What: Supply chain optimization tools bring sense to a complicated operation.

Why is it important: Demand planning software is becoming essential for businesses to be able to understand risks and respond to them quickly.

Tools like sales & operations planning (S&OP) help organizations consult with their factories to coordinate the production capacity of their production lines, among other things. Use of the tools have resulted in better forecast reliability and accuracy as well as reduced and forecast bias. Planning tools help companies increase product availability and decrease the number of back order to have a maximum capacity utilization and more efficient inventories.

S&OP and the pandemic

When COVID-19 first started spreading in China, S&OP tools were able to help companies shift their stock and speed up the supply chain in order to avoid shortages. The central communication, visibility, and control was crucial to avoid major disruptions in the global supply chain.

Integrated planning

There are still several companies that use Excel as a planning tool, which reduces their transparency to a minimum. Integrated planning tools open the visibility companies can have to their suppliers, whether it be a first, second, or third-tier supplier.

Last month, the Suez Canal was blocked leading to the disruption of many supply chains for 6 days. An end-to-end planning system provides companies with options and alternatives so businesses can make speedy decisions in times of crisis. In moments like this, time is of the essence and action plans must be implemented quickly to avoid disruptions in the supply chain.

Looking ahead

Blue Yonder, a supply chain software vendor, advises companies to ask themselves “What is going on in my supply chain right now?” While this seems like a straightforward question, it is difficult to answer for many companies. A cloud-based platform that enables petabytes of data to be quickly processed quickly makes it possible to monitor the supply chain in real time. It can also look ahead to predict future states of the supply chain using machine learning algorithms. Machine learning can predict disruptions that are coming before they happen, giving companies the ability to act in advanced.

Step to IBP

S&OP is just the first step in adopting supply chain optimizing technologies. The next step is IBP (integrated business planning), which will help companies see potential disruptions and changes in the supply chain for the next 18 months. By integrating market intelligence, leveraging CRM, improving demand sensing, and linking it to financial planning, companies can use machine learning to act on future disruptions proactively rather than reactively.

COVID-19 has solidified the importance of having an agile and resilient supply chain.

Pandemic accelerates implementation of IBP