Four Ways for Driving Agility with Integrated Demand & Supply Planning
Already in crisis, the world’s supply chains are facing additional obstacles in the wake of Russia’s invasion of Ukraine. Just as port congestion was beginning to clear, companies find themselves facing a new set of challenges, including product and materials shortages, blocked transportation lanes and airspace, and rising fuel costs. While the safety of human life and humanitarian needs certainly should be our primary focus, supply chain professionals also need to recognize that this war will bring long-term economic and logistics impacts.
Meanwhile, health organizations continue to warn an already exhausted public about new COVID-19 variants that could also affect global health and business continuity.
In a world that’s now defined by volatility and uncertainty, there is one critical competency that every business must invest in — and that’s agility. No matter what challenges the future delivers, companies need to be prepared to act swiftly and strategically in response. Companies must have the capability to sense changing conditions at the earliest possible moment, re-plan instantly and respond in a synchronized manner across key processes. It’s no longer a choice; it’s an imperative.
The Power of the Digital, Connected Supply Chain
The one bright spot over the past several years is the increasing availability and easy accessibility of advanced digital supply chain technologies that enable agility.
Supported by artificial intelligence (AI) and machine learning (ML), companies have never been more capable of digitally connecting the entire, end-to-end supply chain from demand and supply to increase visibility and identify disruptions, anywhere across the network, in real time. Equipped with scalable modeling capabilities powered by digital twins, every organization can now sense issues, collaborate on scenarios in digital situation rooms, and enact an orchestrated, synchronized response across the entire value chain, from procurement to transportation and fulfillment.
Advanced optimization engines, such as those underlying Blue Yonder’s Luminate Planning™ solution suite, position organizations for unmatched agility in the face of continued uncertainty in world markets. Specifically, Luminate Planning enables Integrated Demand and Supply Planning workflows to:
- Create more accurate, evolving demand forecasts that recognize how large and small events will impact customer behaviors. The benefits of increased forecasting accuracy include improved agility, as well as sales, margin and productivity gains.
- Identify the root causes of demand or supply deviations, so the end-to-end supply chain can course-correct and consistently align supply and demand via a master planning process. Companies can avoid lost sales, stock-outs, higher inventory carrying costs, margin erosion and other consequences of unmet demand.
- Use an AI-enabled process to assess resolution options and capitalize on informed, automated recommendations. By running fewer scenarios based on predictive analytics and intelligent guidance, companies can gain speed and agility.
- Leverage a connected, platform-based approach to continuously and automatically monitor upstream and downstream conditions in real time. Planners can work smarter, not harder by allowing AI and ML to resolve exceptions by intelligently balancing costs, service levels and other end-to-end outcomes.
Not only do these four strategies connect the entire supply network in real time, for early detection and resolution of disruptions, but they also create an autonomous, self-correcting and fluid supply chain that’s optimized for agility.
The Proof Is in the Results
What are the rewards of applying these four strategies to maximize your agility and master ongoing volatility?
Blue Yonder commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) companies can realize by using Luminate™ Planning to adopt these four strategies.
For a typical organization with $10 billion in revenue, 15 million item locations and a starting inventory of $1 billion — representing 10% of revenue — Forrester predicts that the payback can include:
- A 10% improvement in forecast accuracy, due to data-driven approaches that look at large, global events, as well as local news, weather and social media influences
- A 10% reduction in inventory, for a three-year value totaling $99.7 million, by matching demand and supply far more accurately based on data science, AI and ML, predictive analytics and proprietary algorithms
- A reduction in inventory carrying costs, valued at $61.5 million over three years, achieved by right-sizing production and optimizing distribution across every market
- Revenue gains, as stockouts are reduced by approximately 25%, lost sales are decreased and increased satisfaction spurs customer loyalty
- A decrease in dead inventory write-offs as greater inventory productivity and sell-through drive financial gains of $5.3 million over three years
- A reduction in transportation costs, valued at $20.6 million over three years, as optimization engines balance delivery speed and service level with cost controls and asset utilization targets
The Only Numbers That Matter: Your Metrics
It’s an incredibly challenging time to be a supply chain professional. Every day, we’re bombarded with frightening statistics about labor shortages, port congestion delays, production shutdowns, fuel costs and transit times. In the face of these numbers, it seems impossible to profitably run a supply chain today.
But it’s essential to stay focused on the only numbers you can control and improve: your own internal numbers. Even in an extremely volatile environment, Blue Yonder’s Luminate Planning helps customers optimize their supply chain operations and improve key metrics, such as forecast accuracy, inventory turns, fill rates, logistics costs and out-of-stocks. Because they far exceed the cognitive abilities and capacities of human planners, Blue Yonder’s AI- and ML-enabled solutions can see all the options — and make smart, strategic recommendations that transform a difficult set of conditions into a win for your company
Blue Yonder positions companies to react with speed and agility as conditions change, to keep all key metrics on track despite changes in external conditions. Ultimately, improvements in these critical metrics correlate to higher revenue, lower costs, better gross margins and increased working capital. If the past few years are any indication, volatility and uncertainty are only going to grow. To stay ahead of competitors, you need to master volatility and move with agility by putting the power of Luminate Planning to work for your organization.