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Why Practitioners Should Embrace Supply Chain Complexity When Planning

Posted by Martin Verwijmeren on Jul 26, 2021 3:03:42 PM

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Planning is often imagined as a static process: Strategize in advance, then act on your objective. But a static approach only works in a static environment. Today’s global market and playing field is rich, complex, disruptive, and continuously evolving. To consistently deliver on the perfect order, planning must occur across the entire ecosystem, and the approach must also be flexible and agile to adapt and shift gears as needed.

The pandemic has been a sobering lesson in the critical necessity for preparedness. Initiatives to improve supply chain planning have seen a sharp rise, though the approach is often misguided and continues to build upon a limiting and problematic foundation.

Here we explore what’s been holding businesses back, and how a holistic supply chain technology strategy will help you embrace complexity to your advantage.

The False Utopia: Why Success Within Silos Is Misleading

As the supply chain gains complexity, with multi-party business networks often occurring across multiple regions globally, supply chain systems and processes continue to multiply and become more siloed.

Ironically, while silos are known for limiting visibility, flexibility, and agility, they are also notorious for masking that issue. Each sector is so focused on optimizing within its own silo, that they develop a false sense of prosperity. But successful silos do not add up to a successful organization or ecosystem as a whole. Consider the fact that lead times in many industries are at an all-time high and rising while margins are thinning. Gartner, Predicts 2021: Supply Chain Technology reported that while 72% of supply chain organizations see technology as a competitive advantage, only 47% take a holistic approach to management.

Supply Chain Planning - False Utopia SilosEfficiency and effectiveness in one area can unfortunately occur to the detriment of another sector or silo. Take today’s operational approach: Supply planning and execution function as two distinct and separate worlds, with their own dedicated processes, systems, and parties. Supply chain management (forecasting, inventory, and production), logistics (warehousing and operations), and transport (carriers) operate as split functions that are only loosely connected. And these practices are common across suppliers, manufacturers, retailers, and service providers, prevailing across most industries, including Consumer, Technology, Industrial, and Healthcare.

Part of the problem is that discrete technologies arise and evolve to meet very specific needs. They perform their function well and are purchased and leveraged by individual sectors to improve their own processes. Forecasting, S&OP, and APS systems automate and optimize elements of supply chain planning, while ERP, WMS, and TMS automate and optimize elements of supply chain execution. Each system may be advanced and state-of-the-art in its own right, but the communication between systems, processes, and parties – or silos – are quite rigid and limited.

For instance, planning systems periodically releasing outcomes to execution systems, the results of which are only occasionally summarized for planning purposes. Sales (S&OP) might make monthly forecasts, as compared to weekly orders from supply chain systems (ERP). Logistics systems (WMS) process daily shipments, but the TMS will operate on hourly deliveries.

Without fast, direct, and immediate feedback from these silos, businesses keep incurring a great deal of waste. Practitioners find themselves unable to make good and timely sourcing decisions when parcel prices rise nor adjust inventory to reflect demand as market or business needs change.

The Holistic Approach: Embracing Supply Chain Complexity

Managing the supply chain holistically is critical to reducing inventory and transport costs, decreasing delivery times, and boosting fulfillment rates. Simply put, to meet today’s supply chain complexity, orders, inventory, and transport must be managed in an integral way; communication between parties and systems must be instant to meet evolving needs and conditions; and all this must be done intelligently, in service of optimizing operations – OTIF delivery at the lowest possible cost.

Supply Chain Planning - Triple I Standard - InfographicPlanning and execution are not distinct realms, but dynamic processes that regularly inform one another: Exceptions call for re-planning, and the data around how an order is executed, as well as its outcome, is immediately useful to intelligently plan new orders – especially when applying machine learning technology. Holistic technology – such as a smart cloud platform for supply chain orchestration doesn’t try to simplify this reality but embraces the inherent complexity and exploits the often-overlooked opportunities for optimization.

A supply chain orchestration platform enables a new and innovative approach to supply chain planning: The Triple I Standard, which is Integral, Instant, and Intelligent. Integral in that it spans both planning and execution across the business network (plants, warehouses, carriers, stores) by integrating critical systems and processes for managing orders, inventory, and transportation.

Integrated parties, systems, and processes allow planning and execution to be instantaneous. Every event triggers upstream or downstream effects; shifting from misaligned schedules that occur daily, weekly, or monthly to fast, real-time responsiveness ensures businesses continuously optimize across all orders, inventory points, and transport services if conditions change.

Finally, embedded intelligence allows organizations to mine deeper into their data for better decision making. Smart business rules, artificial intelligence, machine learning, and deep learning apply descriptive, predictive, and prescriptive analytics to improve resilience and risk management.

 

The holistic approach - integrated, instant, and intelligent - is not only helping businesses recover revenues and gain competitive advantage, it’s also the future standard. Last year proved to be a difficult one, but those who emerged as industry leaders were brands able to rise to the challenge of delivering anything, anytime, anyplace, anyhow – otherwise known as the Amazon effect. The new leaders are not just brands catering to consumers and retailers, but also manufacturers and B2B organizations whose customers expect the same level of service.

 

MPO’s Supply Chain Orchestration Platform helps brand owners, contract manufacturers, and logistics service providers in diverse industries achieve consistent perfect orders for their B2B, B2C, and D2C customers globally, including EMEA, the Americas, and APAC. MPO was recognized as a Facilitator in the Nucleus Supply Chain Planning Technology Value Matrix 2021. To learn more about the unique ways the MPO platform can help your business gain the flexibility and agility needed to stay resilient and satisfy customers under evolving conditions, click the image below to grab a complimentary copy of the Trend Vision article.

Ready to speak with someone about your business and digital transformation needs? Reach out to bd@mpo.com or request a demo today!

Supply Chain Planning - Trend Vision Article - 2021

Topics: Supply Chain Complexity, supply chain resilience, perfect order, supply chain planning

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