Supply chains large and small are under siege from constant disruption. Companies find themselves struggling to serve customers, source materials, manage costs, manage supply constraints and shortages, and most importantly, gain visibility into what comes next.

Thanks to technology, however, the headlines aren’t all bad. The latest generation of sales and operations planning (S&OP) applications provide better tools for internal management of supply chains. And they enable companies to plan collaboratively beyond the company’s four walls. These new S&OP platforms use artificial intelligence (AI) and machine learning (ML) to support better, faster and more inclusive decision-making.

Below are five emerging areas of rapid development in S&OP, highlighting how companies today use technology, what they get out of it, and why this new inclusive ecosystem approach to what was once a status process can be transformative.

Functional collaboration is essential.

The chaos of recent years is unprecedented. But for the supply chain, there’s some good news coming out of the current environment. As a business function, the supply chain is now front and center in the C-suite, no longer a minor player in the boardroom.

At the same time, the C-suite is transforming to include more parties at the table: a larger cross-functional mix of players from all walks of life in the organization. Sales, finance, operations, marketing, and supply chains are collaborating more closely than ever, ushering in the development of next-generation S&OP technology platforms.

The C-suite is investing in S&OP platforms that can cover the end-to-end supply chain, designed, in essence, to eliminate the fragility of their operations and build greater real-time resiliency. Indeed, all internal and external resources must be coordinated and integrated for a successful aggregate plan.

Technology is increasingly in the spotlight.

To operate in this new environment, companies now recognize the importance of having a single data set: one version of the truth, designed with different “views” and supported by AI, ML, scenario planning and analysis, probability analysis and other smart decisions and analysis tools.

Decision-making gets smarter when it’s powered by powerful analytics, ML, and AI. As Gartner analyst Amber Salley noted, “With the capabilities we have today, we can solve problems in seconds. We’ve come a long way.” Now S&OP platforms are wired with AI and ML, as well as gamification, pattern recognition algorithms, and scenario building and evaluation capabilities.

Bottom Line: Managing five different systems cobbled together through data translation layers and application interfaces is no longer enough to manage a world-class supply chain. And forget spreadsheets; they are not integrated databases but rather reside on individual desktops and the like. As one consultant commented, “Why do people keep using them? Because spreadsheets are easy and everyone knows how to use them.”

Process decision points are becoming more frequent.

Planning and process decision points are moving, at best, from a monthly schedule to a continuous flow. A fixed and rigid periodic planning cadence is no longer enough.

The process of S&OP is rapidly transforming into a much more dynamic and real-time capability. Early versions of S&OP were all about balancing supply and demand on an almost entirely tactical basis and, as noted earlier, relied on spreadsheets. Spreadsheets were the tools most people used to navigate their way through this onerous tactical process.

Today’s S&OP platforms provide sense-and-respond intelligence on both the supply and demand sides of the equation. As Gartner explains in a framework for designing a supply chain strategy and process matrix, this enables companies to collect data and transactions and plan, forecast, measure, decide, collaborate, design, simulate and execute operations.

These improved processes, which take into account long-term strategic goals and short-term tactical goals, can be much more focused on generating profitable growth. Advanced S&OP technology also enables supply chain executives to examine the level of risk and take steps to mitigate it.

Scenario planning is becoming vital.

Today’s S&OP technologies enable effective scenario planning. Companies can “play” different strategic scenarios and, using AI and ML, see how these myriad scenarios play out in their supply chains. They can operationalize scenarios and aggregate or disaggregate them to see how they might impact performance and profitability across the enterprise. This eliminates or greatly reduces the risk factors involved in making strategic business decisions.

Scenario planning creates a proactive means of risk and outcome management. The adoption of scenario-based planning moves companies away from the old paradigm of waiting for something to happen and then responding, hopefully successfully, but always at a cost in the form of lost sales, market share or business opportunity.

Despite these advantages, scenario planning is still relatively in its infancy. Gartner reports that supply chain leaders aren’t yet sure where to start developing their scenario planning capabilities. Only 18% of companies rate their ability to use S&OP to execute multiple scenarios to understand the trade-offs as “excellent”. This represents a tremendous untapped opportunity.

External collaboration is becoming a competitive advantage.

The time was that S&OP was largely an internal cross-functional effort. Now, leading companies are realizing that they can be much more agile, efficient and profitable if they extend a close partnership beyond their own four walls, to suppliers and customers. S&OP is, in effect, becoming a toolkit to help build and enable this end-to-end ecosystem.

The result is intelligent visibility across multiple levels of the supply chain, thus reducing the surprise factor and creating greater predictive resiliency. With the massive increase in the outage rate, organizations must collaborate with suppliers and customers to address supply chain disruptions in a more strategic and predictive way.

AI, ML, gaming, pattern recognition and analytics technologies are enabling better supply chain performance across the board and moving supply chains to a more predictive business model that drives better financial performance. As McKinsey points out, over time, stronger collaboration between suppliers and customers can “strengthen an entire ecosystem of suppliers for greater resilience.”

How Logility can help

Headquartered in Atlanta, Logility is a leading provider of optimized retail and supply chain planning solutions. Using insights gained from hundreds of successful customer implementations, Logility’s supply chain applications enable suppliers, manufacturers, distributors and retailers to collaborate and synchronize demand management, forecasting, supply and inventory optimization , global procurement, quality and compliance, product lifecycle management and manufacturing operations.

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