Orchestrate performance with IBP to overcome supply chain disruption
The world was shocked by the magnitude of the global supply chain breakdown over the last two years, and a return to normal is still not in sight. Outside of the consumer impact, supply chain leaders are forced to make the most out of chaotic and fast-changing circumstances while trying to meet forecasted results.
The impact of supply chain turmoil stretches well beyond the supply chain and has implications across the entire business. When an organization is caught unaware, all business units can find themselves struggling to align plans. But when you activate integrated business planning (IBP), you can tether all stakeholders to the supply chain to use it as an anchor to keep the financial, material, and capacity forecasts as accurate as possible.
Multiple factors upset the supply chain
First, it’s important to stress how many factors impact the global supply chain. Although this is only a small portion of the issues facing the supply chain today, the stress it causes is immense and far-reaching.
Once thought merely temporal coming out of the pandemic, there is debate about the duration of inflationary pressure that impacts many aspects of a supply chain’s input costs. Oil and gas prices, for example, are the highest since 2008 (in part) due to geo-political strife in Eastern Europe.
Pandemic-related conditions cause several industries, like automotive and retail, to not meet demand. As reported by the BBC, the proliferation of working from home created an unforeseen demand on laptops. Coupled with coronavirus-related factory closures, computer chip supply shortages cripple not only tech retailers, but the automotive industry’s ability to complete manufacturing cars with digital dashboards.
The most obvious source of supply chain stress, shipping costs are higher than before, and likely higher than any supply chain leader could have expected. According to CNBC, route costs rose by seven times or even more. A container shortage is fueled by the demand booms, and container freight rates increase global import prices. In fact, Reuters reports that if these rate increases are sustained, prices could increase by a staggering 11%.
Using IBP enables businesses to overcome severe disruption to the entire organization
This situation is not confined to an organization’s supply chain. Considering supply chain can act as a hub for company operations with other departments functioning as spokes dependent its performance. Efficient management of supply chain operations will directly impact other departments such as Finance (working capital, COGS) and HR (workforce planning).
IBP aligns revenue targets with demand and supply plans with costs, and provides leaders with financial, workforce, material, and capacity considerations . It converges high-level demand and supply plans with execution through Sales and Operations planning and execution.
IBP also drives strategic and policy goals between annual operating plans, staffing plans, sales and operations, and demand and supply planning. It orchestrates the information required to run scenarios that incorporate multiple plans and actuals, allowing leaders to:
- Consolidate opinions and reach consensus on the best plans.
- Quickly adapt to change in demand and supply planning or execution.
- Continuously improve short- and long-term planning.
- Rapidly propagate changes across and within business units.
Benefits of IBP in times of turmoil
When facing extreme supply chain disruption, supply chain planning is the nerve center of the business, used to inform each business unit’s best choices to stay on target, support decisions for the best possible outcome, and continuously improve planning. When relying on IBP, the entire organization can enjoy some deeply important benefits.
Gain the ability to plan “what-if” scenarios to change course quickly when necessary, thanks to end-to-end visibility of the entire supply chain. This benefits customer service as well as supply rebalancing.
Top- and bottom-line decision support
Enable supply chain and finance to see bottom-line revenue, cost, material, and capacity impact to better protect margins during disruption while improving customer service. It will also aid in the introduction of new markets, products, and suppliers.
Flexible and swift planning
Allow marketing to adjust promotions and demand-generation plans to account for supply challenges. Workforce planning can right-size talent for current landscape, and finally, standardize finance and supply chain decision-support reporting
Mobilize Connected Planning to enable fully functional IBP
To fully operationalize IBP, organizations should adopt the collaborative and interconnected system that we call Connected Planning. Anaplan’s Connected Planning solution fully enables IBP through:
- Establishing models reflecting organizational design and supply chain network structure
- Enabling key features for alerting, collaboration, and visibility across and within models
- Capturing connections and patterns to record learning and expertise
- Supporting unlimited multi-dimensional planning scenarios to drive timely decisions and consensus plans
- State-of-the-art hyperscale computing to better understand drivers of change and react within planning lead times, such as plan to actual performance
- Automation of business processes and decisions as required
- Inclusion of key planning functionality including multiple forecast methods, optimization capabilities for capacity and inventory, generation of material and capacity requirements, and production schedules
- The ability to adopt machine learning through pre-built solutions for forecasting or custom build solutions as required
Integrated business planning enables supply chain to align all business stakeholders for maximum resilience in time of supply chain stress and disruption. Allowing supply chain planners to communicate issues and opportunities to the entire business, the entire organization can act in concert to rise to any challenge or opportunity. By using Anaplan’s Connected Planning solution, supply chain leaders can fully operationalize IBP to allow supply chain to be a hub of operations during times of immense disruption.