The Invaluable Role of Technology in Supply Chain Planning

Lately, the focus in Supply Chain Management has shifted from logistics to planning, while most organisations have just started exploring how technology can support this new era…

For over 20 years, running a lean, agile, and responsive supply chain has been the main goal of all our customers. Their warehouse and transportation operations have always been considered as a big cost-bearer, absorbing millions of euros every year and, as a rule of thumb, “the leaner the logistics processes were, the better for the organisation”.

This fundamental principle was also applied to business applications and the type of projects we were implementing for our customers. Streamlining warehouse operations using voice picking and sophisticated “put away” strategies, vision picking with smart glasses and integrating AGVs (Automated Guided Vehicles) with SAP warehouse management systems are just some of the many innovative projects we have run over the last years. Looking at our transportation management cases, we have seen a continuous interest in projects around optimising the truck load, finding the optimal route, and streamlining yard processes.

However, we have recently experienced a large and unexpected shift from our customers towards supply chain planning, which feels like unchartered waters for most of them, as they have just started taking their first baby steps in this field. Most organisations have spent years investing in their SAP warehouse and transportation management systems, but when it comes to planning, they are quite inexperienced and their main planning tools are spreadsheets with long macros. As a CTO of one of our customers shared with us, “there is very little we can do to further streamline our logistics processes and we have almost topped the customisation of our SAP systems. Planning is all new to us and we would like to explore the benefits of introducing this process”.

Along the same lines, an operations’ executive said: “During the pandemic we realised that generating a more accurate forecast and being able to better position our inventory across our supply chain network is more important to us than what we initially thought”. The above statements are also supported by other executives, who see planning as an opportunity to improve customer service levels and customer satisfaction, to reduce days in inventory, and above all, to increase revenue and drive a sustainable business plan, by responding to changing market conditions in real-time.

If we now look at the technology that is used to support this planning process, we will find a plethora of spreadsheets circulated within the organisation, or multiple planning systems that are not integrated with each other and, most importantly, do not “talk” to each other. This leads to contradictions, which means that every department works with a different set of data and complexity, weighing down the planning process and making it difficult to adjust plans when necessary. Also, the current IT landscape prevents effective scenario planning and what-if analysis, that both enable informed decision-making, so that organisations are ready when disruptions occur.

To respond to this increasing demand for planning solutions, we have decided to further build on our supply chain expertise and to heavily invest in SAP Integrated Business Planning (IBP); the innovative cloud solution by SAP, which makes supply chain planning productive, strategic and responsive.

For demand, IBP provides full demand transparency and accurate forecasting across the entire planning spectrum, from short-term and mid-term, to more strategic planning. It also leverages demand-sensing and advanced machine learning algorithms, which allow you -and every other decision-maker- to react quickly to immediate changes, by using external signals such as weather data, competitive pricing, and others.

The Sales and Operations feature supports planning across functions within the enterprise, to balance demand, supply, inventory, service levels, and profitability. The inventory pillar coordinates inventory planning throughout your organisation and optimises your supply chain network simultaneously, recommending ideal stock target levels for all distribution and production nodes in the network. The solution also supports tactical, rough-cut planning, as well as operational supply planning and creates supply orders based on prioritised demands, allocations, and optimised supply chain constraints.

IBP generates the optimal solution, based on up-to-date supply chain data and production, warehousing and transportation capacity constraints, which are fed into the planning system. Finally, with the Supply Chain Control Tower, you can achieve the visibility you need by monitoring, measuring, and responding to events across your supply chain network.

Whilst we are all fighting against our day-to-day operational issues, to keep our business running efficiently, and since we all acknowledge the need for accurate planning and its benefits, SAP Integrated Business Planning is an exceptional opportunity to stand out from competitors and to plan for the future; a future that looks brighter than ever…