Gartner says that clients are increasingly asking, “What will the future of supply chain planning look like?” and in a recent report (Technology Reference Model for Stage 5 Maturity Supply Chain Planning, June 2018) they see three “mega trends” driving that vision.
In the past, Gartner has said that only a few companies in the world have achieved Gartner’s highest “Stage 5” supply chain planning ranking. It’s less common, for instance, than Michelin three star restaurants. However fresh off a new Supply Chain Planning System of Record (SOR) Magic Quadrant, analyst Tim Payne sees enough commonality among leading user companies that he has published a blueprint of a Stage 5 vision.
Payne sees supply chain planning as fundamentally a decision making process and sees three mega trends converging on those planning decisions:
- Horizontal alignment – Payne explains that this means "joining up" planning decisions across the E2E supply chain. For example, he says, “today most companies do not want to make demand-planning decisions in isolation of their ability to support these forecasts from the supply side of their supply chains.” Over time, he projects, this horizontal alignment will extend beyond the four walls of the enterprise and out into customers and suppliers to enable multi-enterprise capabilities.
- Vertical alignment – In this case, the "joining up" planning decisions is from the top of the company to the bottom and vice versa. “This is how strategic objectives are turned into execution and how execution could eventually influence strategic direction,” he says. For example, S&OP decisions are not taken in isolation of operational planning decisions.
- Automation – This is automating predictive and prescriptive planning decisions. Payne says that as companies proceed on their digital planning initiatives, they often cite improving planner productivity as one of the key drivers supported by programs. Examples include “zero-touch planning” or “lights-out planning”.
Payne says that these trends require next-generation technologies to enable and support them. The key technology planks he cites include:
- Algorithmic supply chain planning – This is a far reaching concept that includes a host of capabilities such as insight (to support logical thought, conscious exploring of options and automated responses), configurability (adaptive to new environments), algorithms that support accuracy and resiliency, connections that support environmental signals (e.g., IoT data) and the planning layers. He also cites other emerging technologies such as advanced analytics, deep learning, and data lakes.
- Digital Supply Chain - A digital ecosystem that takes advantage of advanced enablers and focuses on creating value through the connections afforded by machine learning and the Internet of Things (IoT).
- Demand Driven Value Networks (DDVN) – which he describes as a holistic business environment designed to “maximize value and optimize risk across the set of extended supply chain processes and technologies that senses and orchestrates demand. It does so based on a near-zero-latency demand signal across multiple networks of corporate stakeholders and trading partners.”
Payne say that supply chain leaders with responsibility for planning technology should articulate their technology vision to support progress toward a Stage 5 maturity vision. To start, he suggests assessing your current planning technology landscape and roadmap to this reference model to identify gaps and opportunities. He also suggests pushing supply chain planning vendors to support your digitization plans by challenging them to incorporate your digital planning requirements in their roadmaps.
Click below for a document with more on how horizontal alignment, vertical alignment and planning decision automation are transforming supply chain planning.