In my previous post in this short series, I introduced the concept of touchless planning, and summarized its advantages over traditional demand planning.
This time, I’m going to look at how to get started, and also at the benefits that can accrue.
As with so many things, in business as well as in daily life, preparation is key – which is why it’s good to embark on the road to a supply-value network with certain elements in place.
The first such factor is data integrity. The methods by which data is collected and analyzed need to be robust, and they need to be standardized. If they are neither of these things, the data on which the touchless planning system will act will be inconsistent and prone to unreliability. In order to put more dependable measures in place, many organizations will need to reconsider their technological capabilities, as well as their organizational processes, structure, and workforce skills.
The second key factor is the need to digitize operations. Organizations should aim to equip their entire supplier ecosystem with sensors that provide near real-time feedback to the planning systems on various issues, such as production capacity and material availability.
The third and final preparatory factor I’d like to mention here is the advisability of enabling concurrent planning systems, linking demand and supply systems into a single view and bringing them together. The rule set will need to be defined and mapped into these systems, thus automating recurring or routine tasks according to program settings and scenario planning.
Taking these steps may not be straightforward for some organizations, but in competitive terms, they will be worth the effort – especially for those who are active in consumer products markets.
Effectiveness and efficiency
Worth the effort how, exactly? What are the benefits of a touchless planning approach?
One principal positive is the overall effectiveness of the new, smart, digitized process. Organizations will be able to achieve higher levels of forecast accuracy: machine learning will be able to recognize and extrapolate patterns in demand, and it will also be possible to combine traditional data, as well as new data sources, to greatly improve plan accuracy and reduce forecast bias.
Effectiveness will also be enhanced by the increased ability to synchronize supply with demand. Inventory norms can be set more scientifically; key planning parameters such as factory run strategies can be optimized; prescriptive scenario modelling can be conducted to minimize any necessary plan changes; and the use of safety stock can be optimized.
The second general area of benefit is improved efficiency. Low-value activities, such as manual forecast overlays on certain SKUs, can be eliminated; repetitive, low-value tasks can be automated, freeing the workforce to focus on higher-value activities; and planning activities can be consolidated and scaled into appropriate skills and salary bands. Also, the enhanced visibility that smart, digitized planning provides can enable better workforce scheduling and allocation, helping businesses to reduce overtime costs and related expenses.
There are other, broader potential outcomes. The positives I’ve described above aren’t just about better planning, but about the emergence of a more stable supply chain, leading to additional benefits in cost, cash, and service, including:
- Lower operational factory costs, due to higher capacity utilization, less overtime, and less use of third-party overflow capacity
- Improvements in service, including on-time in-full (OTIF) delivery and on-shelf availability
- Lower logistics costs, due to less overtime and more predictable transport requirements, leading to better lane rates and less expediting
- More stable signals to suppliers.
In my next post in this series, I’ll examine the extent to which an organization’s culture can and should be accommodated in the transition to a new continuous, touchless planning environment.
Read other blogs in this series:
To learn more about how Capgemini’s Digital Supply Chain Practice can help your organization implement a supply-value network and touchless planning across your supply chain, contact: firstname.lastname@example.org
Jörg Junghanns leverages innovation and a strategic and service mindset to help clients transform their supply chain operations into a growth enabler.