Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - Nov. 15, 2012 -  

Trends and Insights on Supply Chain Planning Part 2

Our Virtual Panel of Industry Experts Covers a Wide Range of Topics on Supply Chain Planning and Related Technologies
 
     
     
  by SCDigest Editorial Staff  
     
 

Last week, we ran part 1 of our "virtual panel" of supply chain planning experts, wo looked at several key trends and issues relative planning technology and practice. (See Trends and Insights on Supply Chain Planning.)

We're back here this week with part 2 to close out the excellent discussiom.

Once again, are panelists are:

David Johnston, Senior Vice President for Supply Chain at JDA Software

Karin Bursa, Vice President of Marketing at Logility

John Bermudez, Vice President of Product Management at Infor

Lisa Kustra, Founder, Plan4Demand

Mark David, Vice President of Solution Management for Supply Chain Planning at SAP

SCDigest Says:
Kustra says that "planning tools are initially implemented in a way where they may just be replacing the current legacy functionality with the goal of optimization later. In many cases the optimization capability is never adopted."

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Plan4Demand is a consulting firm focused on supply chain planning. All the other companies are providers of supply chain planning software, also sometimes referred to as Advanced Planning Systems (APS). The participants were selected by SCDigest for their known expertise in this area.

The first question we wanted to explore related to in what areas planning software companies are investing their R&D dollars.

Infor's Bermudez has his company sees opportunities in better S&OP/Integrated Business Planning tools.

"We want to ensure that management has the tools to direct the business through precise integrated planning applications, not just react to the disconnected plans that are not synchronized to achieve the desired business results," he says, adding that "The newest version of our IBP solution also incorporates social networking and event management to provide a simple but rich environment for real-time collaboration across all parts of the organization."

He adds that more broadly, Infor is investing in mobile applications, cloud applications, social business applications and a consumer-grade user experience "delivered in an event-driven internet architecture."

Logility's Bursa says her company is "focused on helping companies have a clearer picture through better data, more comprehensive models and increased flexibility in comparing multiple plans and business scenarios. Our investments center on better analytics, S&OP, and optimization of demand, inventory, supply and transportation."

She notes that just recently Logility released its Proportional Profile Planning software. The solution allows customers to better forecast demand for "sub-SKU" items based on product attributes (like style, color, size, configuration), market factors and stage of life cycle. Typically, organizations have difficulty improving forecast accuracy at the sub-SKU level and streamlining the demand-supply translation, Bursa says (Note: this solution was a recent Supply Chain Digest "Cool New Product of the Month.")

Johnston of JDA says they are putting their R&D spend in such areas as tools for better management and execution of "segmented" supply chain strategies and digitally connecting supply chains across enterprises to take significant cost and cycle time out of the end-to-end supply chain."

He adds that JDA sees great promise in "Advanced pattern recognition, clustering and analytics that can scale to leverage all sources of insights and data and therefore make more advanced automated decisions."

SAP's David adds that "We see the need to understand a full picture of demand through traditional and non-traditional demand signals. This will include inputs such as web, social sentiments, and market research data, and making this data available to support planning processes. The area of Demand Sensing has become a hot topic, but where you get true business value is in Demand Response. So tying Demand Sensing into solutions where you can respond quickly and efficiently has high potential."

He also sees excellent potential for "in-memory" planning solutions that can dramatically reducing processing times and make new decision support tools available at the same time.

You will be able to see "information about your supply chain in real-time, with decisions and trade-offs done in full context. We see new solutions where could, as an example, combine supply information with market commodity pricing data to make a different type of supply decision, requiring processing of massive amounts of data in real-time."

Consultant Kustra from Plan4Demand also sees a lot of vendor investment in S&OP tools.

"Vendors are investing in S&OP. It is a simple process that really gets complicated because of poor access to real time data, individual silo mentalities, a poor understanding of the value of planning as a discipline in the company, and lack of executive vision and sponsorship at times," she says.

 

How Strong is the Current Market for Planning Solutions?

Of course, more R&D will come if the market for planning and related solutions is healthy. Is it right now?

Bursa says many businesses are still conservative when it comes to investment overall, but nevertheless spending on supply chain planning to lower operating costs.

"Many companies are reporting positive growth and returning to profitability but are still cautious of what the next 18 to 24 months will bring" she says. "We see companies turning to supply chain investments as they work to control costs and improve service levels."

Kustra says the market has certainly gotten better, but as a result of all the changes, companies are reconsidering their staffing needs.

"The market is better than it has been in years, even though we have a few more years to recover from the Great Recession," she says. "While companies are trying to hire, there are not enough people with the proper skills in the market are to meet demand. The market needs more analysts, problem solvers, and innovators and not as many worker bees today."

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Johnston agrees that businesses are still cautious, but still selectively making investment.

"The uncertainty of the global economy and political environment continues to create a very cautious spending environment. However, we still see leading companies taking the opportunity to invest in building platforms for leveraging the supply chain as a competitive differentiate to manage cost and accelerate growth – when and where growth opportunities exist," he told us. "Companies are also continuing to invest in bringing their practices global across their business units and regions to gain the advantage of scale."

David is pretty bullish on the planning market right now.

"Absolutely this is a good market. We are seeing companies engage in more types of supply chain processes and looking to make this a real differentiator," he says. "We are engaged in many strategic roadmap discussions across a variety of industries and businesses, and also seeing interest from less mature companies looking to create a foundation for supply from which they can grow."

Bermudez also sees a pretty robust environment for planning software.

"The market is very active. The recession has caused companies to strive to manage their supply chains more precisely in order to reduce costs while being more responsive to the customers, who are also being pressured by the recession," he told SCDigest."This does not mean, however, that companies are willing to throw money at the problems. They are intelligent buyers looking to get more out of the IT investments they have already made."


How Can Companies Get More Out of Existing Planning Investments?

 

The last topic for our panel involved how companies could use the planning software they already have more effectively.

Johnston said that companies should re-assess their current business processes "to identify areas where training is needed and where they can augment their effectiveness through outsourced process optimization and automation."

He also says building supply chain segmentation strategies should be a high priority to improve total supply chain performance.

David said focusing on the basics is always a good idea.

"There are some basics that may never completely change," he said. "These include ensuring you have a good governance process around master and transaction data, investing in user training more than just the initial implementation, etc."

David also says companies need to augment their planning softer with newer generation tools.

"Companies need to invest in insight and analysis in addition to core planning processes. Companies need to measure performance, track against targets to understand why they are having success, and ensure this positively impacts the business," he says.

Bursa says companies should regularly review how the software is being used and associated processes and skills to squeeze the most benefits out of existing investments.

"If it's been more than two years since the last training or the team has turned over by 30% or more, there is a strong need to refresh and review the current processes," Bursa says.

She adds that the supply chain team's potential could be seen in a whole new light "after taking a fresh look at the processes in place and how the team utilizes and interacts with the supply chain solutions in place. There may be features that were previously unknown or out of reach, or there could be a newer version of the software solution available which solves more complex challenges."

This is a topic Kustra feels especially passionate about.

"We have built our firm off the back of companies consistently not using planning tools correctly," she says. "The main reason is that planning tools are initially implemented in a way where they may just be replacing the current legacy functionality with the goal of optimization later. In many cases the optimization capability is never adopted, so companies are left driving in second gear when they have access to a six speed with overdrive."

Bermudez also focused on training to drive better results for companies from their planning investments.

"The best thing companies can do to use planning tools more effectively is to improve training and collaboration," he says. "Companies should encourage planners to get APICS certification. In the early days of packaged MRP software, this was a very common business practice. Unfortunately, it isn't any more."

Look for more virtual panels on key supply chain topics soon from SCDigest.

Agree or disagree with out panelists thoughts on supply chain planning? What would you add in terms of trends in SCP, or what leaders are doing? Let us know your thoughts at the Feedback section below.

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