Addressing the “White Spaces” in Supply Chain Planning

One of the trends I’ve been writing and talking about is how the clockspeeds of every industry are accelerating and how companies are having a hard time realigning their processes, organizational structures, and technology platforms to keep up with this rapid pace of change.

This is certainly true when it comes to supply chain planning, where the complexity and frequency of the process have increased while time horizons have shrunk.

“We find companies increasingly saying ‘My planning system is solving the problem that it was put in place to solve, but it’s not really answering the questions and solving the problems that we have today,’” said Allison Fowler, Senior Director of Planning at LLamasoft in a recent episode of Talking Logistics. “When you think about the ever-increasing changes in customer demands, supplier demands, and regulations at every node in your supply chain, companies have planning systems that can solve the decision at each node, but having something that can look holistically across all those options and on a week-by-week or day-by-day basis optimize those options is not how planning systems are built today.”

“Companies have been stuck on a world of heuristics for a long time and using those heuristics just isn’t cutting it any more,” added Fowler.

Not surprising, companies have been filling in the “white spaces” of their existing planning tools and processes with (you guessed it!) Excel spreadsheets.

“What we find is that companies have been creating planning scenarios one-off, external to the planning system, using a number of Excel spreadsheets,” said Fowler. “But when you think about the massive amount of data that is needed to make these [planning] decisions and the inability to use [holistic] optimization and run scenarios in a truly collaborative way outside of just a spreadsheet has been difficult for companies.”

This past June I attended LLamasoft’s user conference (see my takeaways post) and one of the new concepts introduced there was Planning by Design, which was described as “building blocks to improve your current planning capabilities through design technology.” What does that mean exactly?

“As our customers started to use supply chain design technology — network design, inventory and transportation optimization, simulation — and design techniques to solve these planning questions on a more frequent basis, we started calling that Planning by Design,” explained Fowler. “So they’re solving supply chain planning problems with supply chain design technology.”

Fowler compared it to how we used to rely on static maps and someone giving us directions to drive somewhere but now we all use navigation apps that give us turn-by-turn directions and are able to re-optimize our routes in real time if traffic is detected ahead.

“Planning by Design is a way to give planners more of this optimization and simulation technology who can then make better and more rapid decisions, and as the surroundings change, instead of having to call their friend or build an Excel spreadsheet to figure out where they’re going, now the optimization technology is just telling them the answer before they even ask the question sometimes,” said Fowler. “The ability to take those [optimization and simulation] techniques and deliver them into the hands of planners is what it’s all about.”

I encourage you to watch the rest of my conversation with Allison for additional insights and advice on this topic, including how the lines between supply chain design and supply chain planning continue to blur and the impact that’s having on organizational structures and technology needs, and some examples of how companies are using this Planning by Design approach to address the “white spaces” in their current supply chain planning applications and processes.

After watching, post a question or comment and keep the conversation going!