Last week was the exciting inaugural kick-off of the Gartner Supply Chain Planning Summit. If you were there, you likely sensed the electric atmosphere in the large crowd flocking to Denver, eager to learn and energized by the possibilities for supply chain and business transformation in the coming year. If you weren’t able to go, the quick and dirty alternative is to read this blog to pick up five points you missed.
1. Winners change their mindsets–and accelerate through economic turns
The inspiring opening keynote from Gartner’s Marko Pukkila urged attendees to change their mindsets to enable real planning breakthroughs. Sometimes it’s tough to look at planning practices through a different lens when concepts like S&OP have been around for over 40 years and little seems to have changed. One way planning leaders can do this is to ensure all the work on the planning side is actually driving the business forward. To illustrate the point Marko asked who in the audience knew their forecast accuracy target, versus how many knew their P&L revenue objective. It’s important to know executive level business objectives, and then execute the supply chain to meet them. More on this in number 2.
Not only are winners refocusing their goals, they’re also anticipating and preparing for an uncertain future. Gartner research shows that companies that continued to increase earnings while others declined in 2009 and 2010 were those that were able to keep their foot on the gas through the downturn because they had planned responses in advance. We know the next downturn is somewhere on the horizon. Is your company merely expecting it, or have you anticipated potential supply chain effects and planned your response?
2. Tie supply chain digital strategy to corporate level goals/outcomes
Eighty-two percent of CEOs have goals to make the company more digital, but most CSCOs don’t have the roadmap to get there. Further, only half of supply chain leaders use executive direction to define digital capabilities. Gartner’s Mike Burkett suggests a better approach is to align digital supply chain planning capabilities to business models. Those companies that align supply chain strategies with executive level business governance are four times more likely to see digital supply chain success. An example is Stitch Fix using machine learning to augment human stylists to ensure the best possible customer service. This wasn’t “digital for the sake of digital”, but to support a very specific business KPI.
3. Plan for demand uncertainty in your forecast
According to Gartner research the number one obstacle to meeting supply chain objectives is forecast accuracy and demand volatility. The problem is, as long as demand volatility is on the rise, that forecast isn’t going to be perfect. That means you need to learn how to work with that uncertainty by driving demand, not just responding to a forecast.
At ToolsGroup we attest that the way to make uncertainty work to your advantage is to understand and automatically adapt to the full spectrum of demand behavior in a SKU portfolio by factoring in order volume and frequency. Combine this probability forecasting with a a fuller, more precise view of the various factors that influence demand, such as promotions, seasonality and product lifecycle behavior. This approach allows you to consistently place better inventory bets than your competitors and free up working capital and improve service levels at the same time.
4. Take a phased approach to supply chain planning technology
It can be tempting to keep adding technologies to your planning stack without a thoughtful strategy. Gartner’s Noha Tohamy used an interesting comparison of Maslov’s hierarchy of needs to SCP analytics. Her advice was, in short, to take advantage of the embedded analytics in planning applications and ERP systems, then complement with technologies like machine learning to further refine results.
5. Advanced analytics support more successful planning–and planners
Much has been written–on our blog as well–about the influence of AI on the planner role. Noha shared that advanced analytics support more successful planning, improve planner work life and drive financial, supply chain and process improvements. Forecasting is the ideal fit for machine learning automation. When planning teams are freed up from crunching endless numbers, they can look at the big picture and drive further business value. Of course, effective change management is critical for success. Noha urged leaders to start by identifying and piloting use cases, talking often to teams about adoption and benefits of advanced analytics and continuing to align use cases and results with business outcomes.
This concludes your quick trip to the Gartner Supply Chain Planning Summit. Perhaps we’ll see you there next year? Many global companies come to us with fragmented supply chain processes and data which make it difficult to increase efficiency and get a unified view of performance. They’re unsure how to manage today’s uncertain, intermittent demand to maintain service and profitability. We’ve seen that a careful mix of digital planning and change management provides the means to challenge old, inefficient processes and create a single global planning model that’s aligned with company strategy.
How about you–are you ready to change your planning mindset for 2020?