It’s no longer a secret that supply chains are becoming more complex. Customers are becoming more demanding and their preferences are under constant change.
We know this by looking at ourselves — if we order something online, we want the delivery within a day, and we always want to know the status and whereabouts of our order. If we go back just a few years, we were happy with just being able to order anything online and to have it delivered within a few weeks!
Customer requirements and preferences are not the only thing changing — requirements from authorities, environmental concerns, and increased pressure on effectivity and cost are challenging our supply chains. We are expected to react faster, sooner and with fewer resources in order to cope in the new era. All of this strains supply chains and adds complexity in the supply chain setups.
So, how do we accommodate this without drowning and losing out to competitors? In order to be able to make decisions faster, thus becoming more agile, we need to rethink our supply chain planning (SCP) technology landscape and our related processes.
As illustrated in Figure 1, we got used to having software solutions that supported specific functional silos. We would have a solution for performing demand planning, a separate solution for sales and operations planning (S&OP), and yet another solution for manufacturing scheduling (order sequencing). We then had to stitch all of these solutions together in order to have some sort of visibility across our supply chain. Making scenarios fast and seamless was a challenge — if not impossible — due to all of these siloed solutions and the lack of computing power available.
Traditionally, the vendor of an SCP software solution has grown up in a specific domain of the SCP process landscape. This could be within S&OP and demand planning or in the manufacturing scheduling space. The vendor may have stayed within its own domain for years, developing this to become best of breed. However, the market for SCP software has changed dramatically in recent years, enabling companies to have a more accurate picture of their supply chain in the digital world — empowering digital SCP.
Today, more software solutions include a much broader range of capabilities, allowing companies to have full supply chain visibility within a single instance. Many vendors have made acquisitions, buying smaller, specialized vendors possessing the capabilities the acquirers lacked. The next step has been to incorporate these capabilities into their own software solution to ensure coherence in their platforms.
We also see many new entrants in the SCP software space, many of which are coming from the world of analytics —predominately the advanced analytics and artificial intelligence/machine learning area. This is not particularly surprising since planning essentially is powered by analytics and has been for years — when we do statistical forecasting, create planning dashboards or perform advanced optimization runs. What has changed, though, is the need for more automation in our planning processes. We want our software to think and make simple decisions on our behalf so we as humans can focus on what really matters: the complex decisions. We want to do this in order to reduce costs and to make higher quality, unbiased and consistent decisions in a fast and agile way. More than ever, companies are ready to switch on the autopilot to let our digital friends do a lot of the work.
Furthermore, moving away from on-premise solutions and entering the world of cloud — software-as-a-service — has reduced, or even removed, the lack of computing power as well as storage headaches. This means that we get the opportunity to simulate and create more scenarios within seconds or minutes — something completely unthinkable years ago.
Computing power and advanced technology is, of course, not enough. The supporting processes also need updating and the change management effort within the organization is significant, but so are the results when you succeed.
So, where are you in this journey? Have you started? If not, get ready to board the train!
Pia Orup Lund,
Gartner Supply Chain