We have tackled the question of automation before, but his time I want to focus specifically on what automation will mean to the job of the supply chain planner.
There is a saying that the best forecasts come from having access to inside information that is not yet widely known. In writing this blog, I have been talking to analysts, consultants and pundits—but most important watching what’s already happening at more advanced companies. And I see several patterns emerging on the changing role of the supply chain planner. These changes are significantly reducing costs (usually dramatically) and increasing benefits, so it’s highly likely that these trends will persist, changing the role of the supply chain planner across a broad swath of companies. Here are my five predictions:
- Planning will become more efficient
If you have been reading this blog you have seen statistical evidence that the planner’s role is becoming more computer-enhanced at leading companies, with less spade work and far more efficient. Lennox Residential achieved 99.7% no-touch, computer-controlled planning and replenishment—planners have to intervene in only three out of every 1000 planning decisions. At Costa Express, one person plans 7000 points of sale (POS). Internet retailer Wayfair reduced their planning workload by a factor of six through low-touch forecasting and planning.
I have already seen similar results at dozens of other companies, large and small and across many industries. Just one full-time planner now handles all planning for the Absout Vodka global brand (and even takes stress free vacations). A pharmaceuticals distributor had two of their three planners simultaneously go on maternity leave and managed comfortably nonetheless. The stories keep coming. As Lora Cecere of Supply Chain Insights sums it up, “Fewer people; more insight.”
- Planners will focus on value add
Most of the productivity gains described above were enabled by technology improvements. These planners are working more in tandem with the computer as a teammate, rather than purely as a decision support tool. Think of a modern soldier – no longer a “grunt” – but outfitted with technology, connected with the outside world, and even supported by semi-autonomous systems such as drones.
UK distributor RS Components offers a good example of automating what the computer does well, while separating out tasks for planners. They stock 500,000 products and ship almost 45,000 parcels daily. Planners get their arms around this by leveraging automated demand planning software. RS’ global supply chain planning boss, Andrew Lewis, says statistical calculations have to be automated so his people can focus on the business, not the math. I want to “separate off the creation of the statistical forecast from the enrichment of it by the demand planners,” he says. “I want my demand planners to be ‘people people,’ with interpersonal skills, who can bring out from other [business] functions the sorts of things the system can’t probably know… making the eventual consensus forecast—the demand plan—absolutely as good as it can be.”
In Digital Business Requires Algorithmic Supply Chain Planning, Gartner analyst Tim Payne says, “Freed up from the heads-down work of creating short-term plans… (planners) can now look for opportunities to run the operation differently to identify more profits, higher service, and potential problems on the horizon. … Those opportunities included new markets, a new configuration of the supply chain network, faster delivery and product segmentation strategies, changing customer buying behavior, and ad-hoc environmental disruptors.”
- Planners will spend more time making “conscious” trade-offs
Tim Payne has an interesting way of describing this. He says that organizations will develop an automated "subconscious" side of supply chain planning to cope with and make sense of the proliferation of data and events. He says “In those layers closer to execution, there will be more ‘subconscious’ planning, where trained algorithms will automatically apply best practice resolutions as relevant events are detected. The subconscious will come predominantly in the respond planning layer, such as when customer orders are different than expectations (within preplanned thresholds).”
This planning response becomes continuous, concurrent, intelligent, self-learning and adapting, event-driven, real-time and automatic. Payne says that “for systematic, repeatable decisions, ranging from transportation to manufacturing and fulfillment, algorithms can offer more scalable and more accurate decision making. Algorithms can consider more variables, more constraints and more trade-offs that what would be feasible to analyze manually. Algorithms also offer supply chains fast response times for more dynamic decision making.”
In the layers further away from execution, there will be more "conscious" planning, he says. For those processes that continue to heavily rely on human judgment, analytical talent will be needed. Supply chain personnel will be expected to adopt a fact-based decision-making approach to their jobs. “Algorithms will act as advisers that analyze the data and provide them with recommendations for the most profitable action. For that, (planners) will need sufficient analytical proficiency to interact with these algorithms, conduct what-if analysis and understand the drivers behind the solution.”
Tim’s perspective fits well with the trend I am seeing, as illustrated at companies like Lennox and Costa described above -- Highly automated day-to-day planning and response, coupled with more manually-intensive analytical work to make the bigger decisions. The diagram at the right shows the software making thousands of "subconscious" decisions on its own while the planner remains a step removed, making only "conscious" decisions.
- Machine learning will make the job easier, not harder
The first part of this prediction is easy. Even setting aside all the hype right now around Artificial Intelligence (AI), the fact remains that the use of machine learning, at least for demand analytics and demand management, is growing and accelerating.
But contrary to some predictions, I don’t see supply chain planners becoming “data scientists” or anything of the sort. My analogy here is mobile phones, cars or wall-mounted thermostats that contain machine learning. Do you need to be a data scientist to use them? Of course not. You may not even know the technology is there.
And that’s exactly what I am seeing in supply chain planning. One client who implemented machine learning for improving their spare parts demand forecasting told me that many of their users aren’t even aware of the machine learning technology inside their system. And those users’ jobs are much easier in many ways. Tough intractable problems that once took long hours to solve and often yielded sub-par results (only to be sorted out later) are now fewer and far between.
Lora Cecere envisions the planner coming in the morning and being greeted by their supply chain planning system with an update about what happened overnight highlighting key news and focusing on a descriptive analytics reporting what happened, predictive analytics that predict what will happen and its business implications, and prescriptive analytics suggesting the best course of action. All the pieces of technology for her scenario already exist in some form or another.
- Planners will evolve through personal development
Looking at the above description, it’s not hard to see that the job will be different enough to require personal development. Think of any job impacted by advances in computers and information technology. The technology changes the job, making some skills less important and favoring others. For anyone who can migrate to higher value-added activities though, it can be an evolutionary change through personal development. For example, in my own experience as a marketing professional of more than 30 years, I have seen dramatic technological changes such as marketing automation systems, social media and web analytics. I saw the introduction of email marketing and PC-based graphic tools that dramatically changed our work life and path to market. These have added an order of magnitude more power, efficiency and reach, even though many marketing fundamentals haven’t changed. If supply chain planning professionals can adapt, there is a great upside opportunity.
Click below for a larger version of the Costa image shown above: