Are you overcomplicating your supply chain planning?
WORDS: Emilio Della Bruna and Charmaine Law
When organisations struggle to deliver accurate and timely demand and supply plans, a lack of information is often thought to be the cause. Often, the real culprit is elsewhere.
Business requirements, and the underlying supply chain systems and processes, are commonly overly complex. Organisations must focus to streamline their processes to ensure their supply chain planning supports business goals.
In this article we identify signs that you may be overcomplicating your supply chain planning. We shall walk through the underlying causes of this complexity, and what you can do to address them.
Recognising the signs
Symptoms of overly complicated supply chain planning processes include:
- Supply chain teams struggling to meet deadlines of the planning cycles, leaving little time to do value-adding analysis
- Planning systems being very costly to maintain and often seen as a bottleneck
- Decisions taking too long to be taken due to unresponsiveness from the planning revised scenarios after management reviews
If left unchecked, these symptoms can lead to lost opportunities, unnecessary costs and frustrated senior management and supply chain teams.
Understanding the causes
Overly complex supply chain planning processes typically have three main causes:
- Stakeholders requiring excessive detail. CFOs wanting visibility of every supply chain decision to ensure revenue, profit and working capital targets are achieved can be counter-productive. Similarly, sales and marketing teams might want supply chain plans to reflect every change in demand forecasts to ensure product availability. This can limit the ability of your supply chain to react quickly to market changes and emerging opportunities.
- Lack of supply chain planning and execution prioritisation. When supply chain teams are overly focused on low-level data processing or dealing with internal politics, this significantly limits their capacity to focus on more strategic, value-adding activities.
- Excessive dependence on technology and automation. The planning systems in place are highly complex to operate and not supported by a fit for purpose operating model and trained resources.
Addressing the problem
There are a number of things organisations can do to streamline overly complex supply chain planning models and improve their ability to deliver a plan that is flexible, timely and actionable. From our experience, here are some of the key steps to adopt:
Step 1: Adjust processes and policies level to match your current supply chain maturity.
Adopting best-in-class processes and systems is of little benefit if your organisation is not yet ready to operate them. Review your existing processes and policies with the planning team and key stakeholders to agree on the key business requirements and define the appropriate level of planning for different business needs. Establishing strategic, tactical and operational planning processes, with a focus on not overcomplicating the process will help to define plans with sufficient granularity for the decision-making at each level.
Step 2: Align your systems to the revised business requirements and processes defined.
Once the business requirements and planning processes have been agreed, the gaps and opportunities in the current technology landscape can be assessed to leverage the capabilities of the systems in place and identify upcoming solutions in the market. This should form the basis of a technology roadmap to support the agreed supply chain operating model.
Step 3: Upskill the supply chain team with the right skills and capabilities.
After streamlining the supply chain operating model, and the ancillary processes and policies, organisation must ensure their supply team has the capability to execute such processes. It is vital to assess the skills and capabilities of team members against the expected roles and responsibilities. For example, the team may lack the stakeholder management skills needed to ensure compliance with new planning processes. Development plans can then be created to address the gaps. This process will also identify whether the level of skills and capabilities required for the proposed operating model is unrealistic for the company to achieve – in which case the operating model should be revisited.
These steps are not exhaustive and may vary by industry and according to the circumstances of the individual business. However, such steps serve as a structured starting point to identify the most appropriate solution for your business.
For more information on how Efficio can help your supply chain organisation to excel and deliver superior results, click here.