Published December 8, 2016
Just as advanced supply chain planning was reaching for new heights, for example, real progress in expanding Sales & Operations Planning (S&OP) to integrated business planning, from functional process planning models to Advanced Planning Systems (APS), from simple data analysis to advanced analytics, and from network analysis to network designs for fulfillment, along comes the “big bang” of the Digital Era.
Digital thinking and its components have only just begun to impact supply chain planning. Yet, its business disruptions are more evident every day, as Amazon, and other online businesses have not only grown rapidly, they have rendered the traditional planning methods largely obsolete. Demand planning, for instance, has been imploded by the dramatic gains in digital shopping that have exceeded almost all predictions made just a few short years ago.
Consider some of this year’s Thanksgiving holiday early results for consumer sales:
- Black Friday: $3.34B (up 21.6% )
- Cyber Monday: $3.39B (largest online sales day in history)
- Thanksgiving Day: up 14%
- Holiday weekend: $9.36B (up 16.4%)
The results are expected to be up for B2B sales as well, over the November and December business season.
It is not difficult to realize that supply chain planning has to be more in tune with online sales and fulfillment. The challenges for all companies whether, Retailer, Wholesaler, CPG, Industrial Products, or other are complex and, in fact, located in “uncharted territory,” as stated by an Oracle Executive. This makes the design of practical “planning scenarios” as challenging as analyzing and ranking them by probabilities of occurrence.
As our CEO Jim Tompkins has spoken, blogged, and advised, digital disruptions are a major occurrence and all companies must get started developing their own digital strategies and roadmap for survival.
The new challenge for supply chain leaders, then, is planning for the new futures and adapting to these at the same time, with speed, flexibility, and agility unlike any before. It is time to plan for new operations strategies and models, those that rely more on demand sensors, cross-process collaboration, and digital integration, to formulate scenarios quickly, evaluate them rapidly, and execute on them effectively. Concurrent planning and continuous planning requirements are finally here and must be applied now. Terms such as “ecosystem”, “platforms”, and “customer centricity”, must become part of the planner’s every day vocabulary and mind-set. Moreover, the several components of the Digital Era (Internet of Things (IoT), Social Media, Artificial Intelligence (AI), 3D Printing, etc.) must be understood well enough to consider their inclusion in supply chain plans.
Do not overlook the issues of transformation. For the new supply chain plans to work, the execution process must be relentless and imbedded with continuous change management. The underlying mind-sets of supply chain operators have to be transformed to the new Digital Era, or they will either resist the changes or revert back to yesterday’s comforts.
After all, supply chain plans have to recognize the likelihood of execution success, and mitigate the risks, or its planners will be lost in the chaos, where whatever can go wrong will.
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