Supply planning in the age of volatility is no joke

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Supply planning in the age of volatility is no joke

How many demand planners does it take to change a light bulb? None. The supply of bulbs is late. That was taken from a blog, "The top 10 supply chain jokes," written in less volatile times when the big supply issues were late purchase orders. Suppliers didn’t get much sympathy back then. Today, though, we would agree that never has it been more difficult to plan supply than it is in the age of the pandemic. It doesn’t help that demand is either in a deep spiral or shooting up like a rocket.

The big challenge is the uncertainty in many industries. The recovery will be slower than the impact emergency measures had on the economy. The need for personal protective equipment and sanitary products will remain high while demand for other products will be slow to rebound.  Companies don’t want to be procuring supply that won’t be consumed. With the amount of uncertainty hitting the supply chain, what makes supply planning manageable?

Well before COVID-19, Kinaxis published an eBook, “Four mission critical capabilities for supply planning complexities,” that outlines key requirements for effective and efficient supply planning, so you can pre-emptively respond to changes and events, even as extreme as what we are seeing now. All four capabilities are as relevant today as when the eBook was originally published.

Instant multi-level, multi-site bill of material (BOM) explosion

It’s important to understand where there may be risk at any level of the supply chain. You need to get visibility across your network but if something changes, you also need to instantly recalculate demand and supply balancing at every node. This gives you visibility to the impact of change as it cascades down to the lowest levels of the supply chain. Without this fast, multi-level, multi-site BOM explosion, planners are left struggling with Excel spreadsheets, trying to figure out a response to a change. Usually it will take days or even weeks to get a wrong answer versus understanding the impact of change in minutes.

Analytic horsepower

To help with some shortage conditions of critical medicines and other therapies, the U.S. Food and Drug Administration (FDA) extended the expiry dates on some active ingredients and products. There will be impact on supply plans from other changing rules, regulations and sourcing requirements. This will require planners to immediately and easily update planning attributes and then understand the impact over all planning horizons. Planners need access to all analytics and attributes, many that are industry specific, to accurately and confidently create realistic plans and responses.

Automated Intelligence

There is so much going on in the supply chain that major efficiencies can be realized if you can automate the routine and escalate exceptions to the planners for their immediate attention. As companies look to diversify supply options, sourcing decisions could be more complex than ever before. An example in the eBook is automatically sourcing from an alternate part but only if there’s inventory for the substitute part.

There are lots of examples where machine learning will be utilized so the computer can do the heavy lifting and planners can focus on what matters. Another area where machine learning will play a critical role is in demand sensing. Creating more accurate short-term forecasts in volatile situations will go a long way in helping supply planners see the impact of change and respond in a timely manner.

Anytime what-if

Things are changing by the hour. The speed of understanding the impact a change will have on your supply plans will have to be faster than ever before, at least sub-hour. You also have to be able to test resolution as fast. Any lag time in testing alternative sources, allocating limited supply or responding to new regulatory restrictions will cause plans to be obsolete before you can take action. For planners to have confidence in their decisions, they need to be able to create scenarios for decision support in seconds.

If you could add a fifth capability, a top contender would be around collaboration. The best decisions usually are not made in isolation. Supply planners will need to converse with demand, inventory and capacity planners to work through resolutions that are best for the company, not just for the department. If supply is on allocation, it only makes sense to collaborate with demand planners and customer service representatives to understand how to best allocate limited supply. All participants will need to provide input so everyone has confidence in their plans and responses to change.

So, how many demand planners does it take to change a light bulb? Just one if the supply is on time. Well, that’s not funny and it wasn’t meant to be. What else isn’t funny is the amount of change and disruption supply planners have to deal with. Having the right capabilities might not make you laugh but it will take away some of the stress in these difficult times. For some not so humorous but insightful reading, check out the eBook, “Four mission critical capabilities for supply planning complexities.”

Check out the eBook, "Four mission critical capabilities for supply planning complexities."

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