Supply chain planning and S&OP

Across all industries, supply chain planning is becoming critical for business success – and the increasing fragility of supply chains as well as rising uncertainties about future developments are accelerating this trend.

Continually evolving technologies, rapidly shifting consumer behavior, recurring natural disasters and market instability require more than merely reacting to change. Instead, companies must proactively monitor and evaluate uncertainties and risks in their supply chain. This allows them to make and implement optimal decisions that can mitigate potential effects on overall business.

In addition to these changes, certain trends over the past decades have contributed to increased supply chain complexity and fragility. These include the reduction of inventories, the implementation of highly dynamic logistics systems (e.g. JIT/ JIS/ cross-docking), global sourcing and the expansion of the global production footprint. As a result, supply chains were becoming increasingly complex – and end-to-end transparency and visibility were often hindered.

Developing supply chain planning

Supply chain planning plays a crucial role in managing these challenges under consideration of future changes and has been developed step by step in the last few years to offer solutions in this dynamic environment. While traditional supply chain planning was initially supply-driven, current integrated business planning offers a cohesive view of demand & supply planning. However, in many businesses, supply chain planning is still not sufficiently cross-functional, too slow, labor intensive and does not adequately consider the end-to-end impact.

The next level of supply chain planning, or the end-to-end real time planning process, enables swift cross-functional collaboration and execution. Holistic planning scenarios can be quickly modeled and evaluated in a digital environment.  Recent technological developments, such as cloud solutions, in-memory databases, concept of digital twins, interactive collaboration platforms, artificial intelligence and machine learning, transform a previously impossible target process into a tangible reality.

Benefits and challenges of end-to-end real time supply chain planning

By employing end-to-end real time supply chain planning, businesses hold a competitive advantage by employing holistic supply chain decision-making processes and reacting flexibly during times of uncertainty. The resulting end-to-end supply chain visibility also allows for optimal resource utilization and streamlined processes as well as seamless collaboration with supply chain partners.

However, a key challenge on the path towards realizing these benefits is the accompanying transformation of supply chain management (SCM) organizations. This includes breaking down functional silos and old silo thinking and designing cross-functional and cross-location organizations. Appropriately trained and qualified personnel and attractive incentives are imperative for the success of this process.