Ever wondered what pilots are doing in the cockpit of the airplane? It is quite like the job of the Chief Supply Chain Officer (CSO) (in Supply Chain Planning) or CFO of a company. Before pilots take off, they have planned their journey ahead and counted in the different variables that could affect the planned journey. They have planned and practiced for different scenarios that could take place and what actions they require. Just before take-off they check the latest information about weather, data around the equipment and ask for clearance. Should they encounter some turbulence in the air, or other challenges, they use their cockpit to steer the plane on a new course, but according to pre-defined policies.

They still have the end destination as their goal. Sometimes they use the control tower to check on the course, but they want to avoid using it. Visibility, decisionmaking and actions based on the latest information from various sources is how they, the pilots, stay in control.

Why should you read this whitepaper about Supply Chain Planning now?

In the fresh light of the Covid-19 disruption, many business leaders are looking for ways to mitigate risks and control of cash flow by bridging strategy and operations and creating a foundation for resolving demand and supply imbalances. In terms of competitiveness we typically see that bridging this gap and start working with planning of the Supply Chain from an end to end perspective could mean: 20-50% Inventory reduction, 75-90% Reduced workload, and 98-99,8% Stable Customer Service Level over time.

With this whitepaper you will:

• Get an introduction to why bridging the gap between operations and business plans is key to ensure top and bottom-line growth in volatile environments

• Understand why it is important to have focus on it now

• Learn how you can benefit from working Supply Chain Planning from an end to end perspective

• Get an understanding of how you can work together with a professional partner to create the foundation for an effective integration with your people, processes and technologies

 

 

Download Whitepaper

Webinar: How can you plan your promotions instantly and connect marketing and operations in a digital way? This webinar episode is centered around Promotion planning.

Watch here!

Planning promotions effectively is extremely difficult.

  • There is often a disconnect between marketing and operations.
  • The siloed planning approaches can lead to excessive stock or unmet service levels and disappointed customers.
  • Demand signals, lead times and other factors can vary significantly at the channel or store level, making promotions planning extremely complex.

In this webinar session we invite you for some inspiration on:

  • What promotion planning is
  • What challenges it helps solve
  • What the difference is between traditional planning and promotional planning
  • How promotional planning fits into end-to-end planning
  • And if you are ready for a surprise – then we will also share with you a conceptual approach on Promotion Planning from our Advanced AI Lab!

 

Having an end-to-end Supply Chain planning approach can turn out to be a competitive advantage in the market. Though, in order to leverage your Supply Chain for a competitive advantage it is important, to utilize technology so that it adds business value. In this blogpost we will share with you how it can benefit the business strategy.

The Supply Chain is transforming
The Supply Chain as we know it today is under pressure. Global Supply Chains are operating in volatile environments. The impact of political instability around the world is impeding the efforts of global companies to efficiently drive cross border trade.

At the same we will see the disruption of global sourcing strategies designed to make in-bound Supply Chains leaner through accessibility to a greater diversity of sources. Indeed, political risk is the “next normal”, as regulatory changes challenge global Supply Chains. Adding to that we have the “Uberization” and the climate change which challenges the designs of the Supply Chain.

In other words, because the likelihood is that centre-of-gravity of a Supply Chain is going to change frequently in the future, given the volatility of the business environment, the need for flexibility in the supply/demand network increases.

Supply Chain designs to date have predominantly followed an ‘inside-out’ approach, where personnel inside the business take a view of what they think customers’ needs are, and proceed to build the corresponding infrastructure, processes and technology. When times are stable, and growth is positive, everything you do in this respect seems to work. But as we move into more volatile operating environments, and customers become more vocal and empowered, it becomes obvious that a single ‘ideal’ supply chain configuration will be unable to service the full spread of customer expectations.

Many organizations want to digitalize their supply chain planning, but few supply chain planning leaders know what this really means. If you want to know more about what Supply Chain planning is all about then you can read this blogpost (http://optilon.com/optilon-academy/what-is-supply-chain-planning/)

How can the business benefit from an end-to-end approach?

It can help leverage the volume of data
Anyone working within the supply chain and planning process is familiar with the endless array of data coming from the increasing number of systems in play. The question lies in how organizations can leverage the volume of data to achieve faster transfer of information for powerful insights and holistic visibility of their Supply Chain across multiple functions. To evaluate and improve the efficiency of their Supply Chain, organizations need solutions that makes sense of the data and that connects the organization for effective informed decision making.

It can reduce resource consumption
Automating non-value adding manual tasks with Supply Chain planning technology is more efficient, accurate and cost effective than manual labor. It helps improve operational efficiency. It typically reduces workload by 50-90% and frees up time for planners to improve the business through more analytical and proactive tasks. This could be analytical work, communication, mitigating risks or comparing plans.

It can reduce complexity
By utilizing Supply Chain planning technologies it is easier to understand and visualize the complex and uncertain world. It is easier to simulate and get a feeling of the outcome of the decisions and to use one set of data. It is also a way of capitalizing on the data that the company possesses.

It can enable visualization
Digital technologies also provides an opportunity for using a digital twin to simulate or model your existing Supply Chain and visualize the “to be” as well as analyze the “cost to serve” and if you like, highlight the trade-off’s between the Sustainable impact and the cost.

It can provide faster business growth
Systemizing your inventory management from an” inside out” perspective to an “outside in” by focusing on customer service instead of traditional approaches decrease key issues like stockouts and overstocks. It helps you with more accurate inventory. Streamlined workflows and processes can be scaled up easily, leading to faster business growth.

Simultaneously you can expect a reduction in lost sales and markdowns due to increase in on-shelf availability. Reduced time between ordering and fulfillment has a positive impact on customer satisfaction. Increased customer service and the right product mix drives sales revenue.

It can reduce costs
Automating your processes and freeing up time means reducing expediting and operating costs. With data driven inventory decisions you can replace excess inventory with data to drive better performance. You can reduce your inventory with 20-30%. Simply because you can put the right products in the right place at the right time for more efficient order fulfillment. You are also able to develop a smarter assortment and stock mix.

It can improve agility, better decision making & collaboration
With the right platform you can easily respond to market changes. Reporting and forecasting tools can be used to make smarter, data informed decisions. Having a centralized source of truth for data enables transparency across teams and customers, while it raises motivation to go that extra mile.

We could say that the processes, behind the technology, should bridge the organizational silos and make up the decision center for a forum that unites decision makers to solve business criticalities.

It can help close the gap between Finance and operations
Companies, which are taking this even further also want to close the gap between Finance and Operations and make the Supply Chain data an integral part of the company’s planning and forecasting processes. They want to make their financial controlling processes an unlimited interaction with stakeholders across the business.

Would you like to know more about end-to-end Supply Chain planning then we suggest that you download our whitepaper right here.

What is Supply Chain planning? The definition of Supply Chain planning is a forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand. A Supply Chain planning suite sits on top of a transaction system/system of records (ERP) to provide planning, what-if scenario analysis capabilities and real-time demand commitments, considering constraints. It is an enabler for truly data-driven Supply Chain planning.

Why is there a need for Supply Chain planning?
There is a market of growing demand volatility and higher service expectations. Many organizations find themselves caught in a cycle of inaccurate forecasts, excess and obsolete inventory and “firefighting”. There are simply too many exceptions causing constant expediting. But it is also leading to out of stocks and lost sales. At the end it could mean missing out on the service levels the customers expect.

With a technological solution that orchestrates all your planning variables using advanced algorithms and self-learning AI technology, you should be able to specify the service levels and relax knowing you’ll reach the service levels your customers expect at the lowest possible cost and working capital.

The different terminologies

Typical modules in an end to end Supply Chain solution could be:

Demand planning and sensing
Demand sensing is a concept for capturing and modelling various big data demand signals into intelligence to foresee short-term sales demand patterns and demand changes to proactively adapt your supply chain planning.

In practical terms it means employing a single, selfadaptive method that models uncertainty for all items–slow and fast movers. The probability-based forecasting approach automatically generates a range of possible inventory levels for each SKU-Location with high and low limits—just like a weather forecast.

Allocation and replenishment
Replenishment works on the basis of re-ordering the same goods as stock levels reduce. Inventory is replaced on a recurring basis. Allocation works on the basis of assessing how many units are likely to be sold over a given period and hence an overall allocation of goods is determined.

In practical terms it means replenishing optimal inventory mix at each node to guarantee the planned service level in a multi-echelon network at the lowest possible cost. It also defines the right mix of requirements to feed production and other upstream processes (such as Purchasing). It automatically creates constrained replenishment proposals and addresses limited capacity constraints by rough cut capacity planning, which allows the optimal mix to be pre-built for seasonal demand.

Inventory Optimization
Inventory optimization is the practice of having the right inventory to meet your target service levels while tying up a minimum amount of capital in inventory. To achieve this, you need to account for both supply and demand volatility.

In practical terms we could say, that through probability forecasting you have the possibility with technology to identify a range of demand outcomes and the probability of each of those outcomes occurring. This information is used to calculate the optimal inventory targets. It then identifies a different service and inventory target for each SKU/Location. The result is service levels and replenishment policies matched appropriately to each item-location in your SKU portfolio. You achieve target service levels and retain customers while minimizing inventory and other costs.

Production planning
Production planning is the planning of production and manufacturing modules in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity in order to serve different customers.

S&OP/IBP (Sales and Operations Planning/Integrated Business Planning)
S&OP bridges the disconnect between the Business Plan (top-down) and Operational Plan (bottom-up), creating preconditions to transfer Business strategy down to the shop-floor. The link between the plans is built by translating BP targets (financial) to operational targets over a time horizon of 3-24 months.​

​With technology you can run an S&OP process; automize input data collection, add a strong forecast engine, enable what-if scenarios, steer and keep track of workflow and taken decisions. If done well it generates value in driving process efficiency and decision quality.

The “end to end Supply Chain planning solution” – Your cockpit
Digitalizing the planning process also means connecting it end to end, so to say. What does that actually mean? It is sort of like a cockpit.

It is a holistic solution that basically projects demand and supply plans forward. It simulates through a digital twin. It covers an end to end supply chain decision making process of various levels of granularity and time horizons combined with intelligence. For a manufacturer, that might span from source to make to deliver. It empowers Supply Chain managers to take the right decision and make them more accountable for business decisions – it improves agile decision making.

It provides an opportunity to collect data from several sources into a single environment, producing a reliable and centralized “single” truth data set that both finance and operations can work with. It is possible to model the financial ramifications of specific operational changes

It helps resolve exceptions. Resolving exceptions can mean running various planning scenarios. Running scenarios should be done in a seamless manner, meaning that it should not include jumping between multiple systems. Scenario impacts on service and finance should ripple up through the systems and be readily visible.

A supply chain cockpit makes implications visible. Event management is important, but it is not enough. As an example, knowing that an inbound shipment for a factory is not going to arrive on time, has all sorts of implications for what can be made and what should be made. To answer those questions, one needs to be able to view the impacts on planning. Exceptions have customer service and financial implications.

It is a collaboration platform. Resolving an exception can require working with other people both in and out of the organization. The discussion of participants, and their decision on what will be done, who will do it, and when, needs to be documented in the system. Ideally, the cockpit needs to provide visibility not to just about what is happening, but what could happen that would adversely affect the organization. In other words, it must elevate supply chain risks.It utilizes predictive analytics to predict the impact of an event on the Supply Chain.

Optimized execution. Planners work more with analyzing and discussing improvements for the entire system rather than setting local parameters in trying to meet local KPI’s. At the same time, it shortens the timeline and ensures that Business execution and operations are immediately linked with strategy.

 

Read our whitepaper about Supply Chain Planning

In the fresh light of the Covid-19 disruption, many business leaders are looking for ways to mitigate risks and control of cash flow by bridging strategy and operations and creating a foundation for resolving demand and supply imbalances. In terms of competitiveness we typically see that bridging this gap and start working with planning of the Supply Chain from an end to end perspective could mean: 20-50% Inventory reduction, 75-90% Reduced workload, and 98-99,8% Stable Customer Service Level over time.

Download now

Every business want’s to gain competitive advantages by putting the conscious consumer in focus in the Supply Chain design. What is a conscious consumer, which competitive advantages could be achieved and how can technology support? Learn more in this blogpost.

What describes a conscious consumer?

Being a conscious consumer in 2020 is linked to the way we live, the choices we make and the meaning we create. What we are looking for is to simplify our options and having smooth purchasing experiences. More specifically we could say, that conscious consumers are becoming wiser. This is forcing companies to constantly innovate, drive prices down and streamline their offerings.

At the same time conscious consumers are becoming more self-sufficient. They make use of apps and personalization services to create a product uniquely to them. Being able to look after yourself is seen as a luxury, that allows people to be more versatile and expand possibilities. Dictating, designing and personalizing your life allows you to be more flexible.

At the same time, conscious consumers demand immediacy, an “I want it now” attitude. Consumers are seeking frictionless experiences that mesh with their lifestyles, allowing them to dedicate more time to their professional or social lives.

Conscious Consumers want a plastic free world. Consumers will use their wallets to protest the irresponsible use of it and create a virtuous circle, where industry stand to gain by improving sustainability. Consumers are rejecting the mass-produced and generic and will favor products positioned as simplified, back to basics and better quality.

The conscious consumer’s impact on the future Supply Chain
The Conscious Consumer increasingly drives innovation from the heart of the supply network, rather than being on the receiving end of the supply chain. This means, that we are shifting towards consumer-led, data driven, highly complex supply networks.

These shifts demand mass product customization, more accurate supply chain planning and synchronization, and faster multichannel responsiveness that go far beyond the abilities of the typical workforce and infrastructure. It requires instant visibility, quick decision making and increased flexibility across the whole network.

Digitalization is an enabler
Digitalization can be an enabler for both enhanced visibility and transparency, cost reduction, enhanced customer focus and service. As well as the foundation for a more agile and dynamic operating model and performance improvements in the full value chain. In building the vision, where should a company start?

You could be inspired by a recent study which PA Consulting Group has conducted:

  • 74% say it is driven by the search for new ways to reduce costs
  • 59% want to advance their technologies, such as automation
  • 56% are seeing changes in consumer or customer behavior. They want sustainable products supplied with immediacy and personalization
  • 51% say it is due to new business models. Integrated Supply Chain systems are becoming the foundation for the new business models to function
  • 41% do it because of the fear of being left behind.

Digitization should bring value
According to the recent study done by PA Consulting Group, 30% of those who responded could not say what value digitalization would bring. 79% said, that they do not have the right mix of skills and capabilities. Half of the respondents said, that they have no clear vision for their digital Supply Chain.

This would mean that they have no way to align Supply Chain initiatives with the business strategic objectives, no formula to establish appropriate budgets for investments and no framework for establishing a dialogue around, how the future would look like.

How can digitization bring benefits to the company?
There are several ways in which digitization could bring benefits to the company:

  • Visibility and transparency
    In order to respond to the different disruptions in the market and act with agility, resilience and predictability it is important to reduce the operational silos and mitigate risks. Data from digital systems reduces errors by removing data collection and manual reporting processes. It creates a stronger foundation for taking the right decisions. At the same time, it increases collaboration and agility and reduces response time to a few hours.

  • Better customer service
    It is important to build a Supply Chain based on data, which helps you understand how customers buy and use their products and services. Understanding the customer could also mean opening up for new revenue streams, as well as responding to the immediacy and personalization which the customers are expecting nowadays. It would mean better delivery performance, customer focus and service.

  • Cost improvements
    As soon as you start improving on visibility you start building the baseline for reductions in inventory and improving the balance between supply and demand in the whole value chain. Money and time which can be freed up for growth in other areas of the business.

  • Streamlining operations for better performance
    AI and machine learning can help improve operations for better performance. It is about creating insights for improvements that are hard to do without. Read more about AI in supply chain here.

Create a knowledge funnel
As a leader you have to accept, that the shaping of a vision is an ongoing process of discovery, disruption, experimentation and learning. It is situational. It is not a fixed object it is invention in motion. As a leader you have to shape the vision, but you have to seek the broad involvement of a broad set of suppliers, employees, conscious consumers and other partners -which could provide an idea about how the future might look like. Even more, you uncover and partner with industry provocateurs and pioneers who anticipate what is next.

This will also help segment the complexities that exist within the Supply Chain and the marketplace you are operating in. It will help you understand the different consumers that exists within your Supply Chain and describe the patterns around them.

Organize the chaos
You can use the following framework to organize the chaos in the marketplace and describe the patterns of your consumers. For each category you can ask the following questions:

1. How will the trends within this industry affect our company and Supply Chain?
2. What opportunities and threats will these trends imply?
3. What actions could we take to anticipate and respond to these trends?
4. What characterizes our consumers?

Supporting categories:

  • Social: Changing lifestyles, social trends (urbanization, flexibility of where work is done, work-life balance, social mobility, globalization)

  • Technical: Increasing digitalization, the use of technology for efficiency, innovation, information and connection.

  • Economic: Global markets with new competitors, economic cycles, new business models.

  • Political: Political unrest, regulatory policies and shifts, increased nationalism or populism, global trade

  • Environmental: social responsibility, community reputation, effects of climate change, sustainability

  • Demographic: changing workforces, influence of millennials, unconscious biases and cognitive styles, aging employees

Design and visualize the future
Once you have organized your chaos it is time to design the future. Here it is important to visualize the interaction between the customer needs, the formulation of appropriate strategic responses and the successful execution of these strategies by shaping the necessary internal capabilities and corresponding leadership styles.

Use simulation and modelling Supply Chain technology to find opportunities. You should utilize data gathered from multiple sources, creating an authentic digital twin of your complete Supply Chain to visualize current and future Supply Chain models and find new opportunities.

Sources: Power Your Potential, The value of the smart Supply Chain

The COVID-19 pandemic is spreading at an extraordinary speed. As a company, you probably have put a crisis team in place and are doing all you can to keep your people safe and stay on top of your business. You deal with the uncertainty amid constant disruption. Close on the heels of the coronavirus outbreak, the biggest economic shock since World War II is headed our way. And it isn’t just an economic shock: it is a shock to customer behaviour and business models too.

Extreme level of uncertainty
The challenges associated with it will be orders of magnitude bigger than what we are used to dealing with. To handle them, you need to adopt an operating model that accommodates the extreme disruptive level of uncertainty facing your business. If you have not already done so, it is time to put together a team tha plans ahead. The plan-ahead team will help elevate your view above the day-to-day response that your crisis team is managing. Its objective is to enable modular, scalable thinking that any Supply Chain Manager needs to navigate this unprecedented and rapidly evolving situation.

Adapting to the new normal
Traditionally, Supply Chain Managers consider the cost, quality and delivery as their key metrics when developing Supply Chain strategies. But as the crisis has shown, major global events caused by pandemics such as COVID-19, as well as natural disasters, climate change and geopolitical tensions, can create significant disruption to the reliable supply of parts or products.

Supply Chains cannot be established overnight. It takes time and effort to qualify potential suppliers in areas of manufacturing quality, capacity, delivery, cost and their ability to respond to engineering or demand changes. Thus, Supply Chains are designed for longer-term needs. Once they are established, it can be difficult to change them quickly to adapt to unpredictable disruptions.

Supply Chain KPI’s are changing
The COVID-19 pandemic has reminded corporate decision-makers that there is a need to develop new business strategies in their future supply chain designs. The KPIs to be considered for future Supply Chain designs likely will contain both traditional metrics such as cost, quality and delivery, and new performance measures including resilience, responsiveness and reconfigurability.

The understanding of supply-chain risk will be changed forever. Too much risk has accumulated in the global supply chains that has left no room in dealing with disruption. The balance of low cost and flexibility needs realignment. Supply-chain strategy development and execution will be sought-after skills. Thinking beyond the smooth flow of products and services needs much more focus on risk and corporate responsibility.

According to a recent study from Accenture – 94% of Fortune 1000 companies are seeing supply chain disruptions from COVID-19. 75% of companies have had negative or strongly negative impacts on their businesses. 55% plan to downgrade their growth outlooks (or have already done so).

The use of digital twins will increase
Given that Supply Chains need to be redesigned to treat disruptions as the norm, detect early warnings and be able to sense and pivot seamlessly to offset situations like the ones mentioned we believe that the use of digital twins will increase. Organizations can use them to create business process simulations that can be updated in real time as circumstances change. For example, this could include finding the best way to shift production to alternate locations, move inventory to different warehouses, increase or decrease safety stocks and be better prepared overall.

 

Source: https://www.supplychaindigital.com/supply-chain-management/accenture-building-supply-chain-resilience-amidst-covid-19

All things supply chain.

Join 3000+ subscribers who read the Optilon monthly newsletter and be the first to hear about the latest insights, articles, events and more.

Subscribe

Contact us to book a meeting

By clicking “Submit”, I agree to Optilons privacy policy.