Executive Briefings

Advanced Supply Chain Planning for Tomorrow's Markets

Analyst Insight: If supply chains are not planned, then they evolve and often become overly costly, risky and ineffective in serving customers. However, today's dynamic markets require much more than routine planning. Each mega-process in the end-to-end supply chain (Plan, Buy, Make, Move, Distribute and Sell) is undergoing change at an unprecedented rate. Leading solutions lie in advanced planning strategies and methods for both depth and breadth. While today's top companies understand this, the majority are not yet advanced in supply chain planning. – Gene Tyndall, Executive Vice President, Tompkins International

Advanced Supply Chain Planning for Tomorrow's Markets

All industry segments are impacted by major trends, such as increasing customer demands, e-commerce and omnichannel operations, intensive competition, disruptive technologies, competition for investment capital, and challenges in attaining strategic goals. Recent surveys by Tompkins Supply Chain Consortium show that the challenges faced by today's supply chain leaders are more complex than ever and require new methods and approaches to resolve.

Advanced supply chain planning incorporates these essential components:

Operations Strategy/Operating Models: Planning requires a strategy to plan against. If we do not know what capabilities we need and why, then how can we plan for the right ones? This is the first step for all companies - to align their operations with their business strategies, and decide what capabilities their supply chains need.

• Organizational Development/Change Management: Organization follows strategy. The supply chain organization should be planned so that it is clear on roles and responsibilities, how decisions are made and carried out, and how needed capabilities will be organized and executed.

• Network Design: Supply chains depend on networks of facilities for inbound flows, storage and distribution, and outbound flows. Nearly all company networks were planned years ago and are not efficient or effective for today’s markets. New approaches such as FCs, DC bypass, intermodal logistics centers, cross-docks, and consolidation/mixing centers need to be evaluated.

• Benchmarking: Leading companies benchmark regularly and adapt best practices to their supply chains, making them efficient and effective. The use of supply chain analytics is critical when deciding on actions.

• Integrated Business Planning (IBP)/S&OP: This is the most critical of the supply chain planning processes. Balancing demand and supply is challenging, but it is a critical success factor for any company that buys, makes, stores, or ships products. Inventory is an asset that can make or break any business.

Demand-driven supply chains are a critical solution for supply chain leaders. Gartner's 5-stage Maturity Model has been in place for several years, and hundreds of leading supply chain companies rely on it for true performance improvements. Yet, many companies become stuck in the execution of true TBP/S&OP processes. Advanced supply chain planning includes modern methods, tools and approaches for improved collaboration that lead companies to better forecasts and more optimal inventory positions.

• The Supply Chain Assessment: This advanced planning process can add measurable value to how a company’s supply chain performs, what it needs to close gaps, and the road map to get to the “TO-BE” vision. It is best conducted in concert with outside experts to ensure that objective and independent evaluations are undertaken.

The Outlook

In 2015, we expect to see more companies adopting these advanced planning methods. Functional plans will continue to be required, but advanced planning methods are needed more than ever as markets change and operational capabilities are expanded. No longer is it adequate to base planning on last year’s performance and budget. Today’s supply chains need to serve multichannels, meet new customer demands, and provide competitive advantage. Advanced planning is the only way to deliver true business value.

All industry segments are impacted by major trends, such as increasing customer demands, e-commerce and omnichannel operations, intensive competition, disruptive technologies, competition for investment capital, and challenges in attaining strategic goals. Recent surveys by Tompkins Supply Chain Consortium show that the challenges faced by today's supply chain leaders are more complex than ever and require new methods and approaches to resolve.

Advanced supply chain planning incorporates these essential components:

Operations Strategy/Operating Models: Planning requires a strategy to plan against. If we do not know what capabilities we need and why, then how can we plan for the right ones? This is the first step for all companies - to align their operations with their business strategies, and decide what capabilities their supply chains need.

• Organizational Development/Change Management: Organization follows strategy. The supply chain organization should be planned so that it is clear on roles and responsibilities, how decisions are made and carried out, and how needed capabilities will be organized and executed.

• Network Design: Supply chains depend on networks of facilities for inbound flows, storage and distribution, and outbound flows. Nearly all company networks were planned years ago and are not efficient or effective for today’s markets. New approaches such as FCs, DC bypass, intermodal logistics centers, cross-docks, and consolidation/mixing centers need to be evaluated.

• Benchmarking: Leading companies benchmark regularly and adapt best practices to their supply chains, making them efficient and effective. The use of supply chain analytics is critical when deciding on actions.

• Integrated Business Planning (IBP)/S&OP: This is the most critical of the supply chain planning processes. Balancing demand and supply is challenging, but it is a critical success factor for any company that buys, makes, stores, or ships products. Inventory is an asset that can make or break any business.

Demand-driven supply chains are a critical solution for supply chain leaders. Gartner's 5-stage Maturity Model has been in place for several years, and hundreds of leading supply chain companies rely on it for true performance improvements. Yet, many companies become stuck in the execution of true TBP/S&OP processes. Advanced supply chain planning includes modern methods, tools and approaches for improved collaboration that lead companies to better forecasts and more optimal inventory positions.

• The Supply Chain Assessment: This advanced planning process can add measurable value to how a company’s supply chain performs, what it needs to close gaps, and the road map to get to the “TO-BE” vision. It is best conducted in concert with outside experts to ensure that objective and independent evaluations are undertaken.

The Outlook

In 2015, we expect to see more companies adopting these advanced planning methods. Functional plans will continue to be required, but advanced planning methods are needed more than ever as markets change and operational capabilities are expanded. No longer is it adequate to base planning on last year’s performance and budget. Today’s supply chains need to serve multichannels, meet new customer demands, and provide competitive advantage. Advanced planning is the only way to deliver true business value.

Advanced Supply Chain Planning for Tomorrow's Markets