Originally posted on Technology Evaluation Centers (TEC)
This article addresses expert’s supply chain trends and predictions for 2019. One of the trends discussed is the evolution and convergence of planning and execution in supply chains.
QAD DynaSys’ Thoughts
Shaun Phillips, product and market manager of the demand and supply chain planning (QAD DSCP) product in the DynaSys division at QAD, identified the following trends and made these predictions:
- “Analytics now” planning. The intertwined relationship between supply chain planning and advanced analytics will become more interconnected. In 2018, planners required planning analytics to support more fact-based decisions for traditional planning questions. In 2019, planners will increasingly use advanced analytics to uncover any issues and address new planning questions. Planners require analytics to expose actionable insights from the vast data volumes within the planning framework. To do this, they need to combine correlation and correlation techniques of machine learning with analytics and the copious volumes of real-time data available from the Internet of Things (IoT).
- The diminishing planning cycle. Although tactical and strategic planning certainly has an important place in the infrastructure planning and budgeting cycles, the focus on operational planning horizons (that is, the plan covering one fiscal year or calendar year) will increase and gain more complexity in 2019. In a modern day–sharing and–outsourcing gig economy, planning questions that are conventionally considered tactical are now being asked in an operational horizon. These new questions are driven by an abundance of near–real time data that poses opportunities and threats in the operational horizon.
- The need for supply chain agility—2019 is the year where the political news was dominated by Brexit, trade wars, and nationalism. On whiteboards globally, supply chains are being redrawn and alternate scenarios rehashed. The ideal strategy to survive and thrive in this changing environment is to have an agile supply chain that is conducive to change. An agile supply chain requires the ability to rapidly identify, evaluate, and execute alternative supply chain scenarios.
Being agile, however, contradicts what many practitioners have been taught over the past decades. Supply chain experts have traditionally focused on efficiency and consequently pursued the lowest unit-cost dream. By using optimization techniques, companies would seek to minimize procurement costs by absorbing larger-order quantities and longer lead times. This would allow them to plan for longer manufacturing runs to drive a higher return on assets and full-container load for land and marine freight in order to reduce transportation costs.
Agile supply chains exist almost as the antithesis of the aforementioned efficient supply chains. Agility requires the ability to detect, analyze, and execute the best possible business decision regardless of the traditional sources of supply and demand.
John Lash, vice president of product marketing at E2open, starts with his first prediction for 2019: the convergence of planning and execution finally taking roots. Granted, there has been talk of convergence for years but like many other big ideas it was ahead of its time. This is happening now because of new business realities, advances in technology, and cultural readiness.
For one, business leaders are confronted with the new-normal reality of fast-moving markets and changing customer preferences. Remember a few years ago when two-day delivery was a game changer? How quaint. Now it’s 2 hours, and that’s just one example. The same is happening across virtually every dimension of the business—and the pace of change is only getting faster.
Convergence of planning and execution provides a means to compete and win in this new environment. A decade ago this planning and execution convergence was seen as something cool that could give you an advantage; in the coming years, it will be a requirement for doing business.
Today’s technology enables this convergence. In the past, the convergence of planning and execution never really had a chance because the underlying technology just wasn’t there. It was like trying to run a smartphone app on a rotary phone. For the past 40 years, SCM was rooted (or perhaps more appropriately, shackled) to enterprise resource planning (ERP) systems. As such, it was bounded by the technology restrictions of ERP software, making it functionally siloed, enterprise centric, and batch or periodic.
That recipe does not allow for the convergence of planning and execution in supply chains. Converged planning and execution crosses silos and is continuous in nature. It allows companies to arrive at answers to questions such as, “How is what’s happening right now in execution affecting my plan, and what is the business impact?”
Going back to the phone analogy, ERP software was designed to manage internal (four-wall) operations in a batch mode (think of a rotary phone). In contrast, the planning-execution convergence requires an SCM software platform to manage multiple ecosystems continuously in real-time mode (think of a smartphone). The good news is that the smartphone equivalent for SCM is finally here.
Much of what drives, and disrupts, the supply chain happens outside the enterprise—at channel partners, suppliers, and outsourced manufacturing and logistics ecosystem partners. With the convergence of planning and execution, as well as with the newer technology capabilities, the modern SCM system should be able to predict how events outside the enterprise can affect the enterprise and react accordingly.
About Technology Evaluation Centers (TEC)
Technology Evaluation Centers (TEC) is a global consulting and advisory firm, helping organizations select the best enterprise software solution for their needs. TEC reduces the time, cost, and risk associated with enterprise software selection with its advanced decision-making process and support application, software selection experts, and extensive resources.
Over 3.5 million subscribers leverage TEC’s industry-leading research and detailed information on more than 1,000 leading software solutions across all major application areas. For more information, please visit www.technologyevaluation.com.