As we work toward Hub 2018, I'm very excited about the direction that Anaplan is going with regard to connected planning. Supply chain is an area of focus for Deloitte and, by nature, it must be a very connected process. I've seen a number of examples of how a connected supply chain can lead to much better outcomes for our clients and their businesses’ bottom lines. My colleague Jason Makins (a Master Anaplanner) and I collected insights and advice for connecting supply chain and finance around inventory optimization that I’m excited to share. Key supply chain factors across all industries The business of supply chain is evolving as technology enables capabilities that were on wish lists a few years ago. The supply chain connects fully automated manufacturing blockchain applications tested to track shipping and freight, and dark warehouses like Amazon, where products stored and offered belong to countless different businesses and same-day delivery is demanded by the simplest of customers. As the supply chain becomes increasingly complex, businesses must adapt and feel comfortable operating in a state of imbalance. Competitors race to stay ahead in a game of shrinking percentages as each part of the supply chain is squeezed, outsourced, or re-invented. When focusing specifically on inventory and its importance to the end customer, a question arises: What key factors are influencing business choices of where, when, and how much across all industries? Inventory sits as a pivot point that can act as a buffer between the business and the customer, and is a key factor in customer acquisition and retention. Three other key factors to address include:
- Speed. It’s imperative for businesses to keep upping the pace to stay competitive. For example, customers are driving expectations for same-day deliveries, so businesses are feeling pressured to keep everything in stock. This, in turn, creates tremendous pressure to optimize the supply chain.
- Costs. The costs of logistics and holding items are continually challenging factors, along with the increasing use of disruptive technologies like robotics and drones in the supply chain. All of these add new costs to contend with in an already competitive marketplace.
- Risks. In a perfect world, suppliers simply meet consumers’ demands. But reality isn’t usually that simple. Instead, organizations must place a significant focus on risk and the ways that inventories and stock rotation impact their balance sheet. The need to hold inventory is not only to meet demand, but also to keep business operations running.
- Appropriate inventory KPIs are needed to drive desired inventory management practices
- Inventory that is not segmented by contribution margin and demand volatility can lead to too-high safety stock and replenishment levels
- Inventory management isolated from account-level demand and promotional planning can adversely impact inventory holdings and long-term costs
- Many companies have significant volumes of inventory data, but require complex analysis to review inventory levels and identify trends in inventory use to establish a baseline for optimizing replenishment levels
Connecting supply chain and finance around inventory optimization