Cross Functional Planning as a Way of (Business) Life
Remember the good old days when planning was something you did once a quarter just to make sure your annual plans were still on track? We don’t live in that world anymore. Today’s complex, global, customer-driven world requires all companies to be agile and responsive to constantly changing customer demand, competition, disruptions and geopolitical events. That means supply chain planning, and the global visibility and execution that goes with it, must now be a way of life, not an occasional event.
Constant Planning requires Continuous Visibility and Communication
As a salute to the 50th anniversary of Apollo 11, let’s compare supply chain planning to that moon launch. What if those designing the launch vehicle weren’t communicating with the flight planners who know how far the spaceship has to travel and at what speed? What if those responsible for deciding how much food, water and fuel should be stored on the spaceship weren’t communicating with the flight planners on how long the trip will be?
It sounds ridiculous, doesn’t it? But isn’t this, in fact, how your supply chain planning is done? Are those designing your launch vehicle (network design, factory planning) communicating directly with flight planners (transportation planning) on projected transportation time and cost impacts of various network layout and materials sourcing options? Are those responsible for deciding how much cargo to carry next week, next month, next year (inventory planning, distribution planning) communicating directly with network designers and factory planners to understand where the inventory is coming from and what the constraints will be? How can you expect to control costs and meet customer service levels without this constant visibility and communication?
Mastering Cross Functional Planning, Visibility, and Execution
In most companies, visibility is more of an aspiration than a reality. You might have some software called “Master Planning,” but does it seamlessly consider all of the factors hinted at in our moonshot example? Is it possible that your network design, factory planning, inventory optimization and transportation modeling are operating in functional silos?
It’s not just about communicating requirements, e.g. “I need X-amount of inventory at these locations by this date.” The key to cross-functional planning, visibility and execution, often called supply chain orchestration, is to also know all of the constraints. How much of each product each factory or supplier can produce in a given timeframe; how long will it take to ship materials or products from various production facilities to each destination; what are the travel times and cost tradeoffs of each producer; what contracted buying commitments and forward-buying incentives must be factored in; what are the impacts on budgeted costs and customer service levels; what are the tradeoffs and constraints in each option; etc.
True orchestration integrates all of the requirements, constraints, production options, transportation considerations and costs into a single intelligent view of what’s possible and what the tradeoffs are so that decisions can be made that are best for the whole company and for customers. Without this integrated approach and technology, decisions tend to be made that optimize only one area of the business based on disconnected goals and incentives. This often results in sub-optimal performance for the business as a whole.
Planning as a Way of Life
The only way to achieve effective planning orchestration is to integrate the technology that supports the main planning functions, including market planning, procurement, manufacturing planning, distribution and transportation. JDA Supply Chain Strategist connects all these functions by creating a digital twin of the supply chain and applying optimization algorithms that evaluate the tradeoffs between costs, constraints, customer service levels and business objectives.
JDA goes further, however, by also integrating network design and optimization capabilities, inventory optimization planning, and transportation modeling with Supply Chain Strategist. This integration creates a cross-functional orchestration plan that continuously optimizes all aspects of the supply chain, not just one or another siloed function.
By connecting all supply chain planning functions into a comprehensive orchestration plan, JDA enables companies to intelligently optimize their complex supply networks. The proof is in the results. Analysis shows that JDA’s integrated solution enables customers to:
- Reduce supply network costs by 5%-10%
- Reduce network inventory by 15%-40%
- Reduce transportation expenses by 10%-30%
Of course, we all know supply chain requirements are always changing—customer demands change; new products are introduced while older ones are retired; new markets and new partners are added; geopolitical factors arise; and disruptions occur. That’s why adopting planning as a way of life bears fruit. This integrated planning regime will reoptimize your supply network as situations, requirements and strategies change, continuously driving value and benefits long term.