What is concurrent planning?
Today’s supply chains are more complex than ever before. Many companies rely on a large network of suppliers and partners scattered around the world to provide the components they need to manufacture their products and deliver them to their customers on time.
And because they’re global, these supply chains are subject to high levels of volatility that can be triggered by everything from trade tensions and geopolitical conflict to natural disasters and global health crises. This combination of complexity and volatility has the potential to create significant disruptions that place supply chains, and the bottom line, at risk.
Despite these challenges, some companies still rely on an outdated sequential or “cascaded” model of supply chain planning in which each step in the process is handled in a linear sequence. Companies ascending the supply chain maturity curve are increasingly adopting concurrent supply chain planning, a new holistic model that takes into view the whole planning network and aligns data so that a change in one part of the supply chain triggers corresponding changes and communications in the rest of the chain, in near-real time. Concurrent planning unifies plans across all time horizons and granularities so planners can understand past, present and future impacts across the entire planning horizon at once.
What are the drawbacks of cascaded supply chain planning?
In cascaded supply chain planning, planners focus on achieving functional excellence in their own specific area of supply chain planning, such as inventory or capacity planning. This involves isolating that one area, fine-tuning it and then excelling at it.
On the surface, this siloed approach would seem ideal for creating a system that operates at peak efficiency from one end of the supply chain to the other. But this is not the case. Between each function, misalignment compounds and contributes to operational blindness. Optimizing for capacity planning alone without an understanding of its impact on inventory, for example, creates challenges that compound as plans circulate throughout the rest of the network. With each function prioritizing its own performance, collaboration, efficiency and responsiveness decline. Opportunities are lost, and broader business objectives are jeopardized.
Organizations that practice cascaded planning often don’t think of the supply chain as an end-to-end system, despite the fact that it’s the functional silos that are making it impossible to get a complete view of the supply chain. Working in this environment, supply chain planners too often spend their days repeatedly managing the side effects of this approach and not tackling the central problem.
Overall, cascaded planning is slow, largely manual and error prone. And because it doesn’t give planners real-time access to the data they need from other areas of the supply chain, it severely limits their ability to react quickly to mitigate the impact of unexpected changes or events.
How does concurrent planning work?
Concurrent planning is a technique, but it’s powered by the right supply chain planning and execution technology. The technique of concurrent planning is rooted in the idea that supply chains should be fast, connected and end-to-end, so that people, processes and data are always aligned and in sync. The technology that powers concurrency mirrors these capabilities, drawing on cloud services, always-on algorithms, in-memory databases with direct memory references and efficient versioning engines to drive capabilities like what-if scenarios, digital twins, demand sensing, AutoML, predictive and prescriptive analytics, and more.
When concurrent techniques and technologies are combined, companies can interweave every aspect of their business, from strategic to tactical, to see benefits across short- and long-term planning. For example, with concurrent supply chain planning:
- Demand planners instantly receive and assess data from internal and external stakeholders to forecast quickly and with greater accuracy
- Supply planners instantly detect misalignment between supply and demand then use rapid what-if scenarios to evaluate alternatives, so they can proactively solve issues before they impact customers
- Inventory planners gain visibility across the network to right-size inventory levels, so that companies can balance customer satisfaction with costs
- S&OP cycles become simultaneously more accurate and efficient with better cross-team collaboration
What are the key benefits of concurrent planning?
Concurrent supply chain planning brings with it numerous benefits for companies managing complex global supply chains. Some of these key benefits include:
While supply chain planners can never completely avoid volatility, with concurrent planning they are better equipped to act quickly to limit its impact and improve the overall agility of the business. For example, when a person makes a change somewhere in the supply chain in response to an unexpected event, such as a demand spike or an extreme weather event, concurrent planning ensures everyone else instantly understands the impact on themselves, their team and the organization as a whole. Armed with this information, planners can update their plans accordingly and take the appropriate steps to mitigate or avoid altogether any financial or customer impacts. This is an enormous improvement over sequential planning, where assessing the full impact of a single change could take days or even weeks.
With supply chain concurrent planning, planners can proactively use the wealth of data they have to avoid potential delays, disruptions and other challenges in the supply chain. Organizations with highly complex planning models can run and rerun scenarios in minutes, and planners can develop plans or sets of alternatives fast enough for the projections to be actionable.
Eliminating functional silos
Cascaded planning takes place in functional silos that are based on a single planning area. Planners within these silos typically don’t share their latest data with other functional groups, which makes the planning process inefficient and error prone. With concurrent planning, these silos are eliminated. Planners in all areas have access to the same up-to-the-minute data from one end of the supply chain to the other. They can use this data to collaborate more effectively with their counterparts along every link in the chain and collectively make more informed decisions faster based on this data. By eliminating planning silos, concurrent planning helps businesses reduce risk, waste and latency.
Shortening planning cycles
Concurrent planning shortens the planning cycle by allowing planners across the supply chain to create plans for their individual areas simultaneously using a common data set that updates in real-time. This faster pace means they can meet daily disruptions while being flexible enough to deal with any unanticipated challenges.
This contrasts with traditional sequential planning methods where long planning cycles are the norm. Because planning is sequential, one group can’t begin planning until it receives the completed plan from its closest upstream neighbour. In many cases, by the time they create their plan, the data they received is out of date, which causes unnecessary churn and slows down the entire planning process.
In their own words: Lessons from supply chain planners
What are some key factors to consider when choosing concurrent planning software?
Many supply chain planning software vendors have taken steps to modernize at least some aspects of the technology used in their existing solutions. They’ve moved their software to the cloud, for example, or added support for basic machine learning algorithms which address a limited set of use cases. In many cases, however, the underlying software architecture of these solutions, which was initially developed to support a traditional siloed supply chain planning model, remains the same.
True concurrent supply chain planning software solutions, on the other hand, have been architected from the ground up to meet the requirements of the new planning paradigm, which is connected, end-to-end and highly data-driven. These solutions take advantage of lower-cost computational power and advanced algorithms, which enable planners to produce plans and evaluate scenarios much faster than they could with legacy planning systems.
Concurrent planning software is typically one component of a larger, scalable platform designed for end-to-end supply chain planning and execution. Individual features vary from one solution to the next, but the leading solutions align in their use of advanced technologies like artificial intelligence, machine learning and automation to provide greater visibility and transparency across the entire supply chain.
Advanced analytics capabilities, for example, are an indispensable component of concurrent planning software solutions. They provide planners and other supply chain professionals with important insights they can use to fine tune their plans, make more informed decisions, optimize their supply chains, and provide better customer service. Different solutions support different levels of analytics. Those that feature predictive analytics, for example, help planners understand likely outcomes through a statistical forecast or predictive model derived from machine learning techniques. Prescriptive analytics take this a step further, recommending a specific course of action, typically using mathematical optimization, heuristics or other rule-based systems.
What is the role of a network planner in concurrent planning?
In recent years, companies with mature planning capabilities have been adding the role of “network planner” to their roster of supply chain planning professionals to address constantly shifting priorities and find ways to resolve them profitably. Rather than focusing on a single supply chain planning function such as demand, supply, inventory, production or deployment, network planners are tasked with addressing any disruptions in the supply chain the moment they occur.
When an unexpected event occurs, such as demand that far exceeds supply or a port strike that constrains inbound delivery, having someone in the organization dedicated to quickly defining, modeling, and deciding on alternatives is key to success. As these unexpected events occur outside the normal planning process, the network planner can act quickly, leveraging the concurrent planning software to begin modeling alternatives and utilizing what-if scenarios to solve the problem before any disruption occurs.
Transitioning a typical supply chain planning organization into network planning roles, supported by enabling technologies, will help any company reduce their response time and increase their flexibility to meet demand with supply.
What are the best practices for adopting concurrent planning?
Moving to concurrent planning from outdated planning methods and tools requires careful planning, cross-functional coordination, and a commitment across the organization to move forward with this innovative new approach. The process of adopting a more customer-centric supply chain powered by concurrent planning can be defined in four steps:
Implement the right concurrent planning software
Choosing the concurrent planning software that best meets the unique needs of the organization is the first step in the process. The solution should provide integrated planning and execution across the entire supply chain along with dashboards that planners can use to measure and monitor key performance indicators (KPIs) in real time. It should also allow them to break out of functional planning silos and provide them with advanced technologies for quickly running and rerunning scenarios to determine which one represents the best way forward.
Embed continuous learning and automated decision making with ML/AI
Continuous learning and automated decision-making with machine learning and artificial intelligence makes it possible for the team to predict and react to short-term and long-term events, long before a traditional planning organization could make a decision. Embedding these capabilities gives planners and other decision makers access to advanced analytics, which can show what is in play, along with root causes, long before an event materializes.
Extend the implementation from supply chain to comprehensive business decisions
As a company matures using concurrent planning, it’s important to extend the concurrent planning implementation to include comprehensive business decisions. Plans related to the supply chain eventually become the heart of the operation and can be directly translated into sales, marketing and financial scenarios. In a concurrent planning environment, this will involve Sales & Operations Planning (S&OP) and Integrated Business Planning (IBP).
Put the customer back at the center
Customer experience dominates all business discussions. Concurrent planning enables organizations to put the customer back at the center of attention. It makes it possible to connect the customer, their customers, the company, its suppliers and the suppliers’ suppliers across the extended supply chain network in a collaborative model and allows all of them to read and respond in near-real time to what is happening in the market and in the supply chain itself.