Overcoming disruption: Top priorities for supply chain planners

From boardrooms to headlines, supply chain disruption continues to be a key concern. The recent efforts of many businesses to become more agile and resilient — particularly through better planning and more robust networks — has helped mitigate the risks of ongoing volatility. 

But what do the supply chain planners themselves have to say about it? 

Through insightful conversations with supply chain leaders across various industries, several key topics and opportunities have consistently emerged. In this piece, we’ll explore some of the top themes and concerns we heard over the past several months.

Forecasting and demand drivers

We’ve seen a wide range of supply chain forecasting needs based on businesses’ maturity levels. Some sought a reliable forecasting foundation, while others aimed to integrate factors like trends and seasonality or adopt advanced AI/ML methods. Forecast accuracy is crucial for demand planning and driving business outcomes, but inefficient metrics, processes, and systems present a constant challenge. 
 
Understanding and enriching forecasts with specific demand drivers, such as promotions, price changes, and growth targets is key. Some business drivers make sales patterns more volatile, which in turn hinders expected forecast accuracy. Traditional forecasting methods are still extremely useful but typically extrapolate historic trends in the future, assuming what has happened in the past will happen again. 

Being able to apply demand drivers — time series inputs that capture product trends and seasons, both positive and negative — helps identify which variables impact the performance of your business. If you can account for these, you can generate a more accurate forecast.

Forecast value add (FVA) as a metric can help you measure the value each step in the forecasting process adds to the final forecast. Unlike traditional forecasting metrics, it helps to focus on the efficiency of each step to target which areas are beneficial and adding value, allowing businesses to improve overall forecast accuracy by placing more emphasis on them. Often, traditional forecast accuracy metrics are captured at the end of the demand planning cycle vs. FVA which monitors value in each stage of the planning process.

An inability to connect forecasting and demand planning outputs to meaningful actions across the rest of the planning cycle — including inventory and production — remains a problem. While forecast accuracy is such a big focus for many, current processes and systems mean it’s often separate from decision-making farther down the supply chain, lacking an emphasis on agility and adaptability to demand changes. A connected, end-to-end ecosystem where demand and supply can be balanced to meet the needs of the customer and business is still a focus for many. 

Production and scenario planning

Businesses face the ongoing challenge of making production decisions based on diverse scenarios involving demand, raw materials, and resources. Many of these decisions are still being driven by highly manual methods which are no longer relevant for master data and production resources of modern operations. This is one area of the supply chain where significant value and time is left on the table, as optimizing for a wide array of complexities and constraints can be so difficult to achieve.    

Scenario planning across a wide range of business situations (typically constraints) is a huge focus for production. Often, planners must respond quickly to questions from the business such as “Can we meet this additional response?” or “Will we have enough raw materials to make this product?” Typically, these areas still center around demand, resources, and capacity, with planners spending significant time pulling together multiple data sources and having multiple conversations across plants to even get to a feasible answer. 

Optimizing for value is still key. Businesses are running to make a profit, but value is not always granular. For example, businesses are trying to make financially beneficial decisions while balancing non-monetary and qualitative factors, including customer relationships, supplier relationships, and prioritization decisions. The factors being considered are also non-linear, meaning decisions on product mix and supplier selection, for example, all have different profit implications which need full attention from one scenario to the next.  
 
Flexibility in production planning for a network is required for a successful long-term customer-software partnership. For many businesses, this is the ability to have complete control and understanding of their master data to ensure decision-making uses the latest information. For software providers, it’s a carefully designed master data area which can quickly reflect any updates across the network and in final plans. 

Uncertainty is inevitable, and businesses are always adapting for a picture that is constantly changing. Within the network, this often includes onboarding new suppliers, changing BOMs, updating manufacturing resources, and footprint changes to product locations. These ultimately need to be available for planners to update and use.

Inventory management and replenishment

Inventory still holds the key to a supply chain’s heart. Not due to any affection to their product range, but because of the cash-inventory-service balance. Businesses are effective and financially agile when they can meet demand, using their inventory, to make customers happy. 

Problems still occur when businesses cannot accurately understand demand and variability, therefore tying up financial resources trying to be everything to everyone. A lens across their full supply network is required, within all tiers, with business specific parameters to fully meet demand with financially efficient operations.  
 
Lights-out and hands-off inventory planning is still desired, but it’s a dream for most without the right technology and processes. Many planners are trying to focus on managing every product, all the time. Outdated processes mean planners are often trying to plan supply for their full product portfolio with equal attention and mixed success. 

It should be clear from forecast and plan accuracy that products are not all forecastable. Yet, we see planners treating those unforecastable and non-value-generating products with too much love and care, leaving businesses longing for: 

• Alerts and exceptions to focus precious time and attention on value-add areas 
• Proper segmentation of products to maximize understanding of which are key to customers and operations
• Specific inventory policies, at any moment in time, to allow for automated simulations of products and network, as well as full control when changes are needed

Replenishment is tough and specific business logic means this cannot be handled one way, all the time. Business networks are so unique that replenishment logic must be flexible and account for multiple scenarios. 

Some variables businesses still must consider when handling replenishment include: 

• Routine vs. ad hoc replenishment 
• Pre-season and in-season planning
• Multi-tier networks (including hub and spoke as well as global, regional, and local facilities) 
• Continuous vs. new products
• Stores of varying importance, size, and layout
• Transit methods and lead times 

These also sit alongside classic inventory considerations such as reorder points, safety stock targets, order quantity, product shelf-life, and service-level targets. Technology is needed to account for business logic and provide automated replenishment, which considers all constraints and complexities. 
 
Due to the agility needed to handle disruption in the supply chain, networks are often becoming larger and more globalized. Businesses now want visibility into global and local locations — including suppliers, DCs, plants and retail locations — something we call a multi-tier network. 

Multi-tier inventory management is a dynamic process which allows businesses to monitor and adjust their inventory to ensure optimal performance across their entire network. In some cases, businesses are looking into multi-echelon inventory optimization (MEIO), which considers appropriate stock levels and where to maintain inventory at each distribution level.  This is an interesting strategy in ensuring effective supply in a cost-efficient manner but requires software to drive a tailored inventory approach across the network. 

Generative AI across supply chain planning

Driven by advancements in technology, businesses are now looking into integrating generative AI (GenAI) into their supply chain strategies and operations. While the buzz around GenAI remains strong, businesses have varied in readiness. Mature organizations with robust digital strategies actively tested use cases, while others sought foundational process optimization before leveraging GenAI. It would be wise to suggest there is a case for both, and a lot can be said for efficient processes and systems before layering on added complexity. 

Interest in GenAI applications within the supply chain have included risk management, disruption prediction, and mitigation planning. The area we have seen most value is in context-aware capabilities around scenario planning and analysis, enabling conversational querying of data and models to help drive decision-making and action on insights generated.

Uncertainty is the only certainty

The supply chain planning space continues to be an area of executive focus, budgetary spend, and growth for many leading organizations. The importance of having tools to plan well across the end-to-end supply chain should not be underestimated.  
 
One thing which echoed through the conversations we’ve had with supply chain leaders was the vitality of connected planning, not only in supply chain management but across the enterprise. Research has confirmed this, highlighting a 14% improvement in total shareholder return for organizations with higher enterprise connectedness.  
 
As a leader in supply chain planning, Anaplan continues to drive innovation and deliver value to our customers through out-of-the-box, best-practice applications and our suite of supply chain solutions designed to connect planning teams across your business. 
 
Uncertainty is the only certainty across supply chains, but as we pointed out in a previous post: the crisis isn’t external — it’s your supply chain planning. Accurate forecasting, scenario planning, inventory management, and GenAI applications will all be crucial ingredients in helping your business overcome supply chain disruption.