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Demand & Supply Chain Management Evolution




18 Apr 2020
The Hidden Opportunity from Integrating Planning and Execution

Vikram Balasubramanian
Blue Yonder

The last five years of supply chain have been marked by a never-ending chase. On one hand, we have social-media powered consumers seeking instant gratification through multiple channels. On the other, we see the growing frustration of companies trying desperately to digitize their operations in response.

Now, the dawn of a new decade brings with it new understanding. Leading companies are laying out a strategic path to incorporating new digital technologies and simultaneously bringing together the right solutions and skill sets that can help them achieve short-term value in line with their long-term vision.

But even with this new understanding, there is still a fundamental challenge that’s blocking the ultimate achievement of a digitized, autonomous supply chain. Historically, supply chain solutions developed out of the natural need to subdivide an intractably complex domain into smaller sub-domains (e.g. plan, source, make, deliver) that individual demand planners, network designers, logistics managers, and other supply chain professionals could master. But this disconnected view of an inherently interconnected supply chain has created dramatic inefficiencies. Rising customer expectations, global trade complexities, expanding channels, and other trends will only increase the pain.

One of the biggest — and most underappreciated — of these structural inefficiencies is the separation of planning and execution. The way supply chains are set up today, there are different organizational and technological branches dedicated to planning and execution. This creates a false choice for today’s supply chain executive: do I focus on my supply chain’s ability to adapt to unplanned exceptions (since monitoring and response traditionally sit solely within execution), or do I invest in planning capabilities that will help improve forecast accuracy? This apparent dichotomy has trapped many organizations into a sense of resignation that disruptions always happen and all they can do is focus on responding to disruption. For many organizations, their only course of action was to react fast with a good enough plan that helped address the issue but inevitably increased expedites, transportation costs and associated expenses. This mentality not only further ingrains the problem of disconnected supply chain silos, but it also keeps companies from achieving either truly integrated end-to-end capabilities.

This “plan or adapt” dichotomy is leading companies to miss a crucial strategic opportunity: the digital integration of supply chain planning and execution. Companies who bridge this fundamental gap will achieve a greater return on investment and operational outcomes compared to reactionary measures that only happen during execution. Closing the gap will require more supply chain planners than ever before in terms of people’s skill, process, and technology.

Fortunately, new enabling technologies have made it possible to revisit these ingrained silos. Blue Yonder is blazing the trail to address this key opportunity, unlocking latent value from synchronizing plans and execution. Planning solutions are now enriched with real-time streaming information that enables them to account for disruptions as part of the planning cycle. This real-time information is being leveraged to not just sense disruptions, but to also predict potential disruptions and opportunities. This provides additional lead time to proactively counter with resolution options rather than be in a reactive mode. Planning technologies can also now incorporate execution constraints such as storage, truck capacity, and labor shortages to generate execution-ready plans that can be automated with minimal touch points. Improvements in the speed and quality of optimization algorithms have enabled “always-on” planning instead of traditional batch-based planning. Plan-to-actuals comparisons enable course corrections to continuously fine-tune planning data, parameters and assumptions that are finally bringing planning and execution even closer together. As global supply chains trend toward increasing complexity, the need to correct the traditional “plan or adapt” dichotomy will only increase.

We will be speaking more about trends in planning and execution, and the Planner of the Future at our virtual ICON event, May 5-6. I hope to see you online!

 

 

 

 









 
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Last update 6 May 2020
Sharpest contraction in output in series history due to COVID-19 impact
   Source: Markit US Manufacturing PMI   -  IHS Markit
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