There is a vintage television commercial for Reese’s Peanut Butter cups. One character says to another, you got chocolate in my peanut butter.” The other response, “no, you got peanut butter on my chocolate.” The two then conclude that peanut butter and chocolate are better together.
Supply chain practitioners are beginning to understand the same is true for supply chain planning (SCP) and multi-enterprise supply chain network solutions. A multi-enterprise supply chain network provides visibility to upstream and downstream events that can affect a company’s supply chain. Meanwhile, supply chain planning solutions support demand and supply planning.
MSCN and SCP are better together. There are just a few suppliers that offer both solutions – E2open, Infor, Kinaxis, One Network, and SAP. For the two types of solutions to work together synergistically, there are some key capabilities that are necessary.
This is how Jerry Bolton, the senior director of product development for supply chain management at Infor, describes connected planning. “I can go in as a tactical planner and see my weekly plan for the next 26 weeks. Or I can give the plan to a strategic planner which shows the plan for the next two years in monthly buckets. But, I’m seeing the same stuff. It is just visualized differently. It’s one plan, all connected.” The plans are made at a daily level, and then rolled up into the time horizon a planner wants to see.
And as new information comes in, that plan, across all the time horizons, can change. And a plan has financial implications. As the new events that have occurred are analyzed and a new plan is created, the financial implications can be seen. Companies typically want to hit quarterly earnings and profit targets, the implications of the new plan on the earnings and profits can also be seen in a connected planning solution.
“It’s a big change in our architecture,” Mr. Bolton explained. “If things are normal, for example, there are no exceptions in the forecast, there are no ‘situations’ that are out of control, then the system will just move you forward day-to-day. You don’t need to touch it.”
But as a situation occurs, whether that is a change to the forecast, a projected stock out or lost sale, or a new capacity constraint, the system flags that for a planner to review, and potentially that planner will create a new plan. “The idea,” Mr. Bolton continued, “is that (these decisions) can be automated and low touch.”
Visibility to the Events
Meanwhile, for the SCP to plan around these new events, the system must be aware Planning of them. This is what the multi-enterprise supply chain network does.
The MSCN provides visibility to whether suppliers can deliver all the items a manufacturer wants on a particular date. Or in longer time horizons, forecasts can be shared with suppliers, and if the supplier can’t deliver all that a manufacturer needs, they have time to find alternative suppliers. The network can also provide visibility to whether the supply chain network has enough inventory across their sites and on inbound shipments. These solutions can have predicted times of arrival.
That function can be native if the supplier supports a big logistics network – like Infor Nexus does – or it can be provided through integration to solutions from FourKites or project44. Tony Harris, the chief marketing and solutions Planning officer for the SAP Business Network, points out that not all product flows are linear and that multiparty workflows need to be supported. “So,” a manufacturer may be “sending the purchase order to the component supplier, but at the same time letting the contract manufacturer know that those goods are going to be coming from a component supplier to the contract manufacturer.”
Then, once the goods are produced the contract manufacturer may ship to a company that engages in packaging services. Both the OEM and the packaging supplier need to see that message. The packaging supplier might then be responsible for arranging the shipment to the OEM’s finished goods warehouse. The logistics supplier and the OEM need to see that stream of messages. Different solutions have their own secret sauce.
Infor has a large enterprise automation management (EAM) business, and these EAM solutions can let the planning engine know of planned maintenance or surface alerts that a piece of production machinery has gone down. SAP has a large procurement network, so if a supplier can’t deliver the number of items needed this solution can make it much easier to find an alternative supplier. The SCP vendor Kinaxis recently acquired MSCN supplier MPO. MPO’s data model connects delivery and customer orders in the same data model; this solution can optimize omnichannel flows in a way that other solutions cannot. One Network’s MSCN can access downstream data and detect changes in demand more quickly than many other solutions.
The idea of meaningful supply chain visibility, according to Peter Nilsson, has been hurt by the rhetoric surrounding control towers. Mr. Nilsson is the chief marketing officer at One Network. “Everybody is saying they have control towers, but these control towers can’t really control anything.”
It is not enough just to offer visibility to supply chain events. What companies need is targeted visibility to those events that matter. For example, if a shipment is running late, but there is sufficient inventory in the DC closest to the customer, the fact that it is late is not significant. What companies need to care about are the events that will have an impact on their commitments. You don’t want a planner looking through a thousand late shipments to find the 80 that are impactful.
David Vallejo – the vice president and global head of digital supply chain planning at SAP – said the need for event intelligence is “exactly right. This is the value of putting all of that visibility, we call this the awareness layer, right on the digital twin of your supply chain.” At SAP, this event intelligence is done in their SCP solution – Integrated Business Planning. But, it is not just visibility to late shipments that is needed but also work in process. “What’s happening within the factory? In IBP we have the relationship of my customer demand to the Bill of Materials. Achieving this is a critical capability that not all solutions can support.”
SCP solutions can create a new plan every day. But should they? If creating a new plan requires changes to scores of purchase orders or canceling hundreds of shipments and retendering them, is that worth doing? If creating a new plan creates many ripples, that plan is said to cause “nervousness.” Some ripples matter and some don’t.
Guide rails are needed to sort out the events that matter enough that replanning should be done. SAP’s Mr. Vallejo explained it this way, “Is this just a dip in my safety stock” that does not matter. “Or is it a problem because there is a domino effect of delayed manufacturing? We are taking these Planning hundreds of thousands or millions of milestone transactions that are happening, and then putting them into a context of the revenue impact and the service impact” of those events. Planners have “a prioritized list of what is actually relevant for them to look at, expressed with the impact to value.”
Joe Bellini, the executive vice president of product marketing at One Network, gave an example of a different kind of guardrail – a guardrail focused on an opportunity rather than the mitigation of a problem. “One of the guardrails might be that it is OK to pull orders ahead one day to get a full truckload rather than an LTL (less-than-truckload shipment).” LTL shipments are more expensive. But what if there’s an opportunity to do a two-day pull-ahead? That would be outside the guardrails. “Over time, for certain items, you may want to say, let’s go ahead and change the guardrails to be a two-day pull ahead because it’s good for everybody.”
Andrew Bell, the director of product marketing at Kinaxis, points out that if there is a guide rail, a key performance indicator that is being used to make a decision, that creates the potential to automate the decision. Automation frees the planner to do more meaningful work.
“In general, what we see our customers doing is automating a predefined process of Planning. When I have a late order, here are the things I can do to try and resolve that. I can try and split that order. I can try and expedite the shipment. I can try and fulfill it from another location. “What we now allow the customer to do is to actually automate the execution of each of those different scenarios.
Here are my four or five predefined solutions to that problem.” Initially, the planner may be kept in the loop. They would see the potential solutions and the ones that drove the greatest value. They could then select that option. In time, as planners grow comfortable with the capability of the system, the planning engine is authorized to go ahead and make the best decision.