Do Intelligent Planning Solutions Impact Supply Chain Efficiency?
Nick Ostdick - February 09, 2016
It’s a problem too many companies in the automotive supply industry continue to wrestle with: How can we infuse our supply chain planning with a greater level of transparency and efficiency?
Even with all we know about integrated and intelligent planning systems, so many companies still rely on ledgers, spreadsheets, or the know-how of veteran supply chain planner (SCPs) to ensure the fluidity of product delivery and warehouse management.
But what happens when that spreadsheet fails or is accidentally deleted? What happens when that (SCP) retires and new hires are brought in to replace him/her?
To ensure supply chain efficiency, a greater level of transparency is required across a multitude of different stages in the supply planning process. Optimized solutions and integrated planning software offer SCPs the ability to reduce the likelihood of supply chain bottlenecks and increase in inventory flexibility through trend analysis, past demand reporting, forecasting, and simulation capabilities.
While there's no denying the hands-on experience a seasoned SCP can bring to the table, it's integral to realize the power of intelligent planning software in helping an automotive supplier reduce costs, increase productivity, and modernize in today’s increasingly digitized market.
Original Equipment Manufacturers (OEMs) ramp down production as the end of the year approaches, which makes it a good time to evaluate the year’s supply chain efficiency and identify problem areas or concerns. Isolating spikes and dips in warehouse holdings, transportation volumes, and container inventory are key to implementing a planning strategy for the upcoming year, and intelligent planning software allows planners to conduct in-depth reviews and generate simple, integrated reporting to increase supply chain transparency and reduce overall costs.
In addition, trend analysis capabilities provide suppliers the ability to coordinate their planning efforts with different segments of the company – transportation, warehouse, and container management – and help create more seamless and consistent workflows.
But trend analysis capabilities can extend beyond the confines of traditional supply chain logistics to include a number of external factors that impact the supply stream. These analytics can offer manufacturers and suppliers great insight into industry-wide buying trends, which will help streamline all points of the supply stream.
For example, a recent report by Reuters indicated the current global decline in gasoline and oil prices sparked a significant increase in automotive sales last December throughout much of North America, and many economists believe this strong uptick in sales will continue throughout much of 2016. The ability to monitor this trend and produce predictive models on future fluctuations in the demand for trucks and other industrial vehicles can be crucial to manufacturers and suppliers ensuring enough product to successfully and promptly fill orders and ensure on-time delivery.
Referencing past demand
The ability to identify recent trends is crucial in creating efficient forecasting models, but a SCPs capacity to reference past demand for specific parts during specified windows of time is equally as important in ensuring supply flexibility and efficiency.
Product shortages or overages are quickly becoming less and less palatable for customers in today’s marketplace, and the margin for error relative to late deliveries and errors in product quantity is becoming slimmer and slimmer. Repeat instances of either can result in severe losses in productivity, revenue, and growth. The ability to reference past demand for products is essential in ensuring these products ship and are delivered on-time and in the correct quantities.
Integrated planning software also helps increase the visibility and transparency for past demand across an entire company, allowing for a more collaborative, coordinated effort in creating consistent, synchronized planning. The more individuals with access to a company’s past demand data, the more capable that company will be in creating accurate and efficient forecasting.
It would stand to reason one of the most valuable features of an automated planning solution is the capacity to generate comprehensive forecasting models for planners to help gauge demand spikes and dips in the coming weeks and months.
Again, let’s say Company A’s supply chain team is creating a supply chain plan without the use of an intelligent planning solution. The team may be able to analyze a year or two of data to help identify trends or the nature of past demand, but with such a small sample size of data it’s extremely difficult – nearly impossible – to generate any kind of accurate forecasting. The pool of data is too limited to draw from and at the end of the day will not only handcuff SCPs in predicting to the best of their ability what’s on the horizon, but it will also have ripple effects throughout a company’s sales and operations planning (S&OP) team.
Forecasting capabilities via intelligent planning software can also be useful in establishing sales and supply chain benchmarks to help promote and encourage a company’s organic growth. Establishing such benchmarks and creating an accurate prediction of supply and sales over an upcoming span of time better equips a company to determine how and where to best allocate sales, shipping, container and warehouse resources to eliminate waste and increase communication across a variety of positions.
It’s something you hear quite often from supply chain planners: “If only I had known then what I know now.”
Whether they’re referring to late deliveries, misallocation of products, or unforeseen dips or spikes in demand for parts, planners working without an intelligent planning system are often relegated to the ‘Could have, would have, should have result when it comes to supply chain snafus or miscalculations.
Let’s say Company A is concerned about the potential of a port strike and the ramifications in delivering products to customers on-time and in the correct quantities. Through an intelligent planning system, SCPs can input such an occurrence into a simulation, incorporating the accompanying variables, to help identify, analyze, and solve supply chain delays or breakdowns.
The ability to run simultaneous simulations for a variety of potential supply chain bottlenecks is a value-added proposition for any SCP looking for methods of increasing visibility and transparency across a variety of platforms, while at the same time reducing costs and increasing communication and collaboration company-wide.