Value leakage of current state planning

In this video, we will discuss the value leakage that can occur in current state business planning processes. We will explore the following topics:

Customer service issues
Excess inventory
Cost of goods
The impact of value leakage on P&L
The importance of planning transformation

Current state business planning processes often lead to value leakage. This can manifest itself in a number of ways, including customer service issues, excess inventory, and cost of goods.

Customer service issues can occur when the supply chain is not able to meet demand. This can lead to lost sales and unhappy customers. Excess inventory can occur when the supply chain is overstocked with the wrong products. This can tie up cash and lead to write-offs. Cost of goods can increase when the supply chain is not able to pre-position the right material and capacity. This can lead to reactive spend on short-term capacity or expediting.

The impact of value leakage on P&L can be significant. For every billion dollars in sales, the impact can be as much as $10 to $15 million of operating profit. This is why planning transformation is one of the most important transformations as part of the digital transformation.

Planning transformation can help to address value leakage by improving visibility, collaboration, and decision-making. This can lead to better customer service, lower inventory levels, and lower cost of goods.