Planning is a key feature of logistics and supply chain organisations. There are plenty of software tools and experts who provide advice and help. However, the industry still seems to be challenged by planning. We spoke to Marco Limena, CEO at Board International about a recent study the company conducted around planning and what issues supply chain organisations are facing.
Marco, what disruption would you say is on top of the list for supply chains right now?
Board recently surveyed 2,450 global business decision makers and found that 89% of supply chain professionals who tried to initiate some form of planning transformation since 2020 failed in some aspect. In light of this, I think it’s safe to say the supply chain industry is experiencing a planning disruption. While many organisations have implemented a range of sales and operations planning best practice tactics, many businesses are still taking an inconsistent and manual approach to supply chain planning. This is self-disruptive because it could have a negative, domino effect on the productivity, transparency, efficiency, and output of the process.
In practical terms, there are examples of common supply chain weaknesses, which stem from little or obsolete planning strategies:
- Lack of centrality in data silos – growing volumes of data are still held in disparate repositories with no link between them and no single point of truth which fosters little to no communication between teams.
- Lack of focus – business users spend more time trying to collate data sets at different stages of the process to gain clarity rather than evaluating options and making decisions.
- Low accountability – lack of a central, agreed plan results in departments or divisions focusing solely on their own activities with little consideration for their impact on other business units.
- Poor flexibility – traditional planning solutions (either spreadsheet-based or otherwise) are not able to cope with changing business demands, which slows down the planning process further.
Why do you think planners and managers are unprepared?
Many planners and managers in the supply chain industry are not ready for future disruptions simply because they’re in reactive, or repetitive mode. Too often, supply chain leaders wait to deal with the aftermath of a disruption when they should focus on preempting such aftershocks.
If we look to the modus operandi supply chain planners operate from, according to our data, 98% are still using basic excel spreadsheets, which is fast becoming obsolete in comparison to smart technology, which has the capability to arm businesses against looming threats to the industry.
Predictive analytical insight and scenario planning is vital for making informed and important decisions that will ensure supply chain businesses prepare for unforeseen challenges, and stay ahead of the curve in a highly competitive industry.
Through using advanced analytics and automated planning tools, companies can make better decisions faster. Businesses can also identify operational risks and opportunities, optimise inventory levels, reduce costs, and improve customer service.
Are there resources lacking in the supply chain: knowledge, human resources, financial, etc.?
The lack of knowledge, particularly when it comes to understanding available simulation tools is probably the biggest hindrance to supply chain professionals. Many companies remain unaware of Business Intelligence tools available to help improve supply chain processes. These tools also help supply chain businesses reach informed decisions.
A good example of applying simulation tools to provide insight into decision-making within the supply chain process, is Tetra Pak, a world-leading food processing and packaging solutions company. Tetra Pak used enhanced intellifent planning technology to undertake agile simulation capability in a demanding modern market. This replaced Tetra’s legacy Excel-based modus operandi with speed-to-scenario tools, which facilitated increased simulations to rapidly test scenarios and adapt to hypothetical supply chain disruptions.
What solutions do you think can be implemented?
Businesses can implement Integrated Business planning (IBP), which is the new standard for modern planning activities. At its core, it enforces integration between departments and removes data silos, which increases alignment and accountability, improves visibility, and generates better decisions across supply chain teams.
On a practical level, below are some ways businesses can deliver a range of improvements to increase overall efficiency and effectiveness in the supply chain, through IBP:
- Integrate planning solutions to optimise production schedules – don’t just add inventory to protect against forecast inaccuracy
- Use estimated demand as input to the production plan – this will ensure constant on-shelf availability of products, minimal waste, and unnecessary inventory
- Estimate material and resources requirements as part of the production plan – this will help determine fixed and variable costs, manage shortages and enforce alignment with procurement and HR departments.
Lamb Weston, a global frozen food processing company, is living proof that taking an IBP approach can revolutionise supply chain processes. The company had faced operational challenges which threatened to significantly hinder its future plans to scale and boost revenue growth. Through building out a defined supply chain plan through IBP, the company became more agile in its decision-making processes which positioned them to confidently forecast sales a few months in advance.