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Welcome to a Recap of The Optilon Supply Chain conference 2021, that was held on September 15th 2021.

The overall theme for this conference was: Thriving in uncertainty. Preparing for the future.

Why is this topic interesting?
Supply Chains are typically designed for efficiency, cost, and proximity to markets, but not necessarily for transparency and resilience. Now they are operating in a world where disruptions are regular occurrences. Both business-to-consumer (B2C) and business-to-business (B2B) companies expect to see meaningful shifts in future demand. This will affect commercial models. Thriving in uncertainty and preparing for the future means building resiliency by improving the Supply Chain and transparency, minimizing exposure to shocks, and building the capacity to respond.

Below you will find an outline of the speakers of this conference:

Block 1:

Speaker Matt Britton on the topic of: Understanding the conscious consumers of tomorrow.
Matt is a true leader when it comes to connecting the dots between the brands of today and the consumers of tomorrow. Matt has inspired and educated the world’s leading brands, on the state of the new consumer and its effect on business models and consumer trends. Listen to this energetic talk and learn how your brand and business will be affected by the conscious consumer.

Speaker Thomas Bjørnsten on Improving business intelligence with human data.
One way of working with resiliency is to work with end-to-end transparency and demand shifts. Thomas Bjørnsten, Phd. works with human data at Innovation Lab. In his speeech he provides insights into facts and fantasies when it comes to the human factor in a data-driven business. He teaches about emotion computing and how feelings can become big (data) business. He also shares how the interactions will be between humans and machines and discuss the role of trust in adoption.

Speaker: Marketing Associate at Optilon John Wikström on the topic: The unredeemed Supply Chain potential in the Nordics.
Nordic companies have a potential to redeem a significant potential when it comes to unnecessary inventory, tied up working capital and unnecessary square meters used for storage and distribution. Speaker: John introduces us to the report, which this year covered all the Nordic countries, named The unnecessary report 2021. John shares the possible actions that can be taken to redeem the potential.

Watch the recording from block 1

Block 2:

Panel discussion on how you can realize the full potential of Supply Chain sustainability
In the panel we had Thought Leader and strategic advisor Alis Sindbjerg Hinrichsen from Optilon, Karl Orrling from Alfa Laval and Eva Grønbjerg Christensen from Sustainify.

Speaker: Manuel Maihofer on the topic of: Improve your end-to-end planning with a digital twin
Companies that utilize the digital capabilities of Supply Chain planning will be much more resilient and better equipped to handle challenges, as well as competing more effectively. What does that mean in practical terms? Manuel Maihofer, Business Analyst and Project Manager from SKF focuses on how a digital twin could be an enabler. Manuel Maihofer is convinced, that transparency, business intelligence and digitalization of processes are key facilitators to improve supply chains. Manuel manages agile IT development projects, establishes workflows and turns data into insights, from purchasing to customer service and from production planner to top management. He plays an important role in creating SKF’s digital twin, which fuels initiatives like Integrated Planning, Demand Management and S&OP.

Watch the recording from block 2

Block 3:

Speaker: Andreas Wieland on the topic of: Transformative Supply Chain Management
Andreas Wieland is an Associate Professor of Supply Chain Management at Copenhagen Business School. He is the Program Director of CBS’s Graduate Diploma (HD) in Supply Chain Management. His current research reinterprets global Supply Chains as social–ecological systems. Global supply chains can be quite complex. Many managers have understood this. But maybe supply chains are even more fundamentally different from what we often imagine? In his talk, Andreas Wieland challenges the conventional assumptions we have about supply chains and supply chain management. He provides transformative solutions to futureproof supply chains in an era of crises.

Speaker: Andrew Spence on the topic of: Transforming the world of work with technology
Andrew talked about how organizations will be able to find the talent they need – when they need it – from a liquid workforce. Hence, they will require fewer full-time employees, and we will see the demise of the traditional job. The focus will be leading work, not employees. What does this mean in the short and long term?

watch the recording from block 3

The Unnecessary Report 2021 once again shows and enormous and unutilized potential for Nordic companies – every fifth stock item is unnecessary. More than a fifth of the inventory is unnecessary for Nordic companies, according to a new report released by Optilon. The average company has an untapped potential of EUR 48 million – which could instead be invested in more growth-promoting purposes. The total figure for the Nordic region’s 400 largest companies amounts to EUR 19 billion.

Effective inventory management and optimization can have a major impact on a company’s profitability. Optilon’s newest publication The Unnecessary report 2021 – which has studied 400 different companies across the Nordics show, that 22 percent of the items in stock are unnecessary for the average Nordic company. This means that they have more goods in stock than they need.

Removing an unnecessary item from the warehouse means not only less tied-up capital, but also less warehouse space, reduced distribution and administration costs and obsolescence. By addressing this and implementing effective inventory management and optimization the average company among the Nordic region’s 400 largest companies will be able to gain around EUR 48 million. Supply Chain has perhaps never been more important. The covid-19 pandemic and the prevailing macroeconomic situation have demonstrated the importance of robust and sustainable supply chains. Having fewer but the right articles in stock gives you more optimization power as a company. You free up capital at the same time as you reduce costs and increase your revenue.

Effective inventory management is an underestimated success factor. It is one of the single biggest measures you can take as a company to maximize your competitiveness. It simply ensures that the resources are used in the right way and where they generate the most value.

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ABC inventory classification has been around so long that most planners just assume it’s the only way to segment inventory. In fact, it’s not. And it’s not even nearly the best way. It’s actually a throwback from technology developed during the 1960s that hasn’t responded to the orders of magnitude increase in computer power that has enabled far better ways of solving the problem.
In this blogpost we will look into a more detailed explanation of why ABC inventory classification is old school and look at what true inventory optimization in 2021 looks like.

Understanding the basics of ABC inventory classification
To understand the shortcomings of ABC inventory classification, we need to understand how it is done. Nearly all traditional inventory management applications calculate safety stock for each individual SKU-Location combination. This requires identifying the desired service level % for each SKU-Location.

Since most companies have tens of thousands, hundreds of thousands, or even millions of combinations, it’s impossible to identify a service level for every individual SKU-Location. So a simplification is necessary and ABC classification is one way of doing it. A common method is a 3×3 matrix with the cost value on the Y axis and order-lines on the X axis, a so called “double” ABC classification.

The percent distribution between classes is often based on 80% of the cost value in the A items, 15% in the B items and 5% in the C items. The same 80/15/5 breakdown is applied to the number of order-lines. Because just a few items can generate so many order-lines and cost of sales, it usually only takes a few A items to reach the 80% thresholds. Therefore, the end result is a matrix with a very small share classified as AA and a majority classified as CC.

A ”trial & error” process is then used to allocate a desired service level to each ABC class. The AA class is often given the highest service level and the CC class the lowest. The aggregated service level is calculated and might end up at 94% in the first try, which might not fit the company’s overall goal, such as 95%. To reach the 95% goal, iterative attempts are made using higher service levels for one or several classes (and perhaps reducing some). The new distribution might turn into an aggregated service level of 95.5%. A small buffer (0.5% in this case) is often good, and the service levels for each class are confirmed.

From here, all of the items (or articles) in each ABC class are assigned the same service level target. If we have 10,000 items in stock, then 5400 in the CC class will be assigned the same service level target. Then the safety stock levels are calculated which results in a total inventory investment.

The pitfalls of ABC Inventory classification
Let us think about this for a moment. Inventory investment is a consequence of each ABC classes’ service level. Could we have chosen other service levels for the classes and still reach 95.5%? Of course! There are a large number of combinations that could result yield the same result.

How do we then know that the distribution we chose is the most optimal one, achieving a minimum stock investment? The answer is that we don’t know. That is why this method is called ”inventory management” rather than ”inventory optimization”.

Supply Chains are complex, with several connected echelons such as central, regional and local inventories. Also some traditional inventory management software offer an 8×8 ABC matrix per location. The workload to define and continuously maintain these matrices becomes very intense. And, as we said, we don’t know whether or not we have an optimal distribution.

What “best in class” inventory Segmentation looks like today
Is there another way to address safety stock computing in 2021? The answer is, of course, yes. A more modern approach exists.

Traditional ABC classification is based on an operational or logistics perspective. There is rarely any connection to sales and marketing or the companies’ customer needs.

Inventory optimization instead looks at the product range and the business. This difference is possible thanks to the use of “service class”. Examples of service classes can be ”accessories”, ”items with a high margin”, ”own-brands”, ”high end brands”, ”critical spare parts”, to name a few. This type of categorization is much more relevant to sales and marketing, who often have very little or no understanding of ABC classification. Every service classification contains items from several ABC classifications (according to the old method) which is irrelevant to true inventory optimization.

Just as in traditional inventory management, aggregated service level goals are also defined in inventory optimization, but per service class instead of ABC class. What happens in the following steps is very different from traditional inventory management. By using ”stock-to-service” curves, the software optimizes every single service level and safety stock level of the SKU-Location, which is also known as mix optimization.

The aggregated service class goal is achieved with a stock investment as low as possible. Instead of inventory planning with ABC classes, every SKU-Location gets a service level to calculate safety stock levels. The inventory optimization software automatically calculates a service level for every SKU-Location that aggregates to the total service level target for the overall service class, achieving “service level optimization“.

True inventory optimization uses “stock-to-service”
True inventory optimization models every SKU-Location and summarizes it in a ”stock-to-service” efficient frontier, where the relationship between service level and stock investment are defined. If demand variation or lead time increases, the stock investment (or complexity) must be increased in order to keep the same service level and vice versa.

The result is that every single item in every single location (SKU-Location) is an individual and is analysed and managed as such. In a sense, there can be as many ABC classifications as there are SKU-Location combinations.

This statement is impossible to fit into traditional inventory management and so it is a very challenging one to accept. If every SKU-Location combination was described with dozens of variables (demand variation, standard cost, my order quantity, multiple order quantity, run-out time, lead time, variation in lead time, sustainability, and more), it would unmanageable, instead of just one or two dimensions, as in a traditional ABC classification matrix.

By the way, it’s important to point out that the automated differentiation of service levels in each service class can be set within defined limits. As an example, the aggregated service level goal for “accessories” could be 93% with a lower limit of 89%. The inventory optimization can then subscribe any service level from 89% and above in a way that the stock investment is minimized. For example, “critical spare parts” could have a goal of 99.5% with a lower limit of 99.3%. Reducing the degrees of freedom in each service class (or increasing number of service classes) will lessen the potential of inventory reduction, since competition is reduced. But these reductions in freedom are not critical as long as they aligns with company strategies and customer demands.

Truly modern inventory optimization enables a whole new level of automation of large complex supply chains with hundreds of thousands of SKU-Location combinations where service levels can be guaranteed over time with a minimum of stock investment.

An increased production complexity made The Absolut Company look for a better and more efficient way to manage the production of the most exported food and beverage product in Sweden. With the purchase of the company from the Swedish government in 2008, Pernod Ricard initiated a transformation of the brand. This had a large impact on the manufacturing process.

The Challenge
For five years, the number of SKU’s rose by 19% as the number of core flavors increased from 11 to 18 and the number of limited editions went from 2 to 12, an increase by 600%. In contrast to the highly automated production process, production planning process was a manual task. Forecasting and production planning was performed by only one planner, with the help of spreadsheets. But as complexity rose, a change was necessary, and The Absolut Company started to look at alternative set-ups.

Peter Neiderud, Director Supply Chain and QE, understood that this was a major project, necessary in order to move to a new era of Absolut Vodka while honoring traditions and continuing the manufacturing in Åhus.

Summing up:

Increased production complexity
Limited resources for planning tasks
Pressure to secure availability towards the Pernod Ricard market companies
A need to ensure lean principles in production, minimizing environmental impact

The Journey
The Absolut Company chose Optilon as a partner after a thorough evaluation of several candidates. A key factor was Optilon’s ability to integrate best-of-breed solutions for production planning, demand forecasting, inventory optimization, and replenishment into a seamless process. Along with this, a key criterion for a new way of working was the ability to automate business processes.

Also, The Absolut Company had clear targets regarding service levels towards its parent company. Optilon proposed a solution that can guarantee product availability according to targets, with minimal investments in finished goods.

“Quality is paramount for us, especially when it comes to production as we leave nothing to chance. We have carried out a thorough evaluation of alternatives and view Optilon as an exceptional solution provider when it comes to improving our logistics and production processes.”

Peter Neiderud, Director Supply Chain and QE, The Absolut Company

The Results
Through a high level of automation in planning, proactive decision making, and optimized production sequences, challenges were resolved.

Summing up on results:

Optimized production sequences
Increased overall production efficiency
Increased product availability
Highly automated end-to-end processes

With an increasing demand for product availability, especially in the omnichannel, keeping the inventory levels low while keeping a stable service level becomes increasingly challenging. Especially in an industry that is service-oriented, one does not want to put too many hours into managing the inventory that could be used for customer service instead. Kronans Apotek decided to tackle the problem by centralizing and automating their inventory management by working with Optilon and implementing SO99+. This resulted in reduced inventory levels, increased service levels, and more time for the staff to spend with customers.

The Challenge
With over 330 pharmacies, Kronans Apotek is the third-largest pharmacy chain in Sweden. Kronans Apotek has approximately 27 000 items in total and around 4 million locations/SKU combinations. The customers value the right product range; at the same time, it is also time-consuming and challenging for the pharmacy staff to plan the correct assortment and availability, resulting in high inventory levels.

The inventory management had become too decentralized and Kronans could not properly manage varying seasonal patterns, frequent product replacements, and new pharmacy launches. The inventory levels were high and Kronans wanted to decrease them by 15% while increasing the service level by 1.5 %. At the same time, they wanted the inventory optimization to be less time requiring and centralized to give their staff more time to spend on giving service and advice to customers.

Summing up on the challenges:

Too high inventory levels
Inventory management process too decentralized and and time consuming
Higher customer expectations on product availability

The Journey
Each pharmacy used to have a designated inventory manager who was responsible for manually setting order parameters for each item; a time-consuming job that never led to optimal inventory levels. With the objective to reduce inventory, increase service, and release time for the staff to spend with customers, Kronans Apotek made the decision to centralize all product sourcing.

The central organization then needed a suitable application to support forecasting and inventory optimization. After a thorough evaluation of alternatives, Kronans Apotek chose Optilon’s solution based on SO99+ (Service Optimizer 99+) from ToolsGroup, with support from consultants at Optilon.

“We chose Optilon’s inventory optimization since they work from the customer’s requirements, while being a developer independent solution provider. In addition, consultants from Optilon supported the organization throughout the whole implementation process” says Tina Jalap, Supply Chain Manager at Kronans Apotek.

The Results
“A few months into the implementation we saw a decrease in the inventory of prescription-based items by approximately 15 percent, specifically for the pharmacies where we had implemented the inventory optimization solution.” Says Jalap.

A key driver for the selection and implementation of a new solution was to drive automation of the supply chain process as far as possible. As a result, Kronans Apotek calculates optimal replenishment and inventory parameters for SKUs in all of the pharmacies on a daily basis, in an automated process. Four people work centrally to supply products to Kronans’ 320 locations, instead of staff at every pharmacy. This saved time by a total of 24 full time employees across the retail stores. Inventory parameters are based on a forecast that automatically considers seasonality, marketing campaigns and planograms (store and shelf layout). Industry-specific considerations like “product of the season” (a government mandated practice for pharmacies in Sweden), is also catered for. All in all, Kronans Apotek has transformed their organization and planning process from push oriented to one that is truly demand-driven.

Kronans not only centralized inventory management—it established core, efficient supply chain planning with the agility to adapt to business change. For example, the pharmacy chain uses SO99+ for promotional campaigns; during the campaign, products are supplied through a temporary increase in parameters. “This increase is removed 10 days before the campaign ends, allowing the volumes to sell down; SO99+ then excludes the temporary increase from future forecasts,” Jalap says. “The software also ‘learns’ from previous campaigns, as well as from customer patterns and seasonal variations.”

Summing up on results:

Reduced inventory levels by 15% withn a few months
Service levels increased by 1%
A highly automated and centralized process
Efficient handling of promotional campaigns seasonality

EET Europarts is one of the world’s largest IT-distributors and sells print and spare parts, and they sell accessories to computers, sound, and networks in all of Europe. The EET Group has sales offices in 27 countries over most of Europe. The group employs almost 600 employees, serves more than 46.000 dealers, and expedites more than 1 million deliveries a year. Most of the dispositions mainly happen manually through approx. 15 schedulers, spread out around Europe. Many sales offices also have their own stock.

The journey
In September 2019, the EET Europarts began the implementation of Service Optimizer 99+ (SO99+), which is sold and implemented by Optilon. The first countries aired in February, incl. the main storage in Ballerup. More countries joined in March. The purpose was to update the company’s approach to planning through Supply Chain, so that it matched the commercial requirements with regards to responsiveness and volatility, which is experienced in the market.

Tom Kjærulf, Logistics Director of the EET Group says: “We’ve only just began that application of SO995 and it generally happened simultaneously with the spread of the coronavirus, but we are in control. I don’t even dare to think about how our commercial situation would have looked, if we had not implemented SO99+. Earlier, we used Axapta and a lot of Excel sheets to make the best decisions regarding order sizes and delivery time etc., but these were not optimal decisions.”

Results
We have a lot of the same items spread out on several repositories, but with a very limited overview of how the other repositories organize their storage. Often, we made local, but not holistic optimization, and this entailed unnecessarily high storage costs and not always the best levels of service.

Today, all our items and repositories are established in SO99+, and we are in control. Twice a day, the SO99+ is updated with the latest Supply and Demand-data, and we can quickly get an extensive overview of the situation. We can see the consequences of lacking deliveries from, for instance, China, and observe the changes in demand. A lot of the “trivial” dispositions have now been automated, which means we have more time for the meaningful decisions. Without SO99+, we would have been chanceless.

Optilon is a trustworthy and competent partner
The implementation of SO99+ has been executed satisfactorily. The Optilon consultants are competent, energetic, and pedagogical. Optilon has been great with regards to explaining complex problems in a simple and comprehensible way. Beyond this, Optilon has explicitly shown that they understand our business. We’ve had many great, professional discussions with the Optilon consultants, and they’re not afraid to challenge our way of thinking.

We can clearly feel that Optilon has done a lot of SO99+ projects, and they know how one attains commercial value from the system. Optilon also has a good understanding of our company, and this gives us a sense of safety. It has given us a sense of safety during the implementation process, and it continually gives us a sense of safety, so that we are well-prepared for the challenges of the future. Now, we’re looking forward to begin using SO99+ in our everyday life, and we have particularly high expectations that the expected results are attained.

Thule has made several important changes in the last years going from a decentralized set-up based on demand planning to a more centralized process. Their positive results have been significant.

The Challenge
Prior to using Optilon’s Supply Chain Planning platform, Thule’s forecasting process had been based first on Excel, later on, decentralized demand planning. To obtain better forecasts the process was centralized but this brought too much manual work and a lack of connection between service and inventory.

The solution to these problems has been to implement ServiceOptimizer99+ (SO99+) from ToolsGroup as well as a new process implemented by Optilon. The new solution covers Thule’s biggest product segment Outdoor. The Outdoor segment has a global customer base consisting primarily of distributors within Cars and Sports, a significant portion of sales goes to OES customers in the automotive industry. There are six factories in Europe, one central warehouse, five regional distribution centers, and more than 4000 finished goods. Two of the major challenges are a distinct summer season and uneven demands.

Summing up we could say:

Forecasting required too much manual work
Seasonal demand spikes
Slow movers with intermittent demand

The Journey
Thule’s Outdoor segment called upon Optilon to implement an automated forecasting system that delivered a more efficient and accurate demand planning process. Thule’sDemand Planner, Michael Wolfsteiner, explained the uniqueness of the solution, based on ToolsGroup’s SO99+ software,

“Traditional demand planning considers demand history in terms of quantity only, ignoring customer order lines. ToolsGroup’s SO99+ on the other hand analyzes the demand history both in terms of quantity and customer order lines, in order to better model the shape of the demand. The close connection between desired service level and inventory level is very positive.”

The solution included inventory optimization. Thule‘s old safety stock routine was based on a seasonally dependent coverage rate (e.g., number of days’ average demand). The new optimization instead starts from an aggregated service level target and defined service levels for each SKU, taking advantage of a wide variety of variables, such as demand variation, average demand, order frequency, costs and lead time. It modifies service and coverage to maximize the overall use of the capital within a pre-defined “service group”. Minimum service levels are set for business-critical items. The system also included rough-cut planning to identify requirements to pre-build stock due to capacity limitations. The actual replenishment is still done in the ERP system.

The Results
The project has brought a common, more efficient, and accurate demand planning process within the Outdoor segment.

The new solution with SO99+ means forecasts and safety stock levels in the ERP are automatically updated every week based on optimizations in SO99+. Thule‘s old safety stock routine was based on a defined seasonal dependent coverage rate (setting number of days’ average demand).

SO99+ instead starts from an aggregated service level target; the optimizer defines service levels for each SKU to reach the aggregated service level target using an objective function. The optimization in SO99+ leads to distinct deviation in service and coverage within a service level group to maximize the overall use of the capital.

The project have helped Thule reach the following KPIs: –Service level increased by more than 20 points, from 75% to 95+% –Outdoor segment average inventory was reduced by more than $2 million–Workload reduced by 75%

Summing up results:

Servicelevel increased by more than 20% points from 75 to 95%
Workload reduced by 75%
Managed to centralize and automate the forecasting process
Reduced average inventory for the outdoor segment by more than 2 million USD

Orthex Group, a leading manufacturer of household products in the Nordic, operates in a sector where the customers have high demands on short lead times and on-time delivery. When unexpected large orders are common and the company growth increases Supply Chain complexity, it puts pressure on the production planning process and the planners involved.

The Challenge
For Orthex, unexpected large orders are very common and usually have a short delivery time between 48 hours and a week. Such short lead times require a production flexibility and an ability for quick adaption. To ensure customer satisfaction and product availability, a streamlined production is of most importance. As Orthex has grown, also the production and factory planning has become more complex and time-consuming.

Prior to using Compass, Orthex had been using another production planning application. Since the previous software was implemented, the demand for a modern planning application had increased. Orthex now needed more functionality, a higher level of automation and the ability to plan the production for a multisite network on an operational, as well as a tactical level.

To secure sustainable growth, while keeping the same number of employees in the planning and purchasing department, Orthex took the decision to start looking for a more modern planning application. This would bring the ability to plan ahead instead of catching up on orders, and to find a partner and solution to grow together with rather than grow apart from.

Summing up we could say that:

Company growth and increasing Supply Chain complexity
Previous planning method was not sustainable with the resources at hand
A planning system that would not meet the future requirements

The Journey
Orthex and Optilon have a long relationship that has consisted of several previous application implementations. When Orthex started looking for a new planning application, Optilon was a natural partner and advisor. This gave Optilon the opportunity to demonstrate the competitive advantage a modern planning tool as Compass could give. Orthex evaluated other applications as well, but in the end, the decision to choose Optilon and Compass was made based on two main aspects. Partially the fit Compass had to Orthex needs, but also the trust Orthex has towards Optilon from previous projects.

The project consisted of software implementation, training of end users, and validation and refining of the master data. The projects have had a smooth implementation, which is mostly thanks to a successful cooperation between Orthex and Optilon.

“It is fantastic to work with consultants that are competent and committed to the project. The consultants of Optilon have shown a clear will to ensurethat the project outcome will reach or exceed the expectations. The consultants at Optilon understand how we operate our daily business and they have not been afraid to question weaknesses in our production planning process” says Peter Ottosson, Chief Operations Officer at Orthex Group.

Peter Ottosson also sees the value in Optilon’s role as a holistic supply chain advisor,

“In my experience, consultants tend to focus solely on assuring that the application is properly implemented and that it runs smoothly. They are, for instance, forgetting about keeping the end-user involved in the process so that the user understands, why the system is implemented and how it will affect their work. This has not been the case with Optilon. This is important considering the total “switching cost”. It determines how long it will take until the end-users have gained a sufficient level of skill and feel comfortable using the system”.

The Results
Orthex has identified many positive outcomes from the project. Working in Compass is faster and smoother. It also gives the planner more flexibility and new functionality that makes the planning easier.

“Using Compass has given me an increased sense of control, which is important for a person in my role. I also feel like I use less time for planning than before. Now I can put more time on analyzing exceptional cases like delayed orders and backlogs” says Therese Dahl, Production Planner, Orthex Group

The planner’s freed up time has also led to a more versatile workday. They can now take part in smaller projects on top of their daily jobs, which has proven to be a real contribution for the planner’s job satisfaction. Before implementing Compass, Orthex used an application that was slower to use and that was more dependent on manual control. Since Orthex receives many unexpected large orders, it was next to impossible to plan successfully. The planning process with Compass today is not depending as much on manual control and it is a lot more robust.

With Compass, Orthex has been able to take a big step towards 100% planning control.

Summing up on results:

Faster and smoother planning process
Time freed up for exception analysis
Increased sense of 100% control
Happier production planners with more versatile workdays

What are the most common myths about Sales & Operations Planning (S&OP)? Which are true and which ones are ready to be busted? Jens Stenquist and Kristina Lindskog from Optilon gives their take on the topic in this webinar.

Tune into the discussion, get inspired, and learn how technology can make a difference when breaking down silos and connecting the S&OP process with the business targets.

Watch here

Supply Chain organizations must rapidly assess new digital strategies and Supply Chain planning technology solutions to accelerate digital business. At the same time, they need to assess and identify automation opportunities, while supporting organizational change. How do they stretch their organizations current way of thinking and operating while at the same time delivering on speed and flexibility? Get some fruitful advice in this blogpost.

What does digital mean?
Supply Chain leaders of today struggle with defining what “digital” means for the Supply Chain. Supply Chain are living in a time where there is a lot of complexity and volatility but also enormous opportunity, significant risk, and lots of uncertainty. Supply Chain leaders are driven to redesign their operating models to better meet the needs of new and existing (digital) business models and incorporate digital technologies.

So, the business case is clear. New business offerings are driving revenue growth and the Supply Chain must adjust accordingly. The good news is, that there is a willingness to invest in digital technologies, especially within Supply Chain planning.

Digitalizing Supply Chain planning
Though many Supply Chain leaders struggle with translating a digital vision into the critical Supply Chain planning capabilities needed, to deliver a digital experience to customers. They also struggle assessing emerging digital technologies and current Supply Chain planning technologies, to operate the Supply Chain in new ways.

Digital planning is not about digital technology. Rather it is about appropriate and effective use of digital technology being applied to planning. As a company moves forward in its journey, and applying these technologies across the business, they are looking to make higher quality decisions in planning.

These trends are bringing new requirements that often obviate those traditional architectures. Organizations are more frequently seeking ways to capture data from external data streams, to provide input for future planning activities. As a result, data and processing of this data require increasingly extensive use of in-memory computing to help with planning speed, granularity, and model adaptability.

In parallel, as higher volume, velocity and veracity of data is brought into Supply Chain planning, this increases the need of organizations to use advanced analytics to drive process automation and get insights from all this newfound data.

Why is there a need to be more agile in the assessment?
The accelerating digital business means organizations must rapidly assess new digital strategies and technologies. As digital planning becomes a top priority, Supply Chain leaders need a way to assess and identify automation opportunities, while at the same time supporting organizational change as planning decisions move from people-centric to decision-centric. It is time to rethink the way assessment is done when it comes to the assessment of Supply Chain planning technologies. It is time to seek and embrace agility.

How to rethink the way assessment is done
Supply Chain organizations should place a greater emphasis on testing, experimentation and learning when evaluating Supply Chain planning technology. They should adapt an agile mindset when considering new Supply Chain planning technologies. They should avoid risky and costly projects with long cycle times. They should build pilots and proof of concept into the Supply Chain technology assessment process, in order to gain speed to value and flexibility while mitigating risk and uncertainty. If they do not, they risk that the business looses out on their business potential.

Before the assessment is started, some essential questions
There are some questions which the organization could consider before starting the assessment of the technology – and perhaps start or continue a conversation with a Supply Chain technology partner:

Where are you today in terms of Supply Chain planning maturity?
What type of business are you and what kind of complexity do you have in your Supply Chain? What needs to be catered for?
Larger companies tend to have more complexity in their Supply Chain
What are you trying to achieve? What challenges are you trying to solve?
Make a list of operational challenges that you are facing and goals that you would like to achieve. Spell out the performance you are looking to achieve with the technology. If today you have decentralized organization – will that change in the future?
What are your must have features?
The type of business you are running will determine the exact tools and features you require to operate effectively. Make sure that the software technology has the right functionality to meet your specific requirements.
How much are you willing to pay?
Costs can vary significantly – keep in mind that paying for essential functionality can end up increasing your profitability and decreasing costs over time. What if you could pay more but get a higher guarantee of business results – would that make a difference? There could potentially be a risk of missing out on business results which can be hard to quantify.
What integrations do you need?
Most but not all cloud-based technologies offer a suite of integrations with other key application.
What kind of organization/training/support do you need?
Most providers offer varying levels and types of support as well as training resources, although costs can vary. What you need to consider is how resources will be organized including key role. What key competences, people and skills are needed for the project team and how will they be provided/acquired.
Which change will your planners and other employees see and feel?
Have an idea about the communication around the change. What is the story?

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