In 2023, the major trends that impacted supply chain planning ranged from geopolitical conflicts, inflationary pressures, a recessionary environment, and extreme weather patterns associated with climate change. Last year demonstrated the sheer range and complexity of the macro forces impacting toplines, increasing costs, and eroding bottom lines at a greater pace than ever before.
If 2023 demonstrated anything for supply chain planners, it was that change was (and continues to be) the only constant in the contemporary era of retail. While supply chain planning is beset with increasingly complex challenges, it is also bolstered by the development of powerful digital capabilities.
In 2024, KPMG predicts that rapidly evolving technologies like generative AI, sophisticated data analytics, automation, machine learning, the Internet of Things, and blockchain herald the emergence of the “smart supply chain.” That is, a supply chain that empowers organizations with control tower visibility, transparency, and traceability from end to end; one where organizations can respond with agility to day-to-day requests and adopt a proactive rather than reactive approach to problem solving.
“Now is the time for organizations to overcome the inherent silos and enterprise systems that will restrict their progress,” advises KPMG. To this end, organizations should urgently prioritize extracting relevant, clean, and well-governed data, if they want to see a healthy return on investment in new technology. What does this mean for supply chain planning?
Agile Supply Chain Planning Does Not Stop With Planners
Stakeholders within the same supply chain often lack interdepartmental insight, but that’s not because of a lack of data. If anything, the proliferation of digital technologies, IoT devices, advanced tracking systems, and more has engendered a constant data onslaught.
This, in turn, has given rise to greater silos of data within an organization, which has spawned discrete data sets. Essentially, this widespread fragmentation of data has obfuscated a holistic view of the retail supply chain — and the onus to clarify that view cannot rest on planners alone.
While supply chain planning professionals can prepare for the forecasted demands of 2024 by increasing their analytical modeling capabilities and relationship management skills to maximize collaboration, adopting a point solution is not going to bridge the myriad gaps between supply chain silos.
An End-to-End Approach Can Consolidate Data Archipelagos Into a Singular Data Landmass
It’s not possible to visit all four of the touristed Hawaiian Islands in one day, and yet anyone with a 4×4 can become relatively well-acquainted with the layout of any one island in a matter of hours. This is the archipelago effect — despite their relative proximity, the residents of Oahu cannot see what the residents of Hawaii are up to at any given moment. The islands belong to the same archipelago, but not the same landmass.
Supply chain planners are facing a similar problem. Financial planning, assortment, allocation, and pricing are all invested in accelerating their supply chain planning. But there’s no use in approaching planning optimization on an island-by-island basis; this simply entrenches the tension between siloed business functions.
Instead, planning archipelagos need to be consolidated into a single landmass, preferably the kind that can be circumnavigated in a day’s work (or less). This can be accomplished with a single, dynamic, AI-optimized plan that responds to shopper demands while taking into account supply chain constraints, thereby unlocking exponential potential. An end-to-end solution that focuses on business outcomes rather than competing KPIs represents a better fit for planners across the supply chain.
How DSW Found a Cinderella Fit for Financial and Merchandise Planning
DSW evolved into a large footwear specialty retailer in the mid-2000s with stores averaging 20,000+ square feet and featuring approximately 24,000 pairs of shoes and accessories. While this format appears large, the fixed capacity of the store’s branded locations and limited backrooms to keep excess merchandise posed a strategic challenge.
Previously, DSW’s planning was done in dollars at a departmental level. The effect was that financial planning was occasionally at odds with merchandise planning, and assortment management had to be kept to an exacting degree for each market to accommodate limited storage space. Because planning existed in an archipelago, DSW was facing challenges with keeping stores optimally stocked.
But after they implemented Blue Yonder Merchandise Financial Planning and Allocation solutions, DSW was able to align financial and merchandise planning, as well as allocation and pricing, to project accurate inventory levels, keep stores optimally stocked, and even supply the right mix of shoe sizes.
“We went from having a mosaic of Excel worksheets, Access databases and numerous other independent pieces of technology to relying on a unified set of solutions that are customized to our business needs,” reports DSW’s Executive Vice President of Supply Chain. The result? “We’ve had increased sales, lower inventory, and increased margins. A lot of the success we’ve had…is due to the solutions and our ability to get efficiencies and productivity out of these tools.”
Accelerate Planning From Orchestration to Execution With an End-to-End Solution
The solution to archipelagic business functions does not lie in optimizing the retail supply chain in silos. The most efficient and effective way to drive bigger, faster, and more sustainable ROI is by implementing a single, powerful, end-to-end solution that aligns supply chain planning from orchestration all the way to execution.
Schedule your strategy call with a Blue Yonder expert today. They’ll explain how an AI-enriched, end-to-end supply chain platform drives more agile and impactful decisions by breaking down silos and unlocking the hidden value of your supply chain.
