The Innovator's Solution


Will Supply Chain Planning Productivity be a Hot Topic in 2017?

Posted by Jeff Bodenstab on Jan 10, 2017 4:16:00 PM

Increasing Planning Productivity by Separating Tasks.jpg

Planning productivity can be increased by segmenting tasks
according to the tools best suited for the activity.

For years, planning productivity has not been a particularly hot topic at most companies.

In fact, I can say from experience that supply chain planning automation that increases productivity can be a difficult sell, reminiscent of the scene from the movie Moneyball where Oakland Athletics manager Billy Beane (played by Brad Pitt) tells a room full of scouts that Jonah Hill’s character represents the new way forward. Meaning they were going to start employing statistical software and analytics techniques to help identify talent and build a team. The scouts were not too keen on ceding part of their job to a computer.

But this looks like the year attitudes are changing, particularly in forward-thinking supply chain organizations. Firms are beginning to ask, "Why do planners need to spend so much time nursing their planning system." Large enterprises ask, “What’s wrong with my process that I need armies of planners?” Growing mid-market companies ask, “Why do I need to keep adding so much overhead?”

Firms are asking, worse yet, if all this non-value added effort is preventing them from reaching higher levels of planning maturity. Is their planning inefficiency preventing them from achieving advanced supply chain competitiveness?

So whether you call it “automated planning”, “lights out planning”, “low touch or no touch planning” or even “driverless supply chain planning”, reducing human intervention is gaining currency. We call it “Powerfully Simple”, meaning that the software is highly intelligent and built to run in a more autonomous manner, yet simple for the user. Being smarter, it greatly reduces manual effort—dramatically improving planning efficiency and lowering the cost of ownership. Here are some examples:

  • Lennox Residential achieved 99.7% no touch, computer-controlled automation in their planning and replenishment. At Lennox, 997 out of 1000 planning decisions have been automated to the point where there is no manual intervention.

  • At Costa Express, just one planner now handles the planning for 5600 points of sale. Unmanned coffee stations transmit POS data every 15 minutes to help a highly autonomous planning system forecast demand, optimize inventory, and generate replenishment proposals for distribution and procurement.

  • Internet retailer Wayfair reported a 6 to 1 reduction in planning workload by moving to low touch forecasting and supply chain planning.

  • At pharmaceutical firm Cipla Medpro, the automated statistical forecast is now consistently up to 20% more accurate than Cipla’s own market intelligence. Says the supply chain executive director, “We’re now at the point where we can confidently switch off our manual overrides and put complete trust in the forecasts.”

  • In the UK, the National Health Service (NHS) is now also using telemetry to send inventory and demand signals to a highly automated planning system to manage the nation’s blood supply chain. 

What going on? As products proliferate, demand complexity increases, and customers expect faster service, planners are overwhelmed trying to create accurate forecasts and optimize inventory and replenish stock. Swimming in oceans of data, planners can no longer manually incorporate into forecasts all the data available to them—market trends, seasonality patterns, promotions, new product launches, projected life cycles, POS data, or even social media data that signals customer sentiment.

Automating the bulk of this far-reaching forecast process frees planners to take a low-touch; “advisory” approach, occasionally fine-tuning these baseline forecasts with their supply chain domain expertise and knowledge of business upside and risk. Planners are still needed for more complex and particularly more chaotic problems, but simple, mundane and routine activities should be just that – routine – and therefore prime for automation.  

To understand and accept the need for automation and analytics, it helps to look at the problem at a granular level, matching types of activities to those that can be automated. The right automation in the right place is not a job killer. It’s a job changer. In fact, it can transform an entire business. Just ask any of the companies above.

 Click below for a more in depth discussion of this topic.

Improve your planning process productivity - Supply Chain Planning Brief

Topics: Supply Chain Planning

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