Supply Chain Planning: Why Is It So Hard?

To thrive in an environment of growing uncertainty and to successfully address the challenges of the new normal, businesses must focus on — and invest in — supply chain planning.

And yet, many of them are not sure if they have the right plans in place or understand how to formulate them.

Let’s try and understand why organizations often fail to make the right plan and find themselves struggling amidst supply disruptions.

Lack of Reliable Data

The unavailability of useful data has been the biggest challenge for effective supply chain planning. “All the companies of any given size have data in a bunch of different systems. The problem is that it is not connected. There is nobody that’s got good, clean data in one system that you can get access to,” says Robert Giacobbe, vice president of global supply chain consulting at GEP.

While lack of useful data has cost many organizations dearly, data quality has also been a roadblock to planning. Different business units often have different data. Poor master data management guidelines and policies may threaten the quality and integrity of master and transactional data.

Again, too much reliance on historical data has not helped adjust to changing market dynamics. As a result, data, even when available, has not been accurate.

Lack of Internal and External Integration

Different teams in an organization work in functional silos, thereby creating barriers to developing, sharing and collaborating on plans. Reluctance to share data with other functions and teams, lack of metrics or even company culture can hamper effective supply chain planning.

Further, a business may not have collaborative tools required for cross-functional integration. Working with external partners and suppliers again suffers from lack of integration. As a result, a business and its suppliers may have different data, thereby making it difficult to streamline supply chain operations.

Skillset Mismatch

Today, supply chain planning has become a specialized job that requires data scientist skills, among other things. Planners must understand how to decode real-time data to derive useful insights and plan accordingly. Unless they have this ability, the availability of data will not do any good.

Despite these additional new-age requirements, most supply chain planners continue to be engaged in tactical execution and firefighting and hardly have any time or opportunity to learn new skills.

Also, as market conditions change, the planning requirement changes over time. Companies therefore tend to struggle with maintaining the job design and career track for supply chain planners.

Additional Read: Things for Supply Chain Leaders to Focus on to Avoid Disruptions

Legacy Systems

Continued reliance on “old tech” tools does not help a business optimize its supply chain. Working with legacy systems impacts the ability to adjust to changing market conditions. The current business environment calls for the adoption of advanced technology such as AI and machine learning that can automate supply chain processes and reduce human intervention.

Complex Supply Chains

Complexity of supply chains also makes planning difficult. A business may plan to produce thousands of product SKUs across multiple locations. As demand patterns and supply availability vary across locations, planning becomes complicated. Different plans may have to be made depending on demand and supply dynamics.

All the above factors make a supply chain planner’s job difficult yet crucial.

In the next part of this blog series, we will look at what happens when a business does a poor job at supply chain planning.