In many businesses, sales generation activities and operational activities are disconnected, so they struggle to optimise resources to fulfil the demand for products. This can result in conflicting objectives and foregone business opportunities. So when it comes to fixing the disconnect between supply and demand within your organisation, you need collaborative planning software so that you can feed the right data to the right people at the right time.
Here’s how collaborative planning software can solve that disconnect.
- Why traditional solutions can’t fix the disconnect between supply and demand
- What can cause the disconnect?
- Why collaborative planning software is the solution
Why traditional solutions can’t fix the disconnect between supply and demand
Just think of all the things that can happen in your business environment that can disrupt your carefully crafted plans. Competitors suddenly disrupt your market with technology innovation, a major event comes from the left-field and causes a sudden surge in demand that you are not prepared for, or a natural disaster interrupts your supply chain.
However, the variety of traditional planning tools that are used for planning no longer enables businesses to formulate the best response quickly enough.
These solutions are typically rigid and unfit for planning purposes. They don’t provide the relevant data when required, so companies can’t collaborate and adjust their plans. Now consider if your planning processes are flexible enough to respond quickly by adjusting to variables across your supply chain to meet a sudden surge in demand, or to shift purchasing and production to alternative suppliers and sites.
Traditionally, businesses have used a series of execution systems - order management to purchasing to scheduling systems. Everything that is designed to run the business every day. These systems are intrinsically inflexible, as their purpose is to enforce a consistent process that is predictable.
ERP software providers have released modules that allow you to try and plan for some of this and push down into the execution systems. More recently, cloud solutions software has also tried to bridge this planning gap. And, of course, many have chosen to use the most popular tool of all time… Microsoft Excel.
While there are plenty of S&OP tools available, they can still prove to be challenging. ERP vendors are difficult to implement, rigid and costly. Also, while smaller vendors have point solutions carefully designed to serve a particular process, you’ll end up with a lot of tools which serve the individual processes. However, you’ll lack the end-to-end visibility to manage and make decisions effectively for the entire S&OP process.
As there’s no flexibility or no central place with all the plans, decisions are supported by taking data from various systems into MS Excel, which is a personal productivity tool, not generally considered fit for enterprise planning.
What can cause the disconnect?
Let's say you currently work in the supply or demand planning, supporting sales, marketing, production, purchasing, or inventory. This means there could be five different managers, each with their own plans each period. All updating forecasts and making adjustments in response to a dynamic business environment.
The issue, however, is that all managers have their own model and process to gather, consolidate and report data. These are all disconnected, so planning is done in silos. This can result in ineffective use of resources and time, inefficient decision making and inability to evaluate future scenarios and see the financial impact of potential decisions.
The alternative to this is integrating demand and supply planning so that all of the data and plans are interrelated and people can collaborate.
Sonos, the consumer electronics company, has end-to-end visibility across plans. This frees planners’ time for analysis. Heather Williams, Senior Director of Integrated Business Planning said: "Our ability to collaborate internally is vastly improved, which reduces the stress level and really enables a better team relationship".
Think of it as a more pragmatic approach that can effectively match demand requirements with supply capabilities to achieve service levels and inventory targets - while managing supply chain risks.
For example, a marketing promotion might increase the demand for a particular product. By working in silos or using traditional methods, the relevant departments won’t share information, goals, tools or priorities. This can cause further issues such as not having enough stock of a popular product or having too many products that are obsolete because they won’t sell. What’s important is the ability to track the effectiveness of this promotion and react quickly to any changes.
So, you need the capability to give supply a view of what sales expect to sell to that they can produce a demand-driven plan and adjust immediately to demand changes - that’s where collaborative software can help.
Sales also have visibility of supply constraints and this, in turn, drives collaboration to achieve and maintain balance between Demand and Supply. Management has a view and joint ownership of the decisions they can take to ensure that they don't miss market opportunities, or over-promise and under-deliver, slow down a demand generation campaign to match production capacity or find a way to increase capacity, for example.
Collaboration is key to ensure that nobody has to play catch up which can slow down your business and let your competitors get ahead. Having to rush orders through suppliers can be costly. This is why specialist collaborative planning can help and is ideal for the supply chain.
Why collaborative planning software is the solution
Your business needs a solution that can update the right plan for the entire supply chain at once. Look for one that’s an enterprise planning solution which is both scalable and secure. It should also be able to handle the entire business and be flexible enough to model real-world scenarios that will inevitably impact your business.
It's crucial that demand, supply and inventory plans are connected, as this drives collaboration and planners for each will benefit.
Benefits of collaborative planning for demand planners
Currently, you might face several demand planning issues. Some examples include difficulty keeping promised dates, writing off obsolete or expired products, not having the right stock in the right place at the right time and more. With effective collaborative planning software in place, your business can enjoy the many benefits.
- Increased responsiveness to changing market conditions.
- Reduced expediting costs.
- Increased inventory turns.
- Inventory and safety stock reduction.
- Fill rates and service level improvements.
- Improved short-term forecasts.
The ideal software can be used with legacy demand planning tools to drive better cross-functional input for consensus demand planning. As a result, you can benefit from more accurate demand plans and either reshape or alter demand and supply plans.
Benefits of collaborative planning software in supply planning
In supply planning, you might realise that you have high inventory levels for unexplained reasons. The business might also suffer from high indirect costs, disconnected manufacturing and distribution costs or even have limited collaboration with suppliers which cause delays.
Here’s how the right collaborative planning software can help:
- There’s an improvement in collaborative planning and execution.
- Capacity can be improved by 10-20%.
- You can see a 20-30% improvement in fill rates and service levels.
- Forecast accuracy can improve by 25-80%.
- You can finally reduce unnecessary levels of inventory by 25-60%.
- Achieve a total supply chain cost reduction of 25-50%.
S&OP Software that drives collaboration can allow you to accelerate your sourcing, replenishment, make-or-buy, production, inventory, capacity and material decisions in real-time. It’s easy to collaborate on multiple scenarios simultaneously to evaluate your optimum response to disruptions and effortlessly adjust planning models.
The software you choose to implement in your business needs to bring together the people and processes that are involved in both demand and supply planning. Both are interlinked and it’s vital that you get them to collaborate effectively. Everybody needs to see the impact of changes so that they can adjust and respond in a timely manner.
To help make your decision a little easier, we’ve created a checklist to narrow down your software choices.
Fix the disconnect between supply and demand with the right collaborative planning software
Inaccurate forecasting, missed deadlines, an unwanted surplus of stock - they’re just some of the potential problems encountered if your business isn’t utilising the right software. There are countless options available, so it can be difficult to know which is the right fit for your requirements.
In the guide below, you’ll find out the benefits, the problems it can solve, the key features you should look out for in your search and much more. To get your free copy, click on the link below.