Does concurrent planning in the supply chain work?
Does concurrent planning in the supply chain work to address disruption? Some experts say the promise doesn't yet match reality during major crises.
As the COVID-19 pandemic continues and companies attempt to respond more effectively to its disruptions, a concurrent supply chain planning approach may work to enable greater agility.
Some experts say a concurrent planning approach could help companies during small-scale crises, like a machine breaking, but it has not reached its full potential as a means of addressing more dire situations, like natural disasters.
So, does concurrent planning in the supply chain work? Here's a closer look at its current reality.
What is concurrent planning?
Concurrent supply chain planning connects shorter-term execution plans with a longer-term business plan. When a user makes a new short-term plan, the short-term plan is immediately connected to the longer-term plan's goals, potentially increasing an organization's agility. Users in different parts of the organization can see the company's latest relevant data and make decisions based on it.
Creating a horizontal and vertical supply chain model is also important for successful concurrent planning.
Concurrent planning can potentially help reduce costs and improve response time. However, its promise doesn't always line up with its reality.
In theory, concurrent planning can lead to significantly enhanced supply chain accuracy, visibility, resilience and agility and drive improved costs, quality, timeliness and responsiveness, said Bill Huber, digital platforms and solutions partner at ISG, a global technology research and advisory firm located in Stamford, Conn. Since supply chain costs can constitute 70% of total costs for manufacturing companies and those in other industries, concurrent planning's potential impact is enormous.
However, effectively executing concurrent planning is often easier said than done, he said. Supply chain technology can range widely in sophistication. Concurrent planning participants are trying to make different types of tech, which may include everything from a spreadsheet to an integrated system connected to sensors, interact successfully. This can result in significant gaps in data tracking and reporting, making data science difficult to carry out. Updates and delays can also occur.
Advances in AI and machine learning will be critical to concurrent planning's evolution because the vast majority of supply chains are far too complex for concurrent planning to achieve its potential at this time, he said.
Potential concurrent planning scenarios
Some experts are split on whether concurrent planning could help companies deal with natural disasters, which are a major concern for any organization as climate change continues.
Concurrent planning can potentially make a supply chain more nimble, which could help during a pandemic or a weather event, like a hurricane or tornado, said Josh Nelson, principal of strategy and operations at The Hackett Group, a management consulting company located in Miami. A company can use concurrent planning to conduct a scenario analysis and better manage demand spikes or supply disruptions.
In addition, concurrent planning's reduced planning cycle time enables companies to make decisions more quickly during these situations and take better advantage of market opportunities, Nelson said.
However, some experts say concurrent planning may not actually help during weather events just yet.
In theory, if a company's supply chain partner in another area experienced a natural disaster, the concurrent planning approach could improve that company's response, Huber said. The reality is a bit different.
Tim PayneAnalyst, Gartner
"True concurrent SCM [supply chain management] will not be achievable in most instances at present," he said. "What is achievable is [the] modeling of probabilities of different scenarios, [which] will allow better contingency planning."
Some experts say concurrent planning can help right now with smaller-scale crises.
For example, if a machine at a company plant goes down, concurrent planning could help, said Tim Payne, analyst at Gartner, a research and consulting firm located in Stamford, Conn.
"If the machine is going to be down for eight hours … and the company needs to rebalance some inventory throughout the supply chain, concurrent planning will allow the company to immediately see what its options are and make the best decision," Payne said. "So, you can use concurrent planning in any circumstances, big or small, where you're seeing changes or events happening either on the demand or the supply side."
Concurrent planning technology
Like concurrent planning itself, concurrent planning technology may have far to go before it achieves its goals.
Organizations must embrace the fact that concurrent planning technology is still evolving, Huber said. The tech will first likely achieve better concurrent planning within a business. Next will come better concurrent planning across suppliers, customers, carriers and third-party logistics providers.
Interoperability will be key.
"Solutions will need to be omnichannel," he said. "Existing SCM, transportation management, customer relationship management, enterprise resource planning and other software will be part of the solution."
But, in all cases, users should expect significant upgrades to their existing suites and integration of new products and technologies, he said. These range from sensors and meters to the installation of mobile edge computing to increased cloud migration.
How concurrent planning can help organizations
In some cases, moving toward concurrent planning is already helping companies predict disruption.
During the pandemic, Cascades Inc., a paper and packaging company in Kingsey Falls, Quebec, Canada, used an integrated business planning (IBP) software to serve as its concurrent planning tool.
About five years ago, Cascades began using SAP's IBP tool in its tissue division, which serves North American retailers, said Isabelle Leclerc, vice president of supply chain at Cascades. Cascades then deployed IBP, which SAP says is its concurrent planning product, in all its divisions during 2019. The company wanted one tool to connect all its sales and operations planning processes.
Cascades also hoped that SAP IBP would help support monthly and weekly planning processes and enable employees from various business units to more easily collaborate and resolve issues.
IBP gave Cascades greater business visibility during the pandemic, and the tool's data and forecasting capabilities helped the company make more informed decisions, Leclerc said. The data and forecasting also helped Cascades respond quickly when product demand shifted.
For example, Cascades' tissue division serves retailers and what the company calls "away from home" areas, such as schools, hotels and conference venues, Leclerc said. During the pandemic, "away from home" demand declined, and retailers' needs increased significantly. When a new COVID-19 wave occurred, Cascades was more prepared because IBP helped the company foresee that shift and meet retailers' demands.
"This [forecasting] would not have been possible without concurrent planning," Leclerc said. "In the past, we only had pieces of information, but you would never have the whole story. So, with IBP, we have a comprehensive and transparent view of the supply chain."