Every solid structure needs a firm foundation. Without the cornerstone in place, the building will waver and even crumble. It’s the same with a connected supply chain. The cornerstone of connected supply chain is a network of people, plans, data, and processes inside the enterprise.
Connecting your supply chain within your organization first is essential because it links people and plans across your business, both within the supply chain function and to other functions, such as finance or sales. Without such connections in place, you’re likely using offline plans and information that’s outdated almost as soon as it’s created. That can cause inventory issues, hamper accurate forecasting, and impede a quick response to disruptions. And all of that leads to higher operating costs and other inefficiencies.
When the right data and processes work together in harmony in a connected supply chain planning platform, teams of the talented and experienced planners already on your staff can invest their time in higher-value activities, such as managing exceptions or risk rather than the routine headache of data cleansing, organization, and dissemination. Recent research into how analysts spend their time unearthed a startling statistic: An astonishing 60-70 percent of supply chain analysts’ time is spent cleaning and preparing data, which leaves only 30-40 percent of their time for actually generating plans and making decisions with that data. Coupled with the fact that most offline data processes use out-of-date data, it causes sub-optimal decisions. Here’s a real-world example: Supply planners are more efficient and make better decisions when they have a real-time view of the demand forecast, costs, available inventory, and lead time in one unified platform.
Another benefit of a connected supply chain planning platform is the intelligent combination of data from multiple sources in a collaborative, dynamic, and flexible planning platform. When the supply chain is managed from a single source of data, drivers, hierarchies, and metrics, the endless debates over data sources and accuracy can cease. And without reliance on macro-riddled spreadsheets, there’s no fear of the process breaking if the spreadsheet owner gets sick, goes on vacation, or leaves the company.
You can’t fix what you can’t see, so a connected supply chain enables the visual representation of data flows. With this type of model transparency and accountability in place, coupled with a full change history that tracks changes by any user in any cell in the model, planners and decision makers are more likely to identify potential data issues and correct them before they cause disruptions. When key people, plans, data, and processes are connected, unified decision-making becomes the expected reality instead of a rare surprise.
For example, in sales and operations planning (S&OP), there can be dozens of processes and people involved. Let’s look at a typical S&OP process.
- The consensus demand plan is generated by collecting independent demand sources from the sales, marketing, and product teams, and combining it with AOPs (annual operating plans) and LRPs (long-range plans) from finance. A demand planner then finds the consensus value for that forecast by product line and region, and over time.
- Next, that plan is passed to a supply planning or network planning team that takes input from inventory, manufacturing, and inbound receipts to build a supply plan that meets the demand plan.
- Finance provides input on performance to financial goals, and “what-if” scenarios are analyzed across functions and up the organization until senior leadership pilots the monthly review and decision-making process.
Dozens of people can have a direct impact on the S&OP process every month. Keeping those people, their data, and their plans in sync is a challenge under the best of circumstances, even in the simplest supply chain, without essential and regular dialogue among them. When your information-connecting process operates in the context of a supply chain, planning cycles are shortened, money is saved, and goals stay front and center.
But enough about the problems. How do you get on the right path to supply chain connections?
Start the path to connection
Building solid connections in the supply chain isn’t an overnight process, and here are a few practical questions to ask yourself to get on the right track:
- Do different functions collaborate on different “views” of the same problem? A few examples of this include sales planning a territory, marketing planning promotions, finance planning revenue and margin, and demand planners planning units. If you find yourself with these multiple views, you might have a collaboration issue. Unify the data related to challenges in a single connected platform.
- Where do you have constant “re-working;” for example, is there a weekly “re-plan” of a common process? Wherever you find these situations, you may not have accurate visibility. Focus on fixing data visibility issues.
- Where have processes that were once an offline quick scenario analysis evolved into a baked-in capability? That’s a good indicator that your current supply chain architecture and process aren’t connected and that those using manual and disconnected methods are yielding suboptimal results. Target circuitous processes and plans to make better decisions and improve results.
To take the next step and read more practical details on connecting your supply chain, download our white paper, “3 steps toward achieving a connected supply chain.”
3 steps toward achieving a connected supply chain