The positive impacts of digital technologies for supply chain planning are clear: sourcing is more cost efficient, bottlenecks are identified sooner, and logistics chains run smoother. But supply chain planning technologies have a business impact well beyond the supply chain. Indeed, new technologies in the supply chain planning space have the potential to help organizations achieve their goals for sustainability, profitability, and productivity.
In Understanding Digital Practices in Supply Chain Planning for Better Results, Gartner® analyst Ingrid Gonzalez McCarthy explains how supply chain leaders can measure the impact of their digital technology choices on their own department as well as across the business.
Here are four key takeaways from her research.
The same trends that are driving transformation across other business units are leaving a mark on supply chain planning technologies, too. Whether it is artificial intelligence and its application to supply chain forecasting, the internet of things for demand sensing, the cloud for supply chain workflows, or graph data models for scenario planning, these trends are changing the technologies that supply chain leaders deploy.
Understanding the impact and promise of these trends on planning tools demands developing a broader vision of the role and value of supply chain planning in an organization. McCarthy urges supply leaders to develop a big picture view to allow them to scale-up their technology and create successful long-term transformation towards an agile and resilient supply chain planning practice.
Achieving this agility and systemic resilience, though, can prove difficult. McCarthy notes that more than half of all supply chain leaders identify three major barriers to successfully achieving an agile and resilient supply chain with new digital technologies.
First is the complexity of the products that are designed to drive agility and resilience. Nearly 3 in 5 leaders (57%) identify this as the largest barrier to building a resilient supply chain.
A close second is the need to balance trade-offs between cost-efficiency and resilience/risk mitigation. 54% of supply chain leaders point to the difficulty in managing these trade-offs as a major block to building a resilient supply chain.
Third, just over half (51%) of supply chain leaders explain that contrasting metrics across organizational silos are a barrier to a resilient supply chain. While clear on their own goals and the best strategies to achieve them, aligning with and contributing to the achievement of the goals of the broader business can prove frustrating.
Overcoming these frustrations demands more than just implementing new technologies. For leading companies, it involves transforming their organizations from silo-driven businesses to truly business-driven operations.
In a traditional silo-driven organization responsibility is devolved across functional teams and decisions are taken with a top-down approach. Communication and interaction between different silos is difficult and this, in turn, leads to a lack of flexibility in operations.
In contrast, a business-driven organization sees functional teams aligned around common business objectives. All decisions are driven by the business objective, writes McCarthy, and functional teams find it easy to interact with other teams and react to their decisions. This sort of clarity and alignment not only leads to better and more resilient supply chains, but a new planning approach altogether.
Traditional planning processes are executed sequentially. Each step relies on a previous step being completed, and an action is concluded when all the steps are complete. Sequential planning is cost-oriented and siloed and doesn’t help in driving an organization towards resilience as a failure at any step can and does impact those that follow.
Supply chain leaders that help transform their companies to business-driven organizations also draw on new technologies to transform their planning processes from what McCarthy calls “agile-concurrent planning”. In an agile-concurrent planning process the different nodes of the planning process are connected and interact. With this approach, the impacts of a decision made in one part of the business on another part of the business can be identified, measured, and leveraged towards achieving the broader business goals.
Supply chain planning solutions like a Prescriptive Simulation Twin from Cosmo Tech can transform not only the planning practice but the wider organization, too. As barriers to adoption are overcome and as value is realized not only within the supply chain silo but across the company, the promise of digital tools can rapidly become a reality.
