.
“You can now start from one common view, including the baseline and trends. The solution’s AI capabilities not only give the insight but also bring and use it as insight for the future,” Buyck said.
When leveraging these AI-powered capabilities of DemandAI+, Logility customers can overcome tough forecasting challenges and achieve supply chain performance improvements, such as:
- 70% faster weekly planning cycles
- 15-30% fewer forecast errors
- 16-32% lower inventory costs
DemandAI+: A new paradigm for supply chain planning
Purpose-built for supply chain planning, Logility’s Demand AI+ shows every person across departments and roles what’s driving demand for their products or services. This shared understanding is based on a combination of insights on where and how growth can happen, which categories may decline, and the reasons behind either trend.
DemandAI+ also leverages the incredible speed of today’s AI algorithms. The solution accelerates the information-gathering part of the S&OP planning process from weeks to a continuous stream of real-time information – from market shifts to business impacts and everything in between.
Take, for example, collaboration features enabled by ChatGPT and Narrow AI. With all the information and the underlying assumptions digitally available, DemandAI+ can be queried to get the right data or report. On top of that, scenarios can be created to see how the overall organization and different departments are impacted.
This shift from analog processes and siloed analysis to digital understanding and enterprise-wide collaboration helps uncover demand drivers by translating real-world events, competition, and customer behavior into quantifiable data.
Such access to up-to-date demand insights allows departments to collaborate seamlessly and make informed decisions. Plus, they can forecast and re-forecast demand with constant updates on drivers and leverage the latest insights proactively to take short-term actions and make long-term strategy adjustments.
An AI-first era for supply chain management
DemandAI+ presents a groundbreaking solution to the intricate task of aligning sales, marketing, finance, and supply chain functions throughout the S&OP planning process. By leveraging the power of AI-first forecasting and Generative AI, the solution takes demand planning, sensing, and forecasting to a new level – moving beyond the limitations of traditional reliance on sales history.
Companies can predict and respond faster and more accurately to changes as they happen with algorithms that incorporate customer behavior data, market dynamics, and events into the forecasting process. In addition, they can improve the accuracy of their forecasting models by considering base demand, promotional lift, causal forecasts, and user insights into their overall analysis.
With the integration of ChatGPT and Narrow AI, this new paradigm in supply chain planning is further enriched with more-sophisticated insights and unparalleled visibility. Logility’s DemandAI+ can be tailored to tackle the toughest forecasting challenges, including promotions, seasonality, disruptions, and new product introductions – offering organizations a comprehensive and adaptable tool for strategic decision-making.