Industry: Process / Chemical

Success story

Berry Global packs more value with an integrated business planning process.

Logility provided a unified planning approach to help Berry generate a better demand signal, increase visibility, synchronize inventory, and optimize supply and production.

Challenges

Berry Global’s products are integral to the success of many of the world’s best-known brands. The Fortune 500 company supplies packaging and materials used for finished products in three major markets: engineered materials (stretch wrap, trash bags, duct tape, etc.); consumer packaging (containers, tube, bottles, drink cups, etc.); and health and hygiene products (baby wipes, diaper materials, dryer sheets, etc.). These products are produced in manufacturing facilities across the globe, serving more than 19,000 customers from sole proprietorships to the largest global brands. The company produces over 91,000 SKUs, but the list is ever-changing. 
 
With over 40 acquisitions in 30 years and constantly changing customer requirements, Berry needed an integrated business planning process and platform to keep its supply chain running smoothly and stay ahead of its competition. 

Wide assortments and markets

Berry Global’s wide range of products is matched by a diverse set of customers, from global powerhouse brands, to a single farm buying agricultural film.

Rapid and frequent acquisition

Over 40 acquisitions in 30 years meant a mix of people, process and existing solutions which was difficult to standardize on.

Inventory and replenishment

Plants and divisions had very specific needs, and planning processes needed to be validated across locations.

Solutions

“Logility has helped us develop a consistent integrated business planning process so we can focus on growing without having to reinvent the wheel every time we have a new acquisition, business challenge, or new customer mandate,” says Mike Reibsamen, director, integrated supply chain for Berry. 

Because of the synergy that demand planning brings across the organization, the integrated planning transformation effort started with demand planning and forecasting. Logility Demand Planning™ helped Berry break down silos and achieve demand planning collaboration across its many divisions. “One benefit of having a smart, scalable solution like Logility is automatically planning smaller items and freeing our planning team to focus on larger, more complex scenarios.” 

Next came inventory and replenishment planning. Plants and divisions can be very specific in their needs, so the transformation team selected two pilot plants: one from their engineered materials division and one from their consumer packaging division. Because both plants were already performing well, these two would serve as ideal resources to validate planning processes using Logility and create a playbook for other plants to follow.  

Integrated Business Planning

Integrated Business Planning

Supply Planning and Optimization

Supply Planning and Optimization

Inventory Planning and Optimization

Inventory Planning and Optimization

“A playbook is like an instruction manual: ‘Here is how you implement an integrated supply chain and gear it up for a faster deployment’,” explains Reibsamen. His team also developed a master data scorecard for plants that included seven key data elements that formed the base requirements for inventory and replenishment planning. A plant must achieve a 98% rating before it can go live with the new planning process. Using this approach, more than 40 Berry plants went live in an 18-month period.  

For master scheduling and demand-driven procurement, the integrated planning transformation team worked closely with purchasing to make sure the new processes coincided with the inventory and replenishment planning deployment schedule, ensuring cross-departmental actions were in sync. 

Results

In addition to hard dollar impact, Berry’s deliberate approach to transformation has produced other long-term benefits. Consistent processes mean the company is no longer doing things differently in different areas. Collaboration and continuous learning are part of the company’s culture, so good ideas get populated across the organization.  

Reibsamen is quick to point out that people are a necessary element. “Success requires a combination of things. You have to have the right team in place, committed to defining the right processes, using the right planning platform. For us, that platform is Logility.” 

With Logility, Berry Global has achieved hard dollar benefits through operational changes and optimizing production, and created a proven, scalable planning process applicable to all plants, products and customers. It has established a culture of collaboration and continuous improvement and freed planners from routine tasks to focus on customer needs and innovation. 

Logility has helped us develop a consistent integrated business planning process so we can focus on growing without having to reinvent the wheel every time we have a new acquisition, business challenge, or new customer request.

Mike Reibsamen, Director, Integrated Supply Chain, Berry Global

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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.

If resilience is the panacea to today’s supply chain challenges, it seems that everyone has a different prescription. Every industry article, news segment, analyst research paper, and boardroom conversation offers varying perspectives on the real issues impacting supply chain performance and the best way to fix them. 

Feeling overwhelmed? You’re not alone. Since 2019, nearly 70% of supply chain leaders have been constantly responding to disruption. And they’ve had little to no time to recover from raw material and labor shortages, supplier and factory failures, transportation delays, and rising costs while encountering unpredictable demand. 

But considering how supply chains have responded and overcome high-impact global and regional events over the past couple of years, Mark Balte, Logility’s executive vice president of supply chain innovation, believes that resilience ultimately comes down to planning.  

“Supply chains must be designed to avoid or absorb the impact of these disruptions and continuously maintain corporate financial objectives and service level goals,” Balte advises. “And that resilience must encompass all planning horizons from a strategic and operational perspective.” 

Driving a Much-Needed Supply Chain Reorganization 

According to Gartner1, 25% of organizations will gain a critical competitive advantage in their supply chains by 2025. How? By increasing visibility across multiple tiers of their supplier network to proactively manage supplier risk. 

Considering 67% of disruptions are unforeseen, such transparency across all tiers can yield tremendous resilience, no matter how your business defines it. With access to digital data across your enterprise ecosystem and your multi-enterprise partners’ system, you can measure variability in demand, lead time, production capacity, throughput performance, resource availability, and transportation schedules with planning algorithms. 

“This approach to supply chain planning may be a significant paradigm shift. But it moves business decision-making toward a more probabilistic mindset,” shares Matt Gorman, senior business consultant at Logility. “A supply chain design that applies realistic parameters to establish buffers across the nodes in the supply chain can demonstrate a competitive level of resilience.” 

Many disruptions facing supply chain organizations today are best handled through probabilistic planning. Companies can better gauge emerging risks and opportunities to corporate financial and service level goals when shifting from a least-cost supply chain design to a resilient supply chain design. And for that reason, they can absorb and avoid disruption, measure variability proactively, and establish the right strategies and inventory buffers to address it across the supply network and short- and long-term planning horizons. 

Developing Diverse, Resilient Sourcing Strategies

Vetting all the tiers of the supply network has never been more important, especially when addressing growing expectations for social accountability, environmental responsibility, and financial reliability to establish a responsible sourcing network.  

“Once a responsible sourcing network is established, you can then include product and supply chain strategies to design the supply chain network,” suggests Balte. “Resilient sourcing strategies may include dual sourcing around key raw materials, product raw materials, pricing, sustainability suppliers, diverse suppliers such as minority or female-owned businesses, component inventory buffers, production buffers, etc. 

“Companies need to model beyond their tier-one supplier network,” Balte continues. “And the technology exists to make that happen, allowing companies to proactively manage supplier risk and increase organizations’ resilience while understanding changes in customer demand and responding effectively.” 

Over 40% of supply disruptions occur at and beyond the second tier, making end-to-end collaboration and transparency highly sought-after capabilities when choosing supply chain technology to support this. Using a digital supply chain platform, supply chain organizations can identify where risk may be within the supply network’s structure. They can remove much of the unknown risks, along with those already known, in real time with continuous planning. 

“There’s a lot of power in knowing what’s occurring in real time, instead of waiting weeks or months before finding out about an event, small or large, that already happened somewhere in the supply network,” Gorman acknowledges. “Organizations have the time to recover and do it more quickly. Otherwise, without a resilient design, they end up building large amounts of stock to get through a potential disruption, which only eats into their margins and profits.” 

Turning a Multi-Tier Supplier Network into a Competitive Edge 

Historically, businesses were able to model good forecasts and promise order delivery based on them. But that only works well when material availability, manufacturing and logistics capacity, lead time constraints, and customer demand were predictable.  

“Nowadays, a promise of, say, 20 days to deliver an order is most likely no longer viable, it’s variable,” Balte says. “Companies using a spreadsheet to do this kind of order promise analysis and planning determination will fall short. And as a result, they are more likely to deliver customer orders two or three days late ‒ and no one can afford to do that.” 

A resilient supply chain requires organizations to understand risk and respond to it well throughout internal operations as well as the extended supplier network and customer base. With greater visibility into the supply side of the business, companies can react faster, track emerging and potential events with greater precision, and determine next steps more strategically. Meanwhile, they can better understand how their actions and best practices impact environmental and social responsibilities and customer satisfaction. 

“The supply chain function is not just about accepting orders upfront and fulfilling them. It’s the last leg of an order experience that dictates whether the customer is a one-time visitor or a repeat buyer,” states Gorman. “When organizations can assess the multi-tier supply network transparently and collaboratively, they can entertain different scenarios of alternative vendors and delivery times to pinpoint a realistic delivery promise and tell customers immediately what they can expect.” 

For more insights on creating resilient sourcing strategies from Mark Balte and Matt Gorman, watch our on-demand webcast, “Create Resilient Sourcing Structures in the Face of Disruptions, One Brick at a Time.” 

1  Manage Supplier Risk by Improving Supplier Visibility With Technology 
Published 7 March 2022 
Gartner 
By Cian Curtin, William McNeill, Koray Kose 

Letting your vendors own the process and self-manage their corrective action plans leads to more successful compliance. 

Key Takeaways 

  • When vendors manage their own corrective action plans, they have greater success 
  • Effective implementation of corrective actions will only take place when they are owned, designed, and championed by a supplier 
  • It’s about ownership, and this only happens when your suppliers understand the financial and operational benefits of implementing improvements 
  • Transparency is required: you must be transparent about expectations, and your vendor must be transparent about the corrective actions they are taking 
  • The goal is continuous improvement through corrective action 
  • Dictating how the corrective action plan will be implemented isn’t a recommended approach, but you can certainly dictate the elements that must be contained in every plan. 

Compliance takes cooperation and collaboration across the entire supply chain. There is a lot at stake. Consumers demand that the companies they buy from meet corporate social responsibility (CSR) objectives, and they want to see proof. It’s all about transparency these days, and if you can’t prove that you are working to meet CSR goals, they’ll move on to a competitor who is.  

In addition to providing transparency for consumers and regulators, it is important to be transparent with vendors about your company’s sustainability goals. You’ll weed out those suppliers who aren’t up to the task, but there are others who will try, fall down in some areas, yet want to be compliant. It’s important that they both accept accountability and take measurable action to improve. 

Imposing plans on people or companies rarely works. It’s simple psychology. That’s why it is important to empower your vendors to develop and self-manage their corrective action plans when needed. Once you define and describe the problem and its scope, you’ll want your vendor to devise corrective actions and follow up. Here’s why self-managed plans work, and what should be in them. 

Why Self-Managed Corrective Action Plans Make a Difference

Allowing vendors to develop their own corrective action plan (CAP) rather than imposing one will go much farther when it comes to fostering both cooperation and collaboration and improving the chance for success. One size does not fit all, each business is unique, and they alone know their internal processes. They are in the supply chain trenches and realize the obstacles they might face related to implementing CSR improvements. 

Understanding vendor perspectives aids in transferring ownership of the problem-solving process from you to the vendor. The more ownership a vendor takes, the more likely it is that implementation of their corrective actions will be successful.  

Effective implementation of corrective actions will only take place when they are owned, designed, and championed by a vendor. This level of ownership only happens when they understand the financial and operational benefits of implementing improvements. The financial losses they would suffer are, of course, implicit if they fail to take the right action. 

You set clear expectations at the beginning, and you’ve supplied a supplier corrective action request (SCAR) to your vendor. What should be in their CAP? 

12 Items That Should Be Part of Your Vendors’ Corrective Action Plans 

You’re not going to be dictating what or how your supplier takes corrective action, but you can define what should be in that plan. That plan should include a clear statement of understanding of the problem, the desired outcome of the plan, and a list of specific steps. Let’s explore further the elements of an effective plan, using Lockheed Martin’s SCAP requirements as an example: 

  1. Details of the compliance issues as understood by the supplier. 
  1. The findings of a root cause analysis. 
  1. How each issue will be addressed, and what issues allowed non-compliance. 
  1. What short-term corrective actions will be taken until long-term corrective actions are implemented to prevent reoccurrence in the interim? 
  1. What are the long-term corrective actions? 
  1. What preventative actions will be taken in the future? 
  1. What are the containment plans? 
  1. Based on the planned actions, what improvements are expected? 
  1. What are the target dates for implementation of the planned actions? 
  1. Who are the parties responsible and what is their contact information?  
  1. What is the plan completion date after internal validation?  
  1. What is the schedule of planned reviews to ensure plans are being implemented as scheduled? This should include: 
  • Progress made  
  • The outcome and effectiveness of any completed actions 
  • Metrics that track action performance and effectiveness  

The goal of any SCAR and a corresponding CAP is continuous improvement. You can facilitate this, as well as collaborative compliance, by allowing vendors to take ownership of their issues and corrective actions through Logility’s compliance solution. This provides a centralized system to evaluate, manage and report, simplifying the complexities of vendor compliance and CSR management.

This solution also facilitates onboarding, so vendors know your clear expectations. And it provides a process that offers full transparency and accountability for the collaboration that leads to complete compliance, risk mitigation, and the ability to claim that you, and your suppliers, have the credible sustainability that’s essential for today’s markets.

Empower Your Vendors to Empower Your Supply Chain 

To catch compliance issues before they hurt your business takes complete visibility. Logility’s digital supply chain platform helps you meet your CSR goals with vendor, sourcing, and compliance management.  

Logility’s platform accelerates the sustainable digital supply chain by leveraging data-driven tools such as advanced analytics, ML, and AI that empower your business with greater visibility. This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, and increased operating performance, all while meeting your CSR goals. 

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. 

There are obvious risks involved in sourcing goods from other countries. Managing global vendors well is an investment in the future of your business.

In today’s socially connected world, there’s no room for error. A small mistake or error in judgement could turn into a full-blown crisis once customers and other stakeholders take to social media. And if the blunder is serious enough, it could be the end of your business – even if you’re not directly responsible. However, if you manage your vendors well, issues can often be avoided, or at the very least mitigated, before they do harm. 

Many businesses today source goods or services from a third party overseas, and there is obvious risk involved. This includes: 

  • Unintentional harm to your company such as late or incomplete delivery of goods or use of dangerous materials or product features 
  • Intentional harm to your company such as design or material theft, counterfeiting, trans-shipments or substitution of materials or components 
  • Corporate social responsibility (CSR) issues including unfair labor practices, child or forced labor, worker safety, harm to the environment and more. 

Potential risks can be reduced and even eliminated by properly onboarding vendors, establishing Standard Terms of Engagement, conducting authorizations and assessments, providing training, tracking vendor performance with scorecards and issuing and managing corrective action plans (CAPs) when issues arise. 

Given the physical distance and differing views on socially acceptable ideals, managing global vendors is one of the most difficult tasks companies can face. Yet, vendor management is integral because your reputation and success – or failure – hinges on it. But without the proper tools in place, this can be a daunting task. 

The right technology can help enforce control and accountability for all suppliers, vendors and third parties involved in the design, manufacturing and delivery of your product to ensure compliance, avoid costly litigation, reduce downstream risks and costs, and win market share by building and maintaining a positive public image. 

3 Core Tenets of Vendor Management 

When it comes to managing global vendors today, there are three fundamentals for success. Proper management of these will safeguard your business:

These are: 

  1. Proper vendor onboarding 
  1. Good manufacturing practices (GMP) 
  1. Corporate social responsibility (CSR) 

1. Proper Vendor Onboarding 

Every vendor should be closely managed from the start of your relationship; this begins with vendor onboarding. If expectations and procedures are established before work commences, many issues can be avoided. 

First and foremost, vet and evaluate vendors. This includes educating them on your company’s Standard Terms of Engagement. Once the vendor understands what’s expected of them, schedule an on-site assessment to examine facilities and assess working conditions to confirm that they comply with your Standards of Vendor Engagement. At this point, all necessary documentation and certifications should also be obtained. These, as well as all other pertinent vendor details such as capabilities, machinery, capacity, etc., should be stored together to create a comprehensive vendor profile. 

During the initial evaluation process, if an issue arises and the vendor doesn’t meet the Standard Terms of Engagement, a corrective action plan (CAP) should be issued immediately. Once the issue or issues have been resolved, the vendor can be cleared to work on production orders. Likewise, throughout your relationship, report cards should be kept to calculate a score card index based on established performance metrics. These findings can be used in the future when assessing and comparing vendors. 

All this information should be stored and managed in a central repository for quick reference and assistance in vendor profiling when making sourcing decisions. This data should be searchable and standardized across vendors. 

Investing in the proper onboarding of your long-term vendors is an investment in your future, as well as the stability and future of your vendor. This means: 

  • Taking the time to put Standard Terms of Engagement in place 
  • Putting solid training programs in place so everyone is on the same page 
  • Investing in technology to properly and efficiently manage the overall onboarding process. 

2. Good Manufacturing Practices (GMP) 

Good manufacturing practices (GMP) are typically associated with quality assurance – ensuring products are consistently produced and controlled to the quality standards appropriate for their intended use. However, GMP audits also help ensure the long-term health of your vendors. 

When vetting your vendors, make sure they have enough financing, structured training programs, quality control mechanisms, continuous investment in new technology, and all the other intangibles that ensure they will be in business long term. Consider evaluating the following key areas: 

  • Management commitment and continual improvement – is the management team stable or is there a high rate of turnover? Is management committed to their own continual improvement and the improvement of employees and facilities? 
  • Risk management – what systems and processes does the vendor have in place to evaluate the potential risks associated with various tasks, jobs, etc.? 
  • Quality management – does the vendor have systems and processes in place for quality control? Do these systems meet your standards? 
  • Site and facilities management – are the facilities properly managed? Are the sites and working conditions safe and healthy for workers? 
  • Product control – does the vendor hold raw materials and finished products to the same standards as you do? What is the process for performing product control audits? 
  • Personnel training and competency – are personnel properly trained? Do they receive ongoing training and are there plans in place to address improvement needs? 

When onboarding new vendors, you invest a lot of time, money and effort. After this challenging process, if the vendor goes out of business, that investment is worthless. Even worse, if they go bankrupt while your work is in production, you could lose substantial amounts of revenue and profit. 

3. Corporate Social Responsibility 

In order to protect your brand and reputation, and to operate ethically, you must create corporate social responsibility (CSR) practices and initiatives. Beyond child labor, there is an array of vendor compliance issues related to fair labor, anti-corruption, safety and responsible sourcing that you must manage when contracting with global factories and suppliers. 

Your vendors’ behavior indirectly represents you, and it can make or break your reputation and viability by instituting a strict CSR program and setting expectations that comply with those initiatives. Impose codes of conduct and audit your vendors’ progress. Data should reveal variants between audits and self-assessments, and you can work with your vendors to set corrective action in motion.
 

Managing Global Vendors and The Role of Technology 
Vendor evaluation, onboarding and compliance are nearly impossible to manage with a manual system of email, spreadsheets and attachments. This is where a technology solution, in particular a digital supply chain platform for integrated vendor management, comes into play – to help onboard, organize, vet and manage your vendors in a systematic, efficient and integrated way to assist you with better sourcing decisions, ensure overall compliance, and mitigate risk before it becomes the next trending topic on social media. 

The best solutions for managing global vendors should offer fast implementation, with global accessibility and multi-lingual capability, as well as local training support to assist with the rollout of your global solution. You should be able to streamline your processes, as well as improving the onboarding and ongoing management of your global vendors to ensure immediate, and future, compliance, thereby safeguarding your company. 

Read more about vendor compliance and corporate social responsibility here, or watch this short video showing how a connected vendor ecosystem facilitates collaboration and transparency.