Those tasked with managing complex supply chains likely recognize that a shift has been occurring where the traditional lines between plan, execute, and sense are blurred. Instead, these processes all occur simultaneously and continuously. To accommodate this shift and the resulting changing requirements, organizations—now more than ever—need to leverage the potential openness and connections that accompany heightened visibility across a supply chain network.

Planning—connecting to one version of the truth

The future of planning is connected, intelligent, and continuous. But many organizations are still far away from this vision—with planning processes heavily siloed and disconnected from execution.

Fortunately, our evaluation of the planning landscape shows that many organizations are adopting technologies that move toward a de-siloed, network-based approach to planning. According to Business for Social Responsibility, as supply chains continue to evolve “procurement teams will increasingly look to suppliers for innovation in products and processes, and to partner on areas of mutual benefit. For example, companies describe opportunities to strengthen demand planning and inventory management in tandem with suppliers.”

One of the primary goals of planning should be to connect an organization’s planning functionality to “one version of the truth”—where all the disparate pieces of supply chain planning have access to the same accurate and up-to-date data. For true planning optimization, this needs to be in place, not just at the enterprise level, but also in the broader supply network.

This involves:

• Using integrated business planning (IBP) or sales and operations planning (S&OP) capabilities to collaborate, analyze, run different scenarios
• Performing demand planning and demand sensing to improve short-term forecast accuracy and increase service levels
• Optimizing supply planning with appropriate constraints— such as workforce, supply, and capacity—to drive efficiency
• Synchronizing the plant schedule with production scheduling to increase productivity

Each of these areas are critical to a successful planning process. They are most powerful when integrated and connected with other supply chain processes across the supply chain network.

IBP, S&OP, and S&OE

Even organizations that have advanced supply chain planning capabilities should continuously seek new methods to improve forecast accuracy, reduce inventory, drive customer service improvements, increase capability utilization, reduce manufacturing lead time, and optimize their supply chain costs.

These goals are difficult to achieve when so much work is done in silos. When employees only see the business through their own perspectives, they rarely consider the overall organization and extended supply chain. Decisions are made without the full picture.

The result can be data latency that results in “multiple versions of the truth.” Achieving one version of the truth is not an easy endeavor, but adopting IBP and/or S&OP practices can help organizations get closer to that reality. Some key value drivers that can emanate from adopting IBP and/or S&OP include:

• Providing a platform to synchronize and rationalize sales and operational forecasts
• Engaging an organization’s cross-functional teams (e.g., sales, finance, operations, etc.) in the supply chain planning process
• Encouraging employees to complete their reviews and approvals on-time via workflow capabilities
• Enabling a forum where everyone provides input into a single shared forecast
• Opening communication to a unified forecast in multiple languages, currencies, and formats
• Allowing users to track the assumptions made about a unified forecast

As more real-time data becomes available through the digital supply chain, organizations can further improve operations with S&OP. The increased visibility can help identify challenges— especially when there’s a misalignment between actual sales and planned production.
S&OP systems synchronize demand and supply, identify imbalances, and coordinate a resolution across operating functions and business units. In addition, S&OP enables planners and managers to understand key performance indicators (KPIs) before replanning. Pre-built planning scenarios
can guide planners through quick resolution of capacity constraints, sales spikes, allocation challenges, new product introductions, and performance shifts. Some solutions have collaboration built into IBP systems that enable planners to quickly engage other departments to address
planning challenges.

When an organization compliments its S&OP process with sales and operations execution (S&OE) capabilities, the organization gains additional agility in addressing the needs of today’s complex markets and empowers managers to respond better to emerging near-term issues. When S&OE capabilities—such as collaboration and user-defined tolerances to key metrics—are embedded, it can help teams track-to-plan and course-correct
with speed.

This helps contribute toward deconstructing supply chain silos and can transform planning processes. For instance, when a multi-enterprise business network can connect to planning and S&OE processes, suppliers’ updated quantities can be incorporated and machine learning can be utilized to estimate shipment arrival times. Access to more current and accurate data for a multi-enterprise business network can help planners
with their most frustrating planning problem, adjusting plans to reflect the current status versus relying on historic data.

Demand planning and sensing

Demand planning and sensing are other areas where increased visibility can help usher in significant improvements to the
planning process.

“Demand planning is the development of a consensus- driven demand plan that optimizes the balance between market opportunity and supply network capability. Demand planning enables organizations to make more accurate demand forecasts for a product or service, increasing their efficiency in producing and delivering the product to the customer’s satisfaction.”—Gartner

Demand sensing is “a newer concept that incorporates several approaches, such as including data from all levels of the supply chain network to adjust forecasts in real or near-real time.”—MIT

Organizations that deploy modern demand planning solutions can better calculate statistical forecasts, launch new products, manage promotions, and even determine safety stock. Modern technologies are also driving process improvements. For instance, machine learning and artificial intelligence (AI) have shown that they can enhance statistical forecasts tenfold beyond what traditional historical-based forecasting can achieve. Utilizing a demand planning solution can help organizations improve planning processes, such as:

• Modeling demand scenarios to understand and choose the best scenario for a customer
• Capturing all costs related to current demand
• Improving responsiveness and understanding profitability of last-minute requests
• Applying constraints that consider variables, rather than making do with a fixed model (these variables might include revenue, margin, and profitability when determining inventory allocation)
• Improving customer service levels and managing all exceptions
• Handling make-to-stock (MTS) and make-to-order (MTO) production in a mixed-mode environment

Supply planning

Organizations conduct supply planning to create optimized and constrained plans for capacity, materials, inventory, and distribution—as well as combined replenishment. Identifying ideal optimization levels can be difficult, so it’s an area where organizations can greatly benefit from the power of a modern supply planning solution. Such a solution can help organizations improve their supply plans to experience better balanced stock, increased order fulfillment performance, and optimized inventory policies.

Supply planning can also help improve an organization’s safety stock levels—enabling it to store the right quantities related to seasonal demand volumes across multiple locations and a wide range of products and SKUs. A modern supply planning solution should also support collaboration across the extended supply chain network, as well as the use of optimization algorithms to calculate a cost-optimal plan on automated processes.

Modern supply planning solutions should include these key capabilities:

• Highly analytical and visual overview of supply chain plans
• Multisite purchase, manufacturing, distribution, and inventory across complex, multitier networks
• Feature-rich templates that support management by exception
• Single sourcing of purchasing, transport, production
• Multilevel bill of materials (BOM)
• Reducing costs and penalties
• Safety stock by level and coverage

Production scheduling

When production scheduling is done right, it synchronizes schedules for the entire factory—optimizing schedules based on unique criteria such as labor resources, change-over time, and equipment cleaning requirements. To truly optimize production schedules, enterprise resource planning (ERP) systems, planning solutions, workforce management (WFM) systems, enterprise asset management (EAM) systems, and manufacturing execution systems should all be integrated to allow optimization across people (skill sets), capacity (equipment), and product (supply). This requires production scheduling to have inputs from systems that haven’t traditionally been well-integrated. Integration also creates
additional opportunities to eliminate more data silos.

Production scheduling is often highly specific to a given industry. For example, tank scheduling is critical to process manufacturers, but it lacks applicability to discrete manufacturing production schedules. This means that manufacturers can greatly benefit from the capabilities that are built into production scheduling solutions with industry specific functionality.

The most important capabilities of a production scheduler are constraints around product, people, and equipment. Secondary constraints include labor, supply, capacity, and financials (revenue and margin). The goal is to create a 360-degree view of production to enable optimization through
demand and profitability.

A modern production scheduling solution should allow manufacturers to:

• Engage volume-based constraints (e.g., mixing tanks, ovens, freezers, etc.)
• Manage supply, demand, workforce, and capacity variability in the supply chain
• Handle and remove bottlenecks to the production process
• Synchronize across multiple complex stages of manufacturing
• Manage the impact of shortages, disturbances, and delays at any point in the manufacturing process
• Optimize conflicting objectives at different stages of the manufacturing process