When can we get back to normal, also in Supply Chain Planning?
There was and is news about supply chain disruptions all around the world and they are affecting companies and people. Companies are facing financial and operational challenges. Consumer are hit by product shortages, highest rates of inflation in decades and rising consumer prices.
Given that, there are so many questions ahead of business:
- Will we be seeing a normal Supply Chain in 2022 or 2023 or never again?
- What are we doing when – as we have seen in the pandemic – supply, demand and distribution disruptions are happening simultaneously?
- How to prepare now for the next major crisis?
- Do we need to rethink global models and supply dependencies?
- How do we plan near and long-term best in future?
True is, we live in an uncertain world with a lack of global resilience and the era of predictable unpredictability is not going away. But clear is also ‘failure to prepare is preparing to fail’. Business will have to be resilient and capable of adapting to major disruptions.
Let us spend some time on how to cope with and respond to Supply Chain disruptions in planning.
For example, the pandemic has led to significant shortages of manufacturing components, order backlogs, delivery delays and a spike in transportation costs and consumer prices. Surely you can focus as a company on extra capacity or stockpile inventory to mitigate risks. Eventually, move production closer to customers. But a true game changer is to have the ability to anticipate and plan around problems ongoing.
SAP Integrated Business Planning tears down planning silos providing a flexible E2E-planning across LOBs helping also to manage broken supply chains smartly from a planning perspective and even turn market disruption into new growth opportunities.
You can model a flexible supply chain network structure in SAP IBP and then simulate disruptions directly in the planning book and adjust on the fly by changing parameters and predict effects on demand or supply or service and financial impact.
It is also possible to make a side-by-side comparison of impact. One can run different business scenarios and use scenario comparison, considering e. g. market assumptions, stocking, line capacity and sourcing assumption critical materials. With SAP IBP you can make complex business scenario analysis and so ensure a well-working risk, opportunity and disruption management.
Demand planners can model the expected impact: a drop or rise in specific regions, shifts towards other product groups, delays, cancellations of promotions, optimize diversification of portfolio and market segments.
Supply planners can consider for example if they have the required storage space to host assemblies. How should they adapt their scope of safety stocks? Should they review the shift patterns? Should they consider multiple sources of supply?
Service and operation manager can prioritize some of the customers at a time of capacity constraints, suspending shipments towards some of their partners or keep on serving their domestic partners.
Finally, it is not just a planning issue, but also a lack of visibility that many companies face. SAP Supply Chain Control Tower as part of the SAP IBP platform provides end-to-end visibility and control of the supply chain by detecting potential disruptions and dealing with unforeseen events. Companies can not only leverage the intelligent visibility and sophisticated ML-based exception management, but also use procedure playbooks as internal best practices and guidelines for solving supply chain planning issues.
Clearly, there are so many unforeseen or unplanned events that interrupt the regular flow of goods within a supply chain and business as usual is no longer an option. We will not get back to normal because future supply chains must manage ongoing disruptions.
Yet, we have the chance to plan and manage supply chains in a more resilient way in future and SAP IBP can help you as a company to achieve that ongoing!