The Future Of Supply Chain Planning

Author

Kevin O'Marah

November 1, 2016

Over the past six months, a revolution has begun in the world of planning. New technologies for enhanced visibility offer previously unimaginable granularity, timeliness and subtlety in both demand and supply awareness. At the same time, faster, richer and most amazingly, self-teaching analytical methods are increasingly in use in making sense of all this new supply chain awareness.

The big question is whether our business decision-making abilities will keep pace with the power of our tools.

The Right Stuff

Movies about astronauts pay homage to the incredible effort put into the selection, development and preparation of a small group of elite individuals who will fly the spaceship. Those chosen are said to have the “right stuff”, meaning intellect, a cool head and the ability to deal with big trouble. The analogy to our emerging supply chain planning specialists is increasingly fair.

Astronauts sit literally on top of a rocket, just arm’s reach from hundreds of dials and gauges with accountability for not only successfully completing the mission, but staying alive. The stakes for supply chain planners may not be so high, but their technology cocoon is nearly as complex. 

Too often, however, planners sit not on top of a rocket so much as on a reluctant mule, hauling their spreadsheet load up an S&OP mountain. Opportunities to experiment with and learn from the technology tools around them are too often limited by procedural fascinations that consume thousands of work hours.

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I’ve met many of these people personally and their grasp of quantitative methods, business impact and even strategic dynamics usually far exceeds the scope they’ve been given. SCM World surveyed 996 supply chain practitioners about their attitudes toward S&OP and found lukewarm enthusiasm for the overall process. More worrying, however, was the relatively large share who said that they had no technology support for S&OP at all.

Beyond the problems of wasting time and limiting agility, this process-heavy, technology-poor situation has one fatal flaw – it makes finding people with the right stuff very hard. Individuals can thrive in a classical S&OP process if they are punctual, political and detail-oriented. These are all good traits in any professional, but they’re no substitute for analytical intuition, problem-solving skills and an instinct for appropriate risk taking. People displaying the first set of traits make good administrative assistants. Those with the second set are business leaders – people with the right stuff.

Control Tower

The idea of a control tower has been around for a while. I’ve seen impressive real-world instances at companies including Samsung, PACCAR, Unilever, Colgate-Palmolive and Microsoft among many others. They vary widely in technology enablement and user base, but they share one thing universally: business urgency dominates process discipline.

Now, with cloud allowing real-time data to be accessible not only from enterprise software systems but from machinery, vehicles and everything else that’s IoT connected, it’s fair to expect actual inventory, capacity, cost and lead time information to be used for planning decisions. Supply chain risk assessment upstream and downstream need no longer be an occasional project, but instead a perpetual monitoring capability.

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Plus, analyses that can make profitable commitments easier like cost-to-serve, global trade optimization and product life-cycle value are increasingly possible with specific software tools in use around the backbones of supply planning and demand forecasting. Control towers, in theory should accommodate not only the base plan for the next week or month, but a continuous process of deciding which strategic customer deserves priority and when to go long on air freight space.

What Have You Done for Me Lately?

One of the most impactful comments I’ve heard about the future of planning came from Steve Hochman, now VP of Global Retail Supply Chain for Nike. He flagged the largely unmet need for S&OP to help the business succeed immediately (ie in the current quarter).

Having grown up in the pre-internet era, S&OP is hardwired into a cadence reminiscent of our full truckload, shelf-replenishment past. Great for lean, mass production supply chain strategies, but certainly out of sync with the omnichannel world we now live in.

The future of planning is all about getting off the slow and steady S&OP mule train and onto a spaceship.

This article was written by Kevin O’Marah from Forbes and was legally licensed through the NewsCred publisher network.

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