Subscribe to the Supply Chain Planning Blog

Keep up with the latest trends, research, and insights about supply chain planning, demand forecasting and inventory optimization.

← BLOG

Transforming Your Supply Chain Planning, Transforming Your Business

By Jeff Bodenstab17 Jan 2017

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:

  • 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 Residentialnow 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.

The Ability to Grow can also be Transformative

Sometimes transformation can come in the form of the ability to support growth and address the challenge of an expanding product and SKU-Location portfolio. For example at Wayfair it formerly took 3 planners 100 hours a week to create a forecast and replenishment orders for the growing assortment of SKUs. They implemented software that slashed planning time from 100 hours per week to 15, allowing the team to forecast an exploding portfolio of nearly 1 million SKUs and plan replenishment for more than 40,000 SKUs.

“Our team was snowed under with forecast exceptions and overrides,” said the senior director of inventory planning and sourcing. Now, “we can spend more time looking at the genuine exception SKUs rather having to question everything.” Wayfair has grown 60% or more per year for several years with improved KPIs and minimal additions to its planning resources.

Thinking Differently About Planning

The key to this transformation is to think differently about the role of the planner.   In a Supply Chain Digest Interview, RS Components global supply chain planning boss Andrew Lewis articulated this concept well. He said, “For some time now, I’ve wanted to be able to separate off the creation of the statistical forecast from the enrichment of it by the demand planners.” “I want my demand planners to be ‘people people,’ with interpersonal skills, who can bring out from other [business] functions the sorts of things the system can’t probably know… making the eventual consensus forecast—the demand plan—absolutely as good as it can be.”

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.

Subscribe to the Supply Chain Planning Blog

Keep up with the latest trends, research, and insights about supply chain planning, demand forecasting and inventory optimization.