I came across this great report by Accenture: High Performance through Supply Chain Planning: Accenture Research and Insights into Supply Chain Planning Mastery

I think their findings are right on the mark – I’ve included them below:

Report Conclusions:

• Our first conclusion is that planning must not be relegated to a department; instead it must be a widely embedded capability that extends across business functions. To adopt this philosophy, companies must shift the way they use data across the supply chain and the enterprise, replace obsolete processes, make key decisions much more frequently, strike much closer relationships with suppliers, customers and other “partners” to share critical data in real time, and nurture the supply chain planning professionals so they can accomplish all these goals. Such actions will be a major challenge to companies that view improvements to planning as being largely about upgrading their forecasting capabilities. The companies that have excelled in planning know it requires far more than that to be successful.
• Our second conclusion is that analyzing and managing in a world of increasing volatility depends more on the ability to adapt than to generate long-range forecasts and supply plans. Companies that see improving forecasting and planning capabilities as the route to improved agility will be able to manage a world of increasing supply chain volatility. While forecasting is critical to planning, it is still just a scientific process to predict future demand based on historical performance. Many supply chain disruptions cannot be predicted. The increasing volatility of business now requires companies to possess highly flexible operating models and processes—ones that allow them to adapt rapidly to unpredictable changes. Superior supply chain performance today demands top-notch forecasting and planning as well as highly adaptable sourcing, manufacturing, transportation and other supply chain operations.
• Finally, to deal with a greater number of contingencies in the future, supply chain planning must happen faster and more frequently and be more tightly integrated with pricing, logistics and other functional disciplines—both internally and externally (with suppliers, customers, etc.). This is the essence of an effective sales and operations planning process. All key constituencies in a company (sales, finance, marketing, logistics, etc.) in each channel segment and/or product line must play a role in this process. They all need the right information and the ability to make critical decisions based on sharply defined decision criteria. Furthermore, they must make rapid decisions continually and through an entire product life cycle. In addition to being integrated internally, the sales and operations planning (S&OP) process must be synchronized with a company’s key suppliers, customers and other business partners. Collaborative planning both internally and externally must be the rule rather than the exception.

Without a doubt the authors correctly identify the need for greater agility to address the increasing volatility in supply chains. The question is what constitutes agility. Too many supply chain decisions are conducted by central organizations and decisions have to be approved by central organizations, greatly increasing the time it takes to reach a decision, which greatly reduces agility.

Our view, captured in the post entitled “Volatility is here to stay“, is that front-line people should be making day-to-day decisions in response to realities on the ground rather than a theoretical plan developed at HQ (agility), but based upon targets set by HQ/Finance/… Human judgment should be allowed to prevail. Companies will always have to plan. Agility is when they respond rapidly and effectively when things do not go as they planned.

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Tags: Sales & operations planning (S&OP), Supply chain flexibility, Supply chain planning
Posted in Sales & operations planning (S&OP), Supply chain management, Uncategorized
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