Although digital planning has been around for decades, it suddenly seems to be on everyone’s lips. With the pace of technological advancements continuing to accelerate, digital planning can offer huge benefits and will undoubtedly play a key role in strengthening your supply chain resilience. However, it is important to remember that technology alone is not enough – unless you want to blindly trust what the artificial intelligence tells you to do! Read on to find out what else you need to consider.
Digital planning is nothing new, since advanced planning methods such as statistical forecasting and heuristics have actually been around since the 1990s. Recently, however, it seems to have really gathered pace, and I see more and more companies implementing digital planning solutions. With supply chains still reeling from the latest onslaught of large-scale disruptions, senior executives are of course looking for new and effective ways to cope with today’s volatile, uncertain, complex and ambiguous (VUCA) world.
Moreover, major technological advancements such as cloud computing and machine learning have given us immense computational power and capacity, opening up a wealth of new possibilities to analyse big data. As a result, digital planning now really does have the potential to make a significant contribution to improving your supply chain performance.
For example, today’s digital planning solutions can use artificial intelligence (AI) to integrate data from all kinds of external sources (Tier 1, Tier 2 and Tier 3 suppliers based on financial and geopolitical risks, regulatory compliance, cyber risks, even safety risks such as fire or natural disasters) and automatically prepare detailed risk assessments of your entire supplier ecosystem. The high-tech software can then combine this with your own intelligence plus other real-time data such as weather forecasts and transport delays to continuously analyse the existing situation, identify potential bottlenecks and model scenarios.
Indeed, one of our clients is currently piloting a digital planning platform or ‘hub’ that supports quick and easy communication (including based on polls and surveys) with and between its suppliers. Besides strengthening collaboration and building trust, this provides visibility into the entire supply chain network, acting as an early-warning system for any potential issues and therefore shortening the lead detection time (which is a key factor in the Sheffi risk analysis model, along with probability and impact). Needless to say, this has the potential to save a huge amount of time for the client’s planners who are currently working manually in Excel.
“You can’t achieve supply chain resilience simply by implementing the technology and expecting the software to do the rest”
So against the backdrop of today’s increasingly complex supply chains, involving hundreds or even thousands of suppliers, it’s understandable that so many companies are pinning their hopes on digital planning. However, the technology alone is not enough to improve your supply chain resilience and safeguard the long-term future of your business. It’s true, today’s digital planning tools can help you to identify potential risks, analyse their probable impact and suggest alternatives – but will you trust the system blindly? I don’t think so.
You still need people to evaluate all that information. Therefore, I disagree with those who predict that the planner’s job will become obsolete. I believe we will definitely still need human planners, but digital planning tools mean that they will require a different set of skills – such as the ability to interpret all the different kinds of data and to communicate the insights with their colleagues from other disciplines. This is why ‘behaviour’ is such an important aspect of resilience.
This brings me onto my second point: the decision-making process. There is little benefit to having all these extra insights unless you can use them in order to make the right trade-offs, which is another key factor in supply chain resilience. Therefore, to facilitate the necessary collaboration, I recommend putting an effective decision-making process in place that supports tactical decisions (such as about dual sourcing, building capacity and stock, your service strategy and perhaps even product redesign) as well as operational decisions.
Integrated business planning (IBP) provides the ideal framework for this because it brings together colleagues from multiple disciplines: Finance and Purchasing as well as Sales and Supply Chain. By embedding a regular cycle of decision-making that supports longer-term tactical and strategic improvements, you will steer your company’s performance towards an (even) healthier future.
In conclusion, while digital planning tooling is undoubtedly very powerful in terms of the information it can unlock, you can’t achieve supply chain resilience simply by implementing the technology and expecting the software to do the rest. Instead, to make optimal use of all the data that today’s advanced digital planning tools put at your fingertips, you also need to consider two other key aspects of resilience: behaviour and collaboration.
When you combine data-driven, analytical and proactive planners with an effective S&OP/IBP decision-making framework, all the pieces of the puzzle will fall into place and you will be poised to reap the full benefits of supply chain resilience – with your competitive edge and long-term survival as the biggest benefit of all.