The nature of managing a business on a global scale is undergoing fundamental change, driven by the expectations of the consumer, and it’s up to the world’s supply chains to keep up. The slow, siloed, sequential planning techniques of the past are no match for today’s fast-paced reality. That’s why it’s time to rethink supply chain planning and look to a different approach – concurrent planning.
In this guide, supply chain industry experts take a deeper dive into this new technique, covering topics such as:
- Why concurrency is essential for today’s complex global networks
- What concurrent planning is and the technology powering it
- How a leading components supplier is leveraging concurrency for exceptional results
- Four steps to enabling concurrent planning in your organization
- Looking ahead: Applying artificial intelligence and machine learning to supply chains
The nature of managing a business on a global scale is undergoing fundamental change and it’s up to the world’s supply chains to keep up. With concurrent planning, they can.
Rising supply chain expectations
Known more commonly as “the Amazon effect”, the online retailing behemoth has disrupted supply chain operations and consumer expectations dramatically by enabling same-day (and in some cases within two hours) delivery of goods to a customer’s front door.
With the addition of ongoing trade wars and tariff issues, political uncertainty, unexpected weather events, and the day-to-day small changes that impact the supply chain, volatility almost feels like a quaint way of describing what businesses are dealing with today.
Yesterday’s tools create inefficiency
The ongoing use of tools that use a cascaded approach to supply chain planning, such as SAP which has limited capability in managing these complicated and often simultaneous realities, adds even more strain. Static techniques built on outdated velocity expectations hamstring growth, curtail delivery abilities and put businesses at major risk.
Yesterday’s operational silos default to sequential processes and create planning lethargy which fosters a lack of trust between a company’s departments and its varying functions. In turn, this misaligns the organization, creating inefficiencies and loss of accuracy. These side effects spread across the organization like wildfire – there’s just no absorbing them.
Functional excellence does not translate into supply chain excellence
Current supply chain planning techniques focus on functional excellence: isolating one piece of the supply chain at a time, fine-tuning it and then excelling at it. On the surface, this approach should result in an excellent system, one that operates at peak efficiency from end to end. But it does not.
That’s because, between each function, misalignment compounds to create operational blindness. Expertise in capacity planning without understanding the impact on inventory is an example of this lack of transparency, as is a singular focus on inventory management without a connection to the forecast.
In many cases, the supply chain is still not thought of as an end-to-end system despite the fact that functional silos are at fault for hindering a complete view of the supply chain. As a result, people spend their days repeatedly managing the side effects and not tackling the central problem.
Consider for a moment driving your car.
There’s a reason why humans can drive – we have control over sight and sound and the dexterity required to match speed with direction simultaneously. Humans are designed for concurrent thinking: planning, sensing and responding to the events around them as they change.
But how difficult would driving be if four people were trying to perform the function together? Driver one is steering, driver two is providing directions, driver three has their foot on the brake, and driver four has their foot on the gas. Now imagine if none of the four are friends, but complete strangers. Strangers who don’t speak the same language. This is essentially what many supply chains are like. You still may be able to drive but the lack of concurrent thinking won’t get you very far in one piece.
Concurrency, be it in your car or in your supply chain, builds on the notion of “always on” alignment as it perpetually systematizes and codifies the synchronization required to do the right thing, in the right order, in the right timeframe, allowing you or your goods to arrive safely at the intended destination.
Perfection doesn’t exist
The desire to control the universe to the extent that planners can manage their supply chains by the power of will is unrealistic at best. Despite this, organizations have spent tens of millions of dollars trying to get close, focusing on metrics like “forecast accuracy” and celebrating improvements of five percentage points. The problem is there’s no breakthrough to be had because the perfect plan simply doesn’t exist.
Supply chains operate in constant flux and seeking perfection is futile. Organizations must become more agile and be able to predict, absorb and react to the imperfections.
This doesn’t mean accuracy isn’t important. Organizations absolutely need to have an idea of where they’re going. Those that are infinitely agile rely less on accuracy and are able to absorb the unexpected effects that manifest in business.
Eliminating the “I didn’t know” excuse
Concurrent planning drives end-to-end supply chain alignment and eliminates the age-old “I didn’t know” excuse as organizations have more time to respond to the unexpected.
Decisions made in an agile, concurrent planning environment come from understanding the impact those decisions have before implementation, which creates confidence in the planning decision-making process and results in a more reliable and cost-effective supply chain.
End-to-end connectivity is the key
We’ve talked a lot about the speed of business and why supply chains must adapt to keep up. A supply chain’s ability to adapt to ongoing volatility relies on end-to-end connectivity and the use of both prescriptive and predictive analytics.
For example, even the most effective algorithm won’t solve your supply chain problems if it’s only applied to a specific function. But, if it’s applied to every function across your supply chain simultaneously, “concurrency” or “concurrent planning” occurs.
Inevitably, something unexpected will happen somewhere in the supply chain. A connected, concurrent supply chain instantly handles the effects of these unforeseen events and the impact of the necessary adjustments.
Concurrent planning in action
Real-world applications of concurrent planning are creating positive results for the supply chains of some of the world’s biggest brands across a variety of industries, including life sciences, consumer products, and automotive
(to name just three). The technique has helped companies successfully mitigate supply chain volatility, from the smaller daily disruptions to the more impactful – such as the scarcity of a raw material – to the extreme, like a tornado or earthquake.
A natural disaster can have a profound and immediate impact on a supply chain. With little time to respond to the emergency, the ability to course correct on the fly, which is a core strength of concurrent planning, becomes crucial. Keysight Technologies, one of our customers, was able to dynamically adapt and keep its supply chain flowing when a devastating wildfire stopped operations at its California headquarters.
Similarly, managing raw material shortages is vital to the manufacturing of a product. The ability for a supply chain planner to have the “speed to detect and the speed to correct” when raw material runs low is critical to meeting customer expectations. Another customer – SMTC – is achieving higher levels of supply chain agility, enabling immediate response to changes in demand, supply, product and daily operations.
In life sciences, concurrent planning saves lives. Supply chain planning decisions go beyond revenue concerns, as decisions are made to ensure life-saving medicines are produced and delivered where and when they need to be.
Regardless of industry, a natural disaster isn’t the true measure of the benefit of concurrency. Instead, concurrent planning absorbs hundreds and even thousands of small, inefficient decisions, the sum of which creates a dramatic shift in their business.
Changing mindsets
Every single day, thousands of unexpected events occur, each seemingly immaterial when viewed on their own but epic in their impact when viewed as a whole.
But most organizations don’t think of their supply chains that way because they don’t measure the inefficiency of their supply chain holistically. And that’s because they were built in and still operate in silos.
Concurrent planning absorbs vibrations to eliminate the friction that impedes informed decision-making.
Conclusion
The speed of business is accelerating, and supply chains need to keep pace, whether it’s the “Amazon Effect,” tariff negotiations, an unplanned equipment shutdown, or a hurricane.
The world moves faster than it did a decade ago, so why are companies continuing to merely hope that decades-old practices will be the solution? Our environment won’t get easier to manage, so make the case for concurrent planning strong and clear.