Everyone starts planning in spreadsheets but there is a point where spreadsheets break down. This breakpoint is driven by complexity of planning, business growth, data size, domain expertise or maybe the planning team simply had enough of it.
Over the past 20 years Omnics Team has worked with numerous companies and a wide spectrum of supply chain issues. One common theme we have seen is that most companies have spent a significant amount of money implementing ERP and Best-of-Breed software solutions, but when it comes to tactical and operational planning (4 to 52 week horizons, demand, inventory & supply planning) there’s one software tool that stands out. Any guesses? Yes, it is Microsoft Excel. This is true primarily of small/mid-size businesses but also many large, global companies. Everyone starts planning in spreadsheets but there is a point where spreadsheets break down. This breakpoint is driven by complexity of planning, business growth, data size, domain expertise or maybe the planning team simply had enough of it.
Today's supply chain planning solutions are an 'excel' chaos
Where does it all begin?
Companies implement multiple systems or one single ERP to handle fundamental functions like finance, CRM, PLM, MES etc. These functions are relatively well defined and have fairly well-defined processes and data standards. However, when it comes to planning it is not ‘one-size fits all’ solution. Either the solution is too generic or it is too complex to meet the company’s planning requirements. This results in the birth of an excel planning tool. It works well at the start because there is collaboration by a small, close knit planning team. Typically such solutions are layered with visualization software to provide graphical outputs. As the planning complexity grows the data collection, tool update, verification and reporting outputs from the tool take days rather than hours and soon it becomes a (brutal) monthly ritual. One fine day, the owner of this spreadsheet leaves the company or changes his/her role and a new owner is found...and the cycle continues.
In more than 90% of cases, planning data is discarded or lost due to constraints of spreadsheet planning. Everyone in the organization recognizes the problem but 'urgent' takes priority over 'important' and the fire fighting continues. A shift away from spreadsheet planning is important to leverage the historical planning data for subsequent planning cycles and business planning. Planning is supposed to be smart, automated, scalable, fast and objective, but reality is far from that. The Excel planning tools are not optimal and this impacts the company's top and bottom line.
Digital business era needs automated and intelligent supply chain planning
So what can be done? For this post, let's start with few basic principles that need to be followed:
‘Important’ needs to take priority over ‘Urgent’ : The spreadsheet scenario described above becomes exponentially complicated and unwieldy as days, weeks and months go by. Make it a priority to fix it before it implodes. Put together a ‘tiger team’ with domain expertise in planning along with senior operational leaders. Once you have a foundational solution, stay focused on continuous improvement to make your planning team efficient and effective.
Planning data structure and logic: It all starts with data. A planning solution requires a 'unified' data structure that not only collects the data and reports it but also connects the dots between data sets and categories. This data structure needs to be aligned with your product & go-to market (channel) strategy. The planning logic could be unique or may become unique as business conditions change, so tweak the logic as needed. Implement optimization algorithms and 'what-if' simulation capabilities to drive the best results.
Avoid ‘one size fits all’ approach: No two supply chains are the same and thus plug-n-play, out-of-box etc. software in supply chain planning is a myth. You cannot fit a generic software to a specific supply chain planning process. Implement a 'focused' planning solution that works with your underlying transactional systems. Not vice-versa. And remember that software is not the end goal...it is the means to an end!
Implementation: Implementation of planning solutions is unlike others due to the complexity of the problem at hand. This problem is exacerbated because planning is cross-functional, cross-border and cross-organizations so ‘think big, act small’. The implementation can be managed through a ‘minimum viable product’ approach. Do not try to automate everything from the start or fall into the classic "death by features/functionality' trap. Breakdown the process map to identify key areas that would provide immediate results to make the life of your planning team easy without making this a year (or two) long process.
Machine Learning: There is a hype around this today. Math is there...applying that math correctly to a use-case is the challenge. Planning data holds wealth of information about your supply chain operations, actions, results and business outcomes. Your previous plan cycle data is as important as your current plan cycle data. Augment human intelligence with good data and software technology; this is where Machine Learning plays a significant role. Make machine learning/AI/CI (whatever you want to call it!) as Step 10...we need to go from Step 1 to 9 first.
One of my favorite book is "Think Big, Act Small" by Jason Jennings...applies to supply chain planning excellence journey too.