COVID-19 and supply planning in the digital age

Optimising your supply chain through the crisis and beyond

The COVID-19 crisis is forcing supply chain planners to make smart and fast decisions to respond to the disruptions happening across global supply chains. The weaknesses of traditional, sequential planning methods are now becoming clear, and are reinforcing the need for a digital planning experience. For many companies, this will be a defining moment in their digital transformation.

As supply chain teams struggle to cope with the COVID-19 global pandemic, most have mobilised a crisis response team and are in firefighting mode to secure raw materials and components and protect supply lines. That, combined with the continuing unpredictability of the outbreak, has added new urgency to the need to increase the speed and quality of decision making.

Traditional, sequential planning is not fit for the job

In the case of the virus outbreak in Asia, companies with production facilities or suppliers in that region had only one or two weeks – from the onset of the COVID-19 until the day of the lockdown – to execute a supply chain contingency plan, or find alternatives. That’s not enough time for the slow, sequential planning processes that many organisations use today.

A traditional planning experience with teams working in silos and data gathered manually across disconnected spreadsheets could take weeks just to determine the exact impact of a lockdown. As a result, the response to the disruption is reactive and uncoordinated, and the impact of the crisis is hitting many in full force.

Traditional, sequential planning is not fit for the job

It's time for a digital experience

In contrast, companies that have already invested in digitising their supply chain planning are better equipped. Their planners know exactly which suppliers, shipments, inventories and customer orders are at risk - which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites. On top of that, these companies have the ability to recover faster than the competition, and have as such the opportunity to gain market share. 

But what exactly does a digital planning experience like that look like? To answer, let's look at a use case on how planners could have responded to the current pandemic: 

  • The planners are notified that the manufacturing facilities will most likely shut down for an uncertain amount of time. 
  • Immediately, the responsible planner takes action and performs what-if scenarios to provide real-time answers to questions like:
    • Do we have enough buffer stock to bridge the shutdown?
    • When will we run out of stock?
    • What are the critical components that we need to secure?
    • Which customers will be affected?
    • What’s the revenue at risk?
  • Once the impact of the shutdown is clear, planners look for mitigation measures. The intelligent platform shows a digital twin of the entire network, which allows the planner to find alternative sourcing. Through what-if scenarios, they can determine the financial impact of these measures.
  • A predefined workflow within the internal social media platform facilitates a quick approval process.
  • Once approval is confirmed, plans are changed and orders are created in the enterprise resource planning (ERP) system for execution. 

This use case is not in the distant future, but already implemented in companies around the world. It’s become essential to many operations, because it allows them to make quick and qualitative decisions in case of disruptions, both small (e.g. shipment delay) and large (e.g. factory shutdown).

That’s what digital planning is all about: the use of digital technologies such as the cloud, big data, robotic process automation (RPA), artificial intelligence (AI) or machine learning (ML) to improve the quality of planning decision-making in the supply chain. However, developing a digital planning experience entails more than leveraging technology. The real test is stepping away from the siloed way of working and establishing an end-to-end planning philosophy, mindset and culture.

What are the critical elements to building a digital planning experience?

To answer that, let's look at the journey of one of our clients in the consumer goods and retail sector. Together, we implemented four main elements needed to digitise the planning picture and achieve a proactive planning approach instead of reactive firefighting:

1. Build and end-to-end planning framework

To overcome fragmented planning processes and limited accountability, one end-to-end planning framework was implemented, integrating business processes and IT across all relevant functions and regions. This also included alignment of the organisational setup, governance and incentives in order to facilitate quick decision-making.

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2. Create end-to-end visibility

The next step was to map and interlink all supply chain data from across the network: inventory, capacity, requirement forecasts, orders, shipments, etc. One major part was ditching Excel spreadsheets for a connected planning platform as a single point of truth, and making it accessible to all parties involved.

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3. Leverage AI/ML to increase level of automation

One of the key objectives was to automate most of the daily activities of the planners, to make more time to collaborate with other functions and make more tactical decisions.

Two good examples are the application of AI/ML techniques in the area of forecasting and replenishment. While this technology’s already proven to have a positive impact on forecast accuracy, the real benefit was the automation of the data cleansing and updating the parameters, which took the planners almost a day per week to do this manually. Within replenishment, the client was able to move towards a low-touch ordering process and focus on order proposals that needed extra attention.

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4. Establish a solid project management office that stimulates innovation

Bringing structure to all the initiatives with clear feedback loops to senior management is crucial. Equally important is providing a high degree of organisational freedom and flexibility to enable rapid cycles of development, testing and implementation of solutions. This requires a culture that develops and/or acquires talent to enable transformation and encourages new learning, while also gaining scale by sharing standardised and proven practices.

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Implementing a digital planning experience is a journey but ultimately a rewarding one. As always our advice would be to start small. A good first step would be to establish cross-functional teams and develop insightful dashboards out of the data that you already have available today in tools like Power BI and Tableau, which will help you to know sooner and respond faster.

Authors: Jochen Vincke and Dennis Pilate

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Jochen Vincke

Jochen Vincke

Partner, PwC Belgium

Tel: +32 477 61 12 22

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