Last week we described how attitudes towards improving supply chain planning productivity are changing. Large enterprises ask, “What’s wrong with my process that I need armies of planners?” Growing mid-market companies ask, “Why do I need to keep adding so much overhead?” And firms are asking, “Is all this non-value added effort preventing us from reaching higher levels of planning maturity?” It’s this last question that we would like to address here.
Last week we highlighted five organizations that dramatically reduced human intervention with “autonomous” or “low touch” planning systems. But what’s also exciting about their highly automated supply chain planning was that it not only improved their productivity, it also enabled them to transform their businesses. Here’s how:
Costa and the NHS also reimagined the role of the planner (See diagram above). Instead of manually calculating replenishment estimates with spreadsheets, the computer now automatically analyzes near real-time data to drive forecasts and replenishment. It uses POS data, telemetry and rapid re-planning to enable an entirely new approach to logistics and replenishment. Planners focus on adding market intelligence rather than day-to-day replenishment calculations.
Lora Cecere of Supply Chain Insights calls this creating a “platform for innovation” (“Is IT Standardization Killing Your Growth Agenda”, November 2016). She says new technologies abound, but most companies can’t take advantage of them because they are stuck in an old fashion approach to IT spending. She concludes that “new approaches and business model creation will come from business technology innovators sharing new approaches to solve problems with business leaders.”
Do we need to keep nursing legacy planning systems, employing armies of planners, and adding overhead? No. Can we achieve higher levels of maturity by freeing up time to think and execute our way to advanced supply chain competitiveness? Yes. Many companies are already well along on the journey.
Click below for a Supply Chain Brief on this topic.
- Coffee retailer Costa Express used POS data, telemetry and rapid re-planning to enable an entirely new approach to logistics and replenishment. They now see themselves as redefining the ability to deliver premium barista-quality coffee in thousands of venues that were not previously practical.
- At HVAC manufacturer Lennox Residential, now that nearly all planning decisions have been automated, they are starting to redefine their customer service around new business models. You can’t predict when an air conditioner is going to break down, but with Internet of Things (IoT) data streaming from the AC unit, Lennox will be able to diagnose impending failure points and contact the customer to arrange a service visit, enhancing the customer relationship and balancing their workload.
- In the fiercely competitive world of internet retailing, Wayfair was able to support a customer-centric multi-sourcing strategy to compete with Amazon’s enormous investment in distribution and fulfillment center automation. Wayfair leverages their advanced demand planning and inventory optimization to provide them the agility to predict and respond to constantly shifting demand and customer fulfillment needs.
- Pharmaceutical firm Cipla Medpro developed the intelligence to proactively identify potential stock-outs up to four months in advance. This gave them enough time to respond proactively to critically important customer demands.
- The UK’s National Health Service revolutionized the process of maintaining the United Kingdom’s blood supply, transitioning from a push approach to a demand-driven ‘pull’ model for the entire country.
Costa and the NHS also reimagined the role of the planner (See diagram above). Instead of manually calculating replenishment estimates with spreadsheets, the computer now automatically analyzes near real-time data to drive forecasts and replenishment. It uses POS data, telemetry and rapid re-planning to enable an entirely new approach to logistics and replenishment. Planners focus on adding market intelligence rather than day-to-day replenishment calculations.
Lora Cecere of Supply Chain Insights calls this creating a “platform for innovation” (“Is IT Standardization Killing Your Growth Agenda”, November 2016). She says new technologies abound, but most companies can’t take advantage of them because they are stuck in an old fashion approach to IT spending. She concludes that “new approaches and business model creation will come from business technology innovators sharing new approaches to solve problems with business leaders.”
Do we need to keep nursing legacy planning systems, employing armies of planners, and adding overhead? No. Can we achieve higher levels of maturity by freeing up time to think and execute our way to advanced supply chain competitiveness? Yes. Many companies are already well along on the journey.
Click below for a Supply Chain Brief on this topic.
