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Essential Supply Planning Capabilities

Published: Reading time: 5 min
Stijn-Pieter van Houten SVP of Consumer Products and Knowledge Innovation Lead, o9
Stijn-Pieter van HoutenSVP of Consumer Products and Knowledge Innovation Lead, o9
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Evolving consumer, customer, industry and technology trends are forcing companies to rethink their operating models, including their supply chain setup. This raises expectations for companies worldwide. 

Now, more than ever, businesses need to be able to operate in an increasingly complex landscape, deliver a tailored consumer experience, and operate with creativity, agility, and flexibility. To facilitate this, supply chain and commercial planning functions are converging as the boundaries between them blur, and are ultimately being redefined. Increasingly, organizations are re-clustering and integrating planning processes and capabilities to support the delivery of the customer and consumer experience.

The importance of an ecosystem

Strategy is embedded across the organization, and demand and supply has become an integrated virtuous cycle that drives growth, with enabling services supporting seamless execution. Increasingly, businesses rely on an ecosystem to source, support and deliver products. This ecosystem then becomes an integral part of the overall operating model. 

Among other factors, this is made possible by integrated planning and execution platforms, which are changing both what we do and how we do it. Organizations can use these platforms to become both more efficient and more effective in how they operate, facilitating a shift to more strategic activities that maximize business value.

What if you could, for example:

  • Spot trends before they happen, and act on them before your competition?
  • Design and deliver products and services for individual occasions or needs?
  • Exploit the power of platforms fluidly across all areas of the business, most prominently commercial and supply chain?
  • Meet every consumer, shopper and customer’s unique and ever-shifting demands?
  • Automatically flex your supply chain to respond to market changes?
  • Access the data, insights, scenarios flexibly and seamlessly when you need them?

 What benefits would it bring if, for example:

  • Your business was centered on the end-to-end customer and consumer experience?
  • Demand and supply was a virtuous cycle that architects value and drive growth?
  • Supply chain and commercial functions facilitated seamless collaboration and execution?

However, in today's world, observe that commercial plans (inclusive of pricing, new productions and promotions) are often problematically disconnected from supply chain plans. Blind spots created by this lack of cohesion generate unforeseen pitfalls on the supply side, or supply generates surprises in terms of higher cost-to-serve.

The integrated solution

An integrated platform enables unprecedented real-time visibility, with flexible and intelligent supply responses leveraging analytics, AI, IoT and market knowledge models.  It drives exceptional speed to market, where it matters, as lines blur between e.g., sourcing, planning, manufacturing, order management, distribution and beyond. 

It enables seamless, flexible and demand-driven operations, leveraging the right set of supply chain models to deliver against a complex portfolio profitably. An ecosystem of capability partners, e.g., co-manufacturers, suppliers, and distributors will be part of a fully connected, platform-enabled supply chain.

To make this truly work, a number of supply planning capabilities are required. Below we list those we consider to be essential to enable the digital transformation and deliver its benefits.

Automation:

  • Alert mechanisms in case of major demand deviations above a certain threshold with shortage/waste risk, complemented by proposals for which decisions allow for...
  • Autonomous decision-making delivering improved performance/impact on KPIs and positively impacting sustainability

Collaboration:

  • Real-time interface between an organization and its suppliers on stock levels, forecasts, production schedules and customer demand.
  • Support co-packing activities, including stock in-transit, in production, quality inspection.

Demand/supply matching:

  • Apply several (horizons and time buckets) forecast consumption strategies, including cross-plant forecast consumption
  • Ability to peg demand to supply throughout the supply chain and visualize this
  • Leverage various types of D/S matching algorithms (both heuristics and Linear Programming seamlessly combined)
  • Ability to propagate prioritized demand throughout the supply chain to provide constrained response aligned to business objectives

Inventory:

  • Optimize parameters to manage the inventory levels of raw materials and finished goods stocks
  • Automated inventory target recommendations to adapt inventory policies on an as-needed basis
  • Support multi-echelon stock optimization in quantity and value to drive optimal service levels balanced with the right cost levels

Scenario planning:

  • Ability to evaluate scenarios based on multiple variables, such as revenues, costs, contribution margin and working capital
  • Ability to configure standard scenarios and configure scenarios on the fly to solve constraints and run incremental and full scope scenarios to understand impacts
  • Ability to visually represent the end-to-end supply chain, highlight issues, and drill down to e.g. BOM, BOD and adjust parameters if needed

Control Tower:

  • Ability to visualize real-time any disruptions in the supply chain, including demand, in-transits, procurement, contract manufacturing, inventory and manufacturing
  • Connection to an external source of information to shorten the time of reaction like MES, LIMS, Real-time Logistic visibility providers
  • Scenario planning, E2E resolution with fast replanning and collaboration across different functions are required for agile response

Production scheduling and optimization:

  • Fast solvers to support automated resolution of most shop floor disruptions and improve OEE and service level.
  • Modelization of complex manufacturing constraints, including material, labor and skills, equipment, tooling, tanks, shelf-life, batch characteristics, energy consumption (e.g. electricity, pneumatic, hydraulic, vapor, water…)
  • Scenario comparison to best evaluate the outcome of the solvers
  • Integration in the same data mode with MPS (e.g. central planning vs. local planning) to reduce latency and increase scheduling adherence

Profitable-to-promise:

  • Ability to confirm sales orders not just based on inventory availability but considering the complete E2E SC response leveraging detailed cost-to-serve to determine profitability at order-level
  • Rule-based with prioritization to manage allocation situation

As we stated at the beginning, consumers and customers increasingly expect a more tailored and even personalized experience. Operating in this environment will require an entirely new way to design, plan and operative supply chains. To succeed, the shift to a digital operating model, enabled by an integrated platform is the best way forward.

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About the author

Stijn-Pieter van Houten SVP of Consumer Products and Knowledge Innovation Lead, o9

Stijn-Pieter van Houten

SVP of Consumer Products and Knowledge Innovation Lead, o9

With over 20 years of experience in supply chain management, strategy, and operations, Dr. Stijn-Pieter (SP) is a global leader and innovator in the field of next-generation planning solutions for the manufacturing industry. He holds a PhD in computer simulation and mathematical models from Delft University of Technology and has completed executive education programs at Berkeley, Stanford, and Cranfield.

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