Supply Chain Planning: How to Get it Right
- Amid growing uncertainty, it is vital for businesses to get their supply chain planning right
- A business should align its planning goals with competitive strategy
- Planning must also be integrated vertically and horizontally across the ecosystem
Given the criticality of supply chain planning and what happens to the business when you do a poor job at planning, it is important to understand the key requirements for successful supply chain planning. And, more importantly, how you can effectively meet these requirements.
Before you begin to draft a plan, think of the larger business goals and priorities as well as your competitive strategy.
Here are 4 attributes that can help you excel at supply chain planning:
1. Align Planning Goals with Competitive Business Strategy:
The key objective of your business strategy — whether it’s customer intimacy, operational excellence or product innovation —should be the foundation of your planning and determine the associated tools, metrics and technologies.
For example, if you are looking to excel at customer service, your planning must reflect this priority. Robert Giacobbe, vice-president of global supply chain consulting at GEP elaborates: “At first, the company needs to succinctly define what their competitive business strategy is. And that’s usually around one of three dimensions. One, they’re going to focus on operational excellence and low cost. Two, they’ll focus on customer intimacy or customer service to be the leader in the market. Three, it'll be product leadership or innovation.”
2. Integrate Planning Capabilities, Both Vertically and Horizontally:
You can achieve supply chain planning goals and drive full value when there is top-to-bottom (vertical) integration in the enterprise as well as horizontal integration with suppliers and customers across the ecosystem. The right business architecture – processes, metrics and teams – must connect planning up and down the organization structure and horizontally across customers and suppliers to ensure comprehensive planning ability. Giacobbe says: “You have to really have the business architecture piece that knows how this should work and what should be the processes around it. That integrated business architecture and technology design piece is really important.”
3. Boost Planning Capability with IoT and Analytics:
Boost your planning capability by collecting low-level data from across the ecosystem. Sensors and tags collect data at the transaction level, gateway and edge devices collect data from the network and a connectivity platform can unify disparate data from various devices. A secure cloud can store the data while analytical tools can break down this data and derive useful insights. These tools can quickly evaluate data and push newly optimized plans back to a federated network of planning hubs. To do this, analytical tools must be fit for analysis, simulation and optimization.
4. Engage in Ongoing Maintenance:
Selecting and using the best digital supply chain planning tools will not suffice if you do not engage in regular maintenance and sustainment. Such a routine maintenance is vital, given that technology, products, customers and the industry are all evolving over time. The planning capabilities must therefore evolve to match the changing business requirements. Giacobbe explains: “Digital tools such as inventory planning tools require what’s called metadata, which is just a variable. You need to tell them what’s the cost of an order, what’s the cost of a stockout, what’s the cost of a lost sale. They need these kinds of things to run properly. And you have to have somebody who cares about it and knows what it is and can get in there as a superuser or an admin and maintain that data and make sure it’s right and look at it and calibrate forecasting models over time.”
Also Read: Benefits of Supply Chain Planning
The right selection of digital tools and ongoing maintenance are both equally important to fully derive benefits out of the supply chain planning mechanism.
After all, the last thing you want is to find that the planning toolset does not meet business requirement over time, and you again need to invest time and money in refreshing the planning infrastructure.
Also Read: Supply Chain Planning Challenges