Industry: Consumer Packaged Goods

Look deeper than ever before. Reduce risk. Increase profits. Make your customers happier. 

Key Takeaways: 

  • Supply chain visibility offers the means to manage your supply chain efficiently as well as help you meet ESG and corporate responsibility goals 
  • The transparency gained through complete supply chain visibility increases supply chain efficiency, increases profit margins, and strengthens customer and supplier relationships 
  • End-to-end supply chain visibility allows you to massage and control every piece of your supply chain for optimized results for both you and your customers 
  • Modern supply chains need modern technology — you can’t get visibility with emails, phone calls, and spreadsheets 
  • A digital supply chain management platform gives you the data you need along with the analysis required for informed decision-making and complete visibility 

Today’s supply chains are messy, tangled beasts. Even in the best of times, they can be unwieldy, and keeping track of your suppliers, your suppliers’ suppliers, and… You know the drill. Insights can be hard to come by as investors, consumers, and boards of directors are upping their environmental, social and governance (ESG) criteria and demanding greater corporate responsibility. A transparent view of the supply chain is required.  

It’s not just about meeting ESG goals. Supply chain visibility offers the means to manage your supply chain efficiently by offering previously unseen opportunities. In days of yore, you didn’t need such in-depth visibility, but today, as supply chains grow more complex and stretch further across the globe, you need a 360-degree view, from raw material sourcing to final product delivery. 

As procurement and supply leaders examine their supply chains, they often turn to things like spreadsheets or try to hack their current software to create a DIY solution. What they end up with is an unresponsive, inflexible system and no visibility at all into the supplier data they need. Supply chain visibility has become critical, so we’ll look at what good supply chain visibility really means, why it’s important, and why you need a unified digital supply chain platform. 

What Is End-to-End Supply Chain Visibility? 

End-to-end supply chain visibility is the ability to track individual components – beginning with raw materials, sub-assemblies, and finished products – as they travel from supplier to manufacturer to the final destination. It’s enabled through technology that provides real-time data about all aspects of your supply chain, gathering usable data that gives your company the agility to work around inventory shortages, sidestep bottlenecks, and meet any compliance requirements. 

It’s visibility inside and out – into your internal business operations and all external partners. The transparency gained through complete supply chain visibility increases supply chain efficiency, increases profit margins, and strengthens customer and supplier relationships. 

Why Is Supply Chain Visibility Important? 

Supply chain visibility is essentially about control. As time has marched on, companies have outsourced more and more pieces of their supply chains, making them difficult to control, and this is where supply chain visibility comes in. The transparency gained can alter your organization’s operations as interactions and relationships with both suppliers and customers improve.  

A digital supply chain management platform means you can pull data not only internally but directly from suppliers, providing detailed insight into each component you use or sell. Risk is reduced as visibility into upstream partners means you’re notified immediately of any disruptions, so problems can either be solved or circumvented.  

At this level of visibility, you can track movement throughout the supply chain. There would be documentation for the use of raw materials, components used in the production process, and, upon completion, you can see the exact location of finished goods. Once goods leave the plant, they can be tracked on ships, trucks, or planes as they travel through customs and other checkpoints.  

Your digital supply chain platform should also include a corporate responsibility solution to track social compliance and environmental status that allows you to initiate, review, monitor, and submit corrective action plans. You also need a view into the environmental status of all suppliers to ensure compliance with your corporate responsibility practices. 

Supply chain visibility also offers the benefits of: 

  1. Simplifying complexities: By providing insights across your diverse supplier network, you not only anticipate and solve logistical issues that can hurt customer relationships and decrease profits but also add a level of trust and transparency. 
  1. Increasing customer satisfaction: By making sure the right products are at the right locations at the correct time, you offer the ability for customers to track their orders from the factory to their loading dock. 
  1. Easier compliance: Your international supply chains have intense regulatory requirements, and these are changing all the time. Decrease the risk to your reputation, too, by ensuring that the behavior of all your supply chain partners is ethical.  
  1. Boosted competitiveness: Your supply chain is costly, and likely is one of your largest budget line items. 
Visibility Takes a Digital Supply Chain Platform 

Visibility doesn’t just happen, and it will never happen using phone calls, emails, and spreadsheets. It doesn’t matter if you’re monitoring supplies and products at a batch or individual item level. Monitoring safety, legal, and material certifications; order and vendor information; status and location of suppliers; and manufacturing dates – all are integral parts of the highly visible supply chain.  

Supply chain visibility first and foremost relies on data. Relevant, real-time data across the supply chain. Then, this data must be analyzed and acted upon. To achieve this requires a robust digital supply chain platform that utilizes advanced, intelligent technologies with a focus on process improvements that drive efficiency and monitor corporate responsibility. 

A modern digital supply chain platform also enables resilience with end-to-end visibility and capabilities for supplier management combined with contingency planning, crisis management plans, and incident response strategies. It’s important to note that end-to-end today doesn’t mean a linear progression. The circular supply chain concept is gaining traction, as manufacturers seek to meet sustainability goals by recycling and reusing stock. You want to be able to capitalize on reverse logistics, as well, to be sure you’re capturing the value of or properly disposing of excess goods, whether from returns or because they were unsold.  

You want artificial intelligence (AI) and machine learning (ML) to inform and improve decision-making, forecasting, and planning, as well as to perform the advanced calculations that turn visibility into actionable information. 

Supply chain visibility is essential to business success. You need insights into every nook and cranny of your supply chain to achieve efficiencies that deliver the profits necessary to flourish. In addition, you need the means to both validate and transparently report on progress toward your ESG goals, not to mention keeping on top of the ever-changing regulatory environment. 

Get Vital Supply Chain Visibility with Logility 

The Logility® Digital Supply Chain Platform supports you to drive a visible, sustainable digital supply chain. It leverages data-driven tools such as advanced analytics and AI that empower your business to meet today’s supply chain complexities head on. You get the supplier data and other analytics you need to meet your transparency goals as well as your revenue goals.  

We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses and become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions. 

While the supply chain talent wars continue, it’s incumbent upon today’s business owners to consider whether the technology they use day to day has any ‘wow’ factor. Demand parameter optimization has that ‘wow’ factor.

In this post we look beyond the more conspicuous and well-documented benefits of advanced supply chain technologies, such as increased speed to market, more efficient operations, improved customer satisfaction and the ability to thrive during ecosystem shocks large and small. This post considers the human element, the brains that use the technology to derive insights and take action. 

As you’ve no doubt heard and perhaps experienced, the recruitment and retention of tech talent is a matter of great urgency. Many business leaders around the world are happy the pandemic is waning, but wondering where all the people have gone. More than 19 million U.S. workers have quit their jobs since April 2021, disrupting businesses everywhere. 

The brain drain would rightly be viewed as critical even if the goal were to simply replace lost headcount. But it’s more dire than that; many companies have embarked on aggressive plans for incremental hiring in the coming years. Consider these statistics from McKinsey: 

  • Facebook plans to hire 10,000 people in Europe to build out its “metaverse” 
  • Amazon announced plans to add more than 55,000 people in the U.S. for corporate and technology jobs 
  • In Germany, 780,000 additional technology specialists are needed by 2026 to meet the estimated demand 
  • Globally, more than three million cybersecurity positions were open as of 2020. 

Business leaders are feeling pressure. According to a McKinsey survey of more than 1,500 senior executives globally, 87% say their companies “are not adequately prepared to address the skill gap.” 

Now let’s circle back and pose the question hinted at above: can commitment to and adoption of modern supply chain technology help recruit and retain top talent? The short answer is that talented knowledge-workers want to use the latest and greatest tools. McKinsey quotes a stack overflow survey that shows  “the… technologies I’d be working with” is much more important than, for example, “the industry that I’d be working in” when making a job choice. 

Beyond Excel

Of course, winning the supply chain talent war requires much more than committing to “an Excel-free work environment,” but continual access to modern solutions and capabilities is an aspect that businesses shouldn’t ignore. One such capability among many in the Logility® Digital Supply Chain Platform portfolio is demand parameter optimization (DPO), a machine learning application that automatically fine-tunes a subset of forecast parameters in order to improve forecast accuracy. DPO can process thousands of items simultaneously, selected by filter (such as inventory classification) or by alert (such as forecast error threshold). The result: a significant reduction in the amount of time spent manually tuning plus better quality forecasts. 

And with improved forecast accuracy comes reductions in inventories, lost sales, expediting costs and obsolescence costs. Moreover, demand parameter optimization enables autonomous planning, reducing the hours spent by planners manually manipulating parameters. This in turn increases the time available for other planning tasks, such as exception analysis triggered by workflow alerts. 

As one Logility customer put it: “Not one of my planners goes home at night and brags that they got to use a spreadsheet at work. But when they’re using modern planning tools like DPO to evaluate scenarios and reduce planning error, and they’re really in the zone, I see the joy of learning on their faces, and the joy that comes with knowing they are making a difference. They benefit, and so does the business.”  

More Tech Doesn’t Equal More Value to the Customer

Logility’s Kevin McInturff, EVP of R&D, says: “At Logility, we offer the perfect blend of foundational strength and the desire to innovate. Our product visionaries never lose their footing. Companies that are overly enamored with their own technology often focus their efforts on the pursuit of the next shiny toy. The reality is more technology just for the sake of it does not always equal value for the client. While others give in to the temptation to be led by their technology, we will always allow the voice of the customer to guide us toward solving real supply chain problems.” 

Read about how stichd – a division of PUMA – chose the Logility platform for its “sophisticated forecasting and clear visibility capabilities” in this recent press release.

A transparent digital supply chain will give you the insights you need for faster fulfillment. 

Key Takeaways: 

  • Same-day delivery is preferred by most consumers today, and supply chains must speed up to match that fulfillment speed. 
  • Fulfillment can be delayed anywhere in the supply chain, but if you can’t see where it’s happening, you can’t do anything to fix it. 
  • Promises made must be promises kept, or your customer satisfaction will take a dive – automation is the answer. 
  • Increasing numbers of consumers will abandon their shopping cart if they can’t get things when they want them, and this goes across verticals that include apparel, food, and beverages. 
  • Logility’s digital supply chain platform can help you capture your part of the predicted $9.2 billion growth by 2025 for same-day delivery. 

It’s no secret that order fulfillment is complex with many moving parts. It’s also true that, in today’s competitive ecosystem with consumer demand for almost instant delivery, speed and efficiency are of the essence. Achieving this requires deep insight into the entire multi-stage supply chain, from order receipt to final delivery. 

The economic sustainability of your business depends on fulfilling orders, of course. Preserving that sustainability and increasing profits depends on meeting market demand, which in turn demands increasing fulfillment rates to satisfy your customers. Achieving this goal requires optimizing your strategy with an aim toward perfect order fulfillment. 

There are many places fulfillment can be delayed – from an antiquated order acceptance process to lack of inventory to logistical complexities. Without complete visibility into your entire supply chain, you won’t be able to see where it’s failing. If you can’t find the problem, you can’t solve it. It’s an information gap that can cripple your entire business. Equip your company for growth, improve fulfillment rates, reach new levels of efficiency, and increase customer satisfaction with a truly transparent supply chain. 

A supply chain is only as strong as its weakest link 

Your customers want what they want, and they want it instantly. Same-day delivery has taken hold. Many shoppers – 49% – say that same-day delivery means they will more likely shop online. Of those aged 18 to 34 who already shop online, 56% expect same-day delivery. Another 61% say they are willing to pay more. In addition:  

  • 51% of retailers already offer same-day delivery 
  • Of the remaining 49%, 65% plan to offer it within two years 

To maintain a competitive edge, your supply chain must be able to deliver. Even among those who don’t expect same-day delivery, 80% expect same-day shipping. Many shoppers would abandon an order if they couldn’t get same-day delivery, and this applies to a number of verticals including: 

  • 22% of those who shop for apparel 
  • 24% of electronics shoppers 
  • 23% who buy food and beverages 
  • 28% who buy toys and video games 

The compound annual growth rate for same-day delivery from 2020 to 2025 is predicted to be 20.31%, or $9.82 billion. This growth rate depends on increasing customer satisfaction through speedy and efficient fulfillment rates. So just how do you get there? 

The path to customer satisfaction is transparent 

Opacity is the enemy of supply chain management. You know; you’ve been through that tense, nail-biting meeting with a customer who wants to know where their product is. You know it left the manufacturer. It’s on a ship somewhere, you guess. Or maybe it’s tied up because someone didn’t fill out some paperwork along the way.  

You check your ERP, but that’s to run your internal business, not your supply chain. You can likely see the order, and that’s it. It gives you no real-time insight into inventory, you have no real-time information at all about where your goods are in the supply chain, and you can’t tell your customer anything enlightening. You might have order management applications, some warehouse management software, and a variety of order-taking channels, but they still don’t give you what you need. 

You need a cohesive, integrated solution that offers transparency to speed up your fulfillment rates and give your customers what they want. The Logility® Digital Supply Chain Platform delivers what you need to meet and exceed your strategic goals. Check out the following solutions on offer.

Automated fulfillment 

Automated order promising allows you to evaluate Available-to-Promise (ATP), Capable-to-Promise (CTP), and Profitable-to-Promise (PTP) inventory to improve customer service and model supply chain opportunities. This leverages an active digital twin of your supply chain to quickly determine the ability to fulfill a customer order. You can:

  • Achieve complete visibility into customer order status 
  • Get instant notification of incoming orders with the information you need to analyze every detail to flag and mitigate problems before they happen
  • Know inventory levels in real time so you know you whether can fulfill the order 
  • See fulfillment status in real time so, if necessary, you can adjust resourcing. 

You also gain the ability to review the final profitability of the order. By leveraging in-memory processing and robust analytics, you can make faster decisions around how to respond to an unexpected opportunity, generate incremental revenue, and provide more proactive customer service.

Inventory planning and optimization

Optimized inventory gives you a competitive advantage when it comes to increasing fulfillment rates. You can create, evaluate, and optimize your inventory strategies and tactics throughout your entire supply chain network.  

With increased visibility, you can see and consider all the interdependencies in production and distribution to avoid excesses that increase cost while making sure you have what you need to speedily fulfill orders.

Supply planning and optimization 

It’s all about a strategy that synchronizes supply and demand – even in complex distribution networks and global supply chains – ensuring the most effective allocation of resources throughout your supply chain. With the real-time information offered by the Logility platform, your planning takes place in the real world, with current supplier, transport, and other constraints. By leveraging automation, you can consider a wide variety of replenishment scenarios to meet customer demands. 

Today’s customer is increasingly demanding, with speed of delivery being a primary competitive differentiator. You can either cash in on this expanding market with a modern digital supply chain platform or sit by and ignore technological innovation at your peril. Remember Blackberry? 

Logility delivers the solutions to meet today’s demands for fast fulfillment        

Reinvent your supply chain to deliver what your customers need. Logility offers complete supply chain transparency to meet current demands and adroitly respond to changing market dynamics. By accelerating the digital sustainable supply chain, we help companies seize opportunities and more profitably manage their complex businesses. 

The Logility® Digital Supply Chain Platform leverages an innovative blend of artificial intelligence (AI) and advanced analytics to automate planning, accelerate cycle times, increase precision, improve operating performance, break down business silos, and deliver greater visibility. We help you make smarter decisions faster – reach out to our team to discuss our supply chain solutions. 

Don’t constrain yourself! Real-time insight and the right digital platform means more accurate forecasts.

Supply and demand. It’s a simple equation – until it’s not. The COVID-19 pandemic and geopolitical events have created demand variability. This causes volatility, uncertainty, complexity, and ambiguity across the supply chain. The resulting fluctuation in demand is amplified for vendors upstream in the supply chain in a phenomenon called the bullwhip effect. 

The bullwhip effect creates a demand-constrained supply chain marked by excess inventory, production planning problems, and even adversely affects customer service. So how do you manage a supply chain with demand constraints? It is, after all, a complicated balancing act with several competing priorities such as on-time and fully filled orders, achieving financial goals, and keeping things running at optimum levels. 

Supply chain stability is elusive these days, and recovery is likely to be painful – especially for companies that are unprepared to navigate current problems and lack the resilience to cope with whatever comes next. It’s time to up your supply chain planning game with software that lets you manage the supply chain instead of it managing you. 

Demand Constraints and the Problems They Cause for Businesses 

A demand-constrained supply chain is characterized by low demand and high supply. Because supply exceeds demand, all demand can be fulfilled, but there is underutilized production capacity. This is a common phenomenon in capitalism; demands are met with a bountiful supply for pretty much anything, which creates constant underutilization, even when demand is high. 

Then, there’s the issue of surplus inventory. Current volatility takes its toll, creating excess inventory, which creates a financial risk, leading to waste in many industries, particularly food and beverage, and fashion and apparel. 

Excess inventory can be created in several ways, and consumer and market trends are just part of the story.  Retail and home goods industries are especially vulnerable to these trends because of seasonality, but: 

• 60% of excess inventory can be attributed to shipping delays 

• 25% of surpluses are caused by a lack of transparency and visibility into the supply chain 

• Another 15% is caused by other issues such as quality problems and returns.  

Excess inventory has a profound impact on a company’s financial health as well as the environment, but managed effectively, it can be converted into a valuable business asset. 

How to Manage a Demand-Constrained Supply Chain 

Demand variability has always confounded inventory planning. Conventional statistical forecasting models are no longer accurate. A modern supply chain requires a responsive and agile platform that informs range forecasting, flexible contracting, and strategic multi-sourcing with solutions that give visibility into both supplier capacity and proactively manage risk.  

Lack of a proper understanding of demand means organizations can fail to meet orders and maintain a steady workflow. To be strategically effective, demand planners must leverage historical sales data and real-time supply chain visibility. 

Plan 

Your goal, of course, is to achieve that elusive balance. That takes demand planning, which means predicting the demand for your products so you can ensure you can deliver and satisfy customers without creating a surplus.  

Some best practices include: 

• Implement the right digital supply chain platform; one that has forecasting tools that can detect nuances, has robust analysis and reporting capabilities and provides transparency and visibility across the entire supply chain. This visibility will allow you to produce a more reliable forecast.  

• Collect and prepare your data with real-time visibility; pair inventory movement with reports that give you a clear picture, as well as mine and aggregate data to show areas for improvement and trigger reactions that create a more agile process. 

It’s about efficiency – with visibility into customer demands, product and material requirements, as well as what actions all stakeholders need to perform, you’ll be well equipped to meet market demand without creating surplus inventory. 

Reap the benefits of a well-managed supply chain 

Avoiding demand constraints is just one benefit of a properly managed supply chain. With the proper software, you can develop a cost-effective strategy that minimizes costs while creating happy customers, increasing profits, and boosting productivity. Supply-and-demand balance issues can be promptly addressed. In addition, your organization will realize: 

• Better collaboration with suppliers, distributors, and all supply chain stakeholders 

• Improve efficiency with exception alerts for service level exceptions 

• Automate your planning strategy 

And the big one: optimize your inventory levels so they lead to accelerated turns and reduce the amount of obsolete stock. You can automatically make sure inventory placement takes into consideration shelf-life and substitutions. Fast, sporadic, and slow-moving inventory can be managed by leveraging different safety stock methods and order policies.  

To avoid demand constraints, effective supply chain management requires the right solutions. Today’s supply chain chaos isn’t going anywhere fast, and just as no one saw a pandemic and invasion of a sovereign country in their crystal ball, who knows what will happen next? Best be prepared. 

Logility: Supply Chain Planning With No Constraints 

Don’t be left in the dark, wondering what will come next and with a bunch of excess inventory on your hands. Logility’s digital supply chain platform accelerates the sustainable digital supply chain by leveraging advanced analytics and AI to empower your business with the visibility you need to manage your entire supply chain in good times and bad. Reap the benefits of more accurate inventory planning, accelerated cycle times, improved precision, and increased operating performance.   

We help organizations sense and respond to changing market dynamics, more profitably manage their global businesses, and become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions. 

Interconnected supply chain planning enables faster, more empowered decision-making.

Supply chain organizations are now caught in the clutches of a global economy creaking beneath the weight of cargo embargoes, labor shortages, jammed ports and shipping lanes, and a pandemic that continues to evolve. Factories run the risk of closing without advanced notice. Manufacturing capacity is severely diminished. Even their ability to keep up with demand is challenged by a combination of resource material shortages and shipping and receiving delays. 

While these struggles are not uncommon, functional silos are rendering current supply chain practices inefficient and cost-prohibitive to address. Sudden spikes and sharp declines in supply and demand are happening too quickly to use information that is ill-relayed, incomplete, outdated, or not received at all. 

Let’s face it ‒ the traditional supply chain model is falling short. Now more than ever, the conventional silos of planning, sourcing, and procurement teams must be connected into one cohesive network. 

What Needs to Change? 

According to Gartner analysis1, supply chain leaders should build an organization that orchestrates end-to-end planning, mitigates or resolves risks, and supports current and future business needs. This means that all roles and activities involved in the supply chain must be centralized. 

However, as Gartner noted, the definitions of the activities that should be included are unclear in most cases. For example, distribution requirement planning, capacity investments, midterm capacity planning, material requirements and replenishment planning, and product scheduling are equally shared with the finance side of procurement. 

Instead of viewing these blurred organizational boundaries as “us” versus “them,” supply chain planning leaders should increase their interconnectedness with other areas of the business, especially procurement and sourcing, to maximize performance outcomes. Doing so enables these three groups to work together seamlessly toward common objectives without ignoring other business needs. 

Achieving Interconnected Supply Chain Planning

By uniting planning, procurement, and sourcing data, analysis, and insight, every executive along the supply network is better equipped to seize new opportunities, sense and respond to changing market dynamics, and more profitably manage global complexity. This is where a digital supply chain platform can help. 

A digital supply chain platform captures and stores crucial data in real time and layers that information on top of existing processes across the enterprise. Planning teams, regardless of their organization, can leverage embedded artificial intelligence (AI), machine learning (ML), and automation to always ensure peak operational performance. 

For example, an operations planner can dig into internal capacity data stored on the cloud ‒ without tracking down a specific spreadsheet, document, or disparate application ‒ to obtain recommendations for keeping up with demand. At the same time, the sourcing planning analyst could evaluate the same information and reconcile it to help ensure the material inventory strategy accurately reflects the production needs and expectations of the broader marketplace. The procurement specialist can also use this information to negotiate pricing and standing orders with existing or alternative vendors to optimize spending while ensuring the availability and delivery of the right components. 

A digital supply chain platform enables these interactions between planning, sourcing, and procurement ‒ as well as many other departments across the supply network ‒ to become more flexible, collaborative, and responsive. When all individuals have access to a single source of truth concurrently, planners can strategize together to ensure resources and materials are at the right place at the right time and deliver on customer expectations with little to no delay. 

Where End-to-End Continuity Matters Most 

Supply chain leaders may never be able to fully insulate their operations from disruption. But they can navigate every twist and turn with a single, unified platform like the Logility® Digital Supply Chain Platform that offers interconnected supply chain planning, sourcing, and procurement for faster, more empowered decision-making. Then, every part of the supply chain can run with a resilience that keeps competitors guessing and customers delighted ‒ from integrated business planning, product design, and demand management to inventory and supply optimization. 

Logility helps organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.

1 Gartner, ‘Take 3 Steps Before Designing Your Supply Chain Planning Organization’ 
11 March, 2021 
Cristina Carvallo, Ken Chadwick 

Supply variability today. Where are we at? 

It’s tempting to think of supply variability as a recent phenomenon caused by COVID-19. Supply chain professionals know better. Supply disruptions are as old as trade itself. But the disruptive power of the pandemic was off the charts, as they say.  

How far off the charts? Depends on the data, of course. Let’s take a look an “index of indexes” recently devised by The Federal Reserve Bank of New York.  The Global Supply Chain Pressure Index integrates commonly used measures “with an aim to provide a more comprehensive summary of potential disruptions affecting global supply chains,” the authors said in a post on the New York Fed’s website. 

Note: Index scaled by its standard deviation

The new index is comprehensive, synthesizing data from a variety of sources including the Baltic Dry Index (cost of shipping raw materials), the Harpex Index (container shipping rate changes), Purchase Manager Index surveys and data from the Institute of Supply Management’s manufacturing survey. 

Note the magnitude of the COVID disruption. The index is scaled by its own standard deviation. You’ll (perhaps) recall from stats class that in any distribution, about 95% of values will be within two standard deviations of the mean. The Pressure Index registered ~4 at times during the past two years.

Averaging across industries, companies can now expect supply chain disruptions lasting a month or longer to occur every 3.7 years, and the most severe events take a major financial toll.

McKinsey, August 2020
What’s the Smart Response to Ongoing Supply Variability? 

Supply chain professionals continue to wrestle with supply problems as we emerge from the pandemic. To address ongoing supply-side turmoil, Logility recommends: 

  1. Building and achieving a feasible plan and the importance of “what-if” analysis capabilities. It starts with defining “feasible” and establishing clarity of roles so the ‘top floor’ and the ‘shop floor’ are synchronized; 
  1. Focusing on the form and function of inventory to maximize the utility of the buffer. That means understanding inventory positions and capabilities from raw materials through semi-finished goods to in-transit finished goods; and 
  1. Ensuring adherence to the schedule, which requires understanding constraints across the entire supply network. 

This post focuses on #1 above: the importance of “what-if” scenario planning capabilities. In a single-source world, “what-if” scenario planning would be largely irrelevant. It’s true that some companies argue for a smaller number of highly competent, reliable supply partners, especially in the context of achieving sustainability goals. But few argue for single-source. The risks are too large. In fact, a growing number of businesses are ditching single-source supplier agreements to hedge against global events that disrupt supply lines.  

As a result, multi-sourcing is gaining popularity as a purchasing model. Driven by organizations that seek to mitigate risk as well as capitalize quickly on market opportunities, multi-sourcing offers clear advantages, including reduced risk of supply shocks and ongoing, healthy competition among vendors across a variety of factors like innovation, price, service level agreements (SLAs) and willingness to share risk. 

We Can’t Always Know What, But We Can Know What If?

Paraphrasing a popular Logility blog post, uncertainty isn’t a license to do nothing. We’ve entered an era in which businesses must be hyper-vigilant – anticipating risks, disruptions, and opportunities –  while on the journey to build a resilient enterprise.  

By asking “what if?” inside a data-driven framework, leaders can evaluate strategic and tactical sourcing options. Moreover, when built on a digital model – or digital ‘twin’ – of the supply chain, integrated business planning can leverage “what-if” intelligence to find the optimal balance between supply and demand, as well as risk and reward. Technology-enabled “what-if” analysis and scenario planning can provide on-demand forecasts so organizations can optimize plans as often as required. Supply chain readiness can be evaluated via real-time simulations, yielding improved visibility throughout the extended enterprise. Financial performance can also be assessed and compared against plans from multiple perspectives simultaneously. 

From Defense to Offense 

By examining the possibilities of every conceivable scenario, decision-makers can not only minimize the impact of future shocks, but discover more long-term opportunities for growth. What begins as a means to mitigate supply chain chaos becomes a method for spotting a silver lining and acting on it. This is the beauty of “what-if” analysis and scenario planning, whether in times of crisis or calm somewhat less crisis. 

Read more about the benefits of a diverse sourcing strategy here.

Smart inventory allocation and deployment starts with the right digital supply chain platform.

For most businesses, the past two years have been a much-needed teaching moment on the state of their inventory planning, tracking, and management capabilities. Decades-old, tried-and-true rules ‒ such as unit-based policies for safety stock, ABC classifications, and inventory planning based on spreadsheets ‒ are far too static, unreliable, and slow for today’s world. 

Most supply chain organizations have risen to the challenge of satisfying the basic demands of lower total landed costs while maintaining customer service levels, especially when margin pressure is high. But as marketplaces grow more complex and supply variabilities increase, staying competitive requires making the right trade-offs and working with an accurate view of the end-to-end supply chain. 

Inventory allocation and deployment optimization are tactics that many companies use to evaluate their supply chain trade-offs and mitigate the impact of supply variability. 

It's time to think about better inventory allocation and deployment

A Much-Needed Transformation is Happening Now 

Many companies today still rely on spreadsheets and legacy methodologies to optimize their inventories. It isn’t unusual for planners to use last-century solutions, even though meeting service levels and financial goals consistently is still a struggle. 

While the gap between service levels, revenue growth, and profitability has always been a low-burning concern, recent fluctuations and disruption in global supply and demand have inflamed it into a five-alarm fire. And now, all those previously reliable practices and tools are nothing more than using a garden house when a full-fledged firehouse is needed to get the job done. 

At Logility, we have seen first-hand what happens when businesses migrate away from planning inventory with error-prone Excel spreadsheets and manual, labor-intensive procurement activities and start using an integrated digital supply chain platform. Almost immediately, organizations benefit from higher visibility and process automation. For example, planning teams can focus on exceptions and value-added activities while the platform automatically releases orders into their existing ERP system ‒ leading to reduced errors and faster processing times. 

Digitalization of inventory planning is highly effective because the location of inventory, not the amount produced, often makes the biggest difference. In fact, inventory allocation and deployment across multiple locations is one of the most complex and strategic decisions that can be made. And with the right solutions, supply chain organizations can seize new opportunities by detecting and understanding normally invisible interdependencies with customer response times, transportation costs, and re-deployment costs and concerns. 

Access to predictive analytics and artificial intelligence (AI) makes product production, placement, and delivery more strategic, timely, and impactful. For example, Tillamook County Creamery Association was able to decrease finished good inventory by 75% while increasing fill rates by 98% and saving US$4.2 million in costs normally lost from produce spoilage and obsolescence. American apparel manufacturer Haggar experienced similar outcomes, including 70% lower excess inventory and 10% lower selling, general, and administrative expenses. 

A Position of Growth Emerges from Smarter Inventory Movement 

The next time you need to make a critical inventory decision, consider whether your existing systems and processes enable you to act, react, and adapt fast enough to meet actual customer demand and current market trends. Then think about how much easier and more profitable the experience could be with flexible rules, automated workflows, and enterprise-wide insights across long- and short-term planning horizons. 

That’s the beauty of Logility’s solutions for inventory allocation and deployment. They use all those intelligent capabilities and more to help ensure product availability and high customer service, while efficiently managing inventory positions and directing products to channels and locations that best serve customer demand. Plus, you can keep up with the pace of today’s shifts in demand and supply by automating replenishment across all channels and forecasting at the SKU level to increase inventory turns and reduce markdowns. 

Don’t ask, “Can we take the order?” Ask, “Should we?” 
(Is that order profitable to promise?)

Available to Promise software (ATP) and Capable to Promise software (CTP) aren’t enough in today’s tumultuous business environment beset by chronic supply shortages; you need to consider profitability in your order processing to make the best business decisions. 

Consider an order-taking process that enforces ATP alone.  

Source: Logility, 2022

Even with real-time ATP at order entry, all orders flood into the supply planning organization with the expectation that those orders that surpassed ATP quantities need to be analyzed. Following that, customers must be informed of decisions made regarding how much product they’ll receive and by when. 

The logic applied, assuming there is some beyond “squeaky wheel gets the grease”, is often stored in a non-integrated system, and is at risk of being overridden. Many of the rules applied are inconsistent and changed frequently. This is a time-consuming process that never improves with repetition, and it delays providing customers with updated information which ultimately hurts customer satisfaction. 

Accelerate Decision-Making 

The Logility® Digital Supply Chain Platform offers a solution that improves upon this: guesswork is removed, accelerating the decision-making process and ensuring you maximize financial outcomes. Using a methodology that combines ATP and CTP,  your own production capacity and your supply chain production capacity can be checked immediately, at the time an order is placed. This leads to less firefighting and increased productivity. 

We call this powerful combination automated order promising (AOP). AOP serves as a gatekeeper to the supply planning team. The solution checks against available stock plus capacity, material availability, alternate sourcing scenarios, and other constraints as needed. With AOP, your salespeople and e-commerce platform have accurate, real-time estimates of how much product is available to promise or capable to promise so orders will never go unfulfilled due to lack of available inventory. 

Source: Logility, 2022

Here are some key advantages of an automated order promising solution: 

  •  Improved customer satisfaction. By automating order promising, you can provide real-time insights into which products are, and can be, available. 
  •  Better decision-making. With automated order promising, you can better understand supply and demand across your product line. Armed with these insights, you can make fast, informed decisions to continuously improve operations. 
  • Time and cost savings. AOP helps identify ways to speed up your supply chain processes. Plus, you can use the solution to explore ways to lower supply chain expenses, at the same time accepting more inbound orders with significant time saved. 
  • Effective risk management. The solution ensures your teams can always access real-time product inventory information and perform what-if analyses to prepare strategies for sudden shifts in product demand.

Elevate Decisions and Protect Margins with PTP 

But what about simultaneously protecting margins? ATP and CTP are insufficient functions in a world of constant disruption and tight supply. Profitable to Promise (PTP) is a natural extension of the order promising and sales and operations planning processes.  

Profitable to Promise elevates the decision from, “Can I take the order?” to “Should I take the order?”, where the decision criterion is not restricted to the profitability of the order under scrutiny, but the relative profitability of forecasted orders and other demand alternatives. In other words, it allows planners to ask, “Should I take this order now or preserve my scarce resources and capacity for a future order with much higher margin potential?” Service level agreement compliance and profit maximization can be balanced and trade-offs analyzed. 

How does it work? At the point of committing to an order, Profitable to Promise allows companies to compare the realizable profit from an actual customer order to the opportunity cost (profit) associated with a forecasted customer order that may consume the same resources. This capability moves beyond current ATP and CTP capabilities and requires an integrated digital supply chain platform.

The Logility platform accelerates the sustainable digital supply chain by leveraging analytics and artificial intelligence to empower your business with greater visibility for faster decision-making. That means more accurate planning, accelerated cycle times, improved precision, and increased operating performance.  Reach out to our specialists today to discuss our supply chain solutions. 

The pandemic continues to affect supply chains today as digital supply chain management and real-time visibility become ever-more essential to the disruption-ready enterprise. 

Key Takeaways: 

  • At a time when supply chains are facing unprecedented disruption, only 48% of companies say they have visibility into their tier 1 suppliers while 11% have no visibility at all 
  • Only 21% have tier 2 visibility and 2% can see tier 3 
  • CEOs have long neglected the supply chain but are now seeing COVID-19 and other disruptions as a real threat to the economics of their companies as well as the countries where they operate 
  • Some experts say the current disruptions will last another two years 
  • It’s not just you – many large companies are now making just-in-time investments in robust supply chain management platforms 

Two years after the start of the pandemic, COVID-19 variants continue to spread throughout the world, and supply chains continue to be plagued with uncertainty. It now seems that planning for a post-pandemic world was premature. China’s zero-tolerance policy and lockdowns are bringing bottlenecks to ports while creating supply shortages at the same time.  

Businesses can’t afford to let their guards down but knowing what to do now and how to prepare for a far-from-certain future can be tough. When will the crisis be over? No one knows. A more dangerous variant could emerge and bring supply chains to their knees once again. Governments around the world are also dealing with the virus in their own ways. Some are taking the approach of living alongside the virus, but a lack of worldwide consensus and vaccinations mean there are certain to be more lockdowns. 

As we complete the first quarter of 2022, just what are the enduring impacts of COVID-19 on the global supply chain? How can you adapt the management of your supply chain to meet the challenges? And what can you do to prepare for something you can’t predict? It’s a stressful situation. Let’s look at what’s happening, some strategies to help you protect yourself now, and how best to equip yourself for what might come. 

Supply Chain Resilience Comes to the Fore 

Supply chains are invisible until they aren’t. They work behind the scenes as the hidden mechanisms that drive the global economy. Everything from semiconductors to lumber is in short supply, and even if there is no shortage, there are delays and disruptions.  

The disruption isn’t just in the supply chain – it’s also shaking up company leadership. Supply chain turmoil and other issues mean 72% of CEOs are worried about losing their job because they simply have not been paying attention, seeing the supply chain as simply transactional and something that could be handled by their COO. These same CEOs have finally woken up to the fact that supply chain issues pose a threat not only to their own company’s growth but to the economic growth of their country. 

There’s been a lack of strategic thinking. The supply chain is inextricably linked to overall company goals. The pandemic served as a wake-up call that company leaders should be thinking of their supply chain as something that can drive both value and performance. With some experts saying that the supply chain crises could last another two years, it’s imperative that companies take steps to create resilience now that will last far into the future. 

Creating Resilience 

Visibility: It is possibly the most important tool in supply chain management. It’s a growing realization, but many companies are operating blind. A recent survey showed that: 

  • 11% of those polled said they have no visibility into their supply chain 
  • 48% say they have visibility into their tier 1 suppliers
  • 21% say they have visibility into tier 2 
  • 2% have visibility into tier 3

Without real-time visibility, you do not have the information you need to make real-time supply chain decisions. You can’t quickly flex to handle unexpected changes, you can’t see bottlenecks, and you can’t see the challenges your suppliers are facing that affect final product quality. Lack of visibility means you don’t have the information you need to take swift, corrective action. Internally, siloed systems hamper access to important data. 
 
It’s imperative to know your supply chain. You may know your suppliers, but your suppliers have suppliers who have suppliers. Do you know where your chokepoints are? Do you have single-source suppliers? Do you know where your risks lie?  
 
Risks can come from anywhere – raw material sourcing, production, and finished products, to name just a few. What about vulnerabilities in your supplier’s supply chain? As lockdowns and wide-spread COVID-19 variant outbreaks occur, you need real-time visibility to assess risks and gain true resilience. 

Real-Time Visibility and Resilience Take a Digital Platform 

A sad fact is that some, if not many, of the companies in that survey will find themselves in supply chain snarls that cause them to lose some, if not all, of their business. This is unfortunate since the technology exists that can turn their opaque supply chains into a bright light that powers their truly resilient enterprise.  

It’s about taking your supply chain to the next level with a digital platform that offers: 

  • Integrated business planning (IBP) across products, channels, resources, and investments, so your supply chain is working to support your business goals 
  • Real-time visibility to see what’s really going on in your supply chain 
  • Data management that connects multiple systems to drive visibility for better decisions 
  • More accurate supply-and-demand forecasting. 

With total supply chain visibility, you can better manage your vendors. Collaboration in real time is essential; resilience requires buyers, suppliers, and other stakeholders to share data. This provides a transparent look into every supplier tier. 
 
At a time when companies are taking a hard look at the supply chain models they have been using, just-in-time systems are being examined because they break when there are component shortages. Some companies are stockpiling key parts just in case they can’t get deliveries in the future. 
 
What will your supply chain resilience strategy be?

Conquer Supply Chain Challenges in 2022 and Beyond

It’s possible to see everything going on in your supply chain so you can gain the real-time visibility you need to manage supply, demand, vendors, data, and the overall profitability of your enterprise.  
 
The Logility® Digital Supply Chain Platform accelerates the sustainable and resilient digital supply chain by leveraging data-driven tools such as advanced analytics, ML, and AI to empower your business with greater visibility. This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, and increased operating performance. 
 
We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.