Overcoming the changing global supply chain with Anaplan
Due to the impact of the pandemic, global economic challenges, and the heightened geopolitical risks, it can be said that the future of current corporate management is almost impossible to foresee (VUCA Uncertainty Level 4).
Consumers are seeing a shortage of daily necessities, along with soaring prices. In addition, from the perspective of companies around the world, supply chain challenges continue to occur.
Due to the pandemic, supply chain management (SCM) vulnerabilities have become apparent, and the human resources of the company's manufacturing/shipment departments are functionally paralyzed under lockdown and emergency declaration making it difficult to maintain the production utilization rate. There are delays in delivery of raw materials and parts from suppliers (especially general-purpose semiconductors and harnesses), and delays in ports/shipping due to lockdowns and container shortages. It has become difficult to keep up with changes in consumer propensity due to the pandemic.
Under these circumstances, many companies have fallen into a situation where they cannot do what has been taken for granted in supply chain management so far:
- Inability to answer when they can deliver products to customers.
- Raw materials and parts (to provide critical products and services) do not arrive.
- Inability to recognize the current state of the company's supply chain in a timely manner.
- Organizations/departments do not share necessary information (siloed).
- Delay in digitalization/operation with excel bucket relay.
- Conventional business models and operations jeopardize business continuity, but they are not aware of changes (even if they are aware of it, they are not taking countermeasures).
In this article, we will introduce four examples of companies using Anaplan to overcome the confusion of supply chain management due to such an environment.
- Global supply chain planning: Supply chain management between factories and distributors
- Sales and Operations: Managing the supply chain in terms of value and profit
- Market PSI: Market-aligned PSI management
- Supplier PSI collaboration: PSI management collaboration with suppliers
Supply chain management between factories and a sales company
In one company, "factories, headquarters, and sales" with different physical domains and "management, operations, and IT" with different organizational and role hierarchies were siloed, so it was difficult to know the whereabouts of the problems that straddle the gaps.
Against the backdrop of such silos, each site and organization adjusted the planned value (intention to put in) according to their own speculation. However, this factor reduced the accuracy of the plan execution. Therefore, in this case, they adopted demand-driven planning based on the actual sales plan and eliminated internal considerations and human bias.
Now, sales plans are devised on a weekly basis based on the planned value purchase plans that take inventory into account. Shipment and production plans at factories are automatically drawn up without human intervention.
In response to sales plans (supply requests), factories respond to supply requirements that take into account constraints such as parts procurement and production capacity, which is the case in global SCM planning practice. At the same time, they also developed a system for managing such constraints.
Managing the S&OP supply chain in terms of value and profit
In general, sales and operations (S&OP) play a role in connecting goals and execution on a monetary basis, managed by SCM and quantity management by the business plan (budget and medium-term management plan).
In addition, the S&OP process is based on understanding supply chain problems on a monetary basis by multiplying volume-based planning with sales prices and costs to create value-based forecasts. This chart can help serve as a decision-making tool.
In this case, the organization was able to improve the sophistication and efficiency of the process by looking at each plan that was drawn up in one fell swoop — from the sales plan of the company — in terms of amount, finding the gap with the budget, and making corrections.
By simulating quantified planning and quantity planning at the same time, it became easier to discover abnormalities in inventory levels that could not be grasped by quantity alone. The advantage of S&OP is that it can monitor improvements and strengthen the PDCA cycle of management.
In addition, they are now able to improve the speed of drafting revised budgets by modifying the plan based on volume and value while synchronizing the raw sales, so that the data can be reflected in the revised budget as it is.
PSI management in conjunction with the market
In the planning work of global supply chain management, the sales plan of the company is the starting point and flows to the supply and production departments. From the viewpoint of suppressing the occurrence of the bullwhip effect, it is very important to formulate sales plans with high accuracy.
Despite the importance of accurate sales plans, it is difficult to clearly verify the basis for "selling" and "wanting to sell," and there is a risk to drafting sales plans using only information within the sales department.
Therefore, in order to give objectivity to a sales plan, one company utilized actual sales information from distributors. They drew up sales plans using data from distributors (which is relatively low biased) as input and reviewed their own sales plans and budgets while looking at the target value and gap.
Linkage of PSI information with suppliers
In this case study, each supplier, factory, and head office site had its own role and function and was managed according to its own management indicators and formats. Exchanges between bases were often conducted by e-mail or telephone, and the visible range was divided.
In order to solve such problems, the company aimed to collect and share supply chain plans and actual information (product production, shipment, inventory, parts purchasing, shipping, inventory) between each site on Anaplan through API.
On Anaplan, KPI information such as stock level as well as part-level shortage status can be shared among participating companies.
Until now, in such cases, the information had been aggregated on-premises just for the core areas that needed the information. In addition, there were many cases where SCM information was shared with suppliers via Excel, and it took time and effort to exchange it. Now, Anaplan allows information to be shared not only at the head office but also with factories and suppliers. It has become possible to check the SCM information of each site in real-time as well as break away from Excel work.
Since it is possible to consistently visualize the adjustment status of parts purchased by multiple companies, it is possible to have suppliers actively move according to the excess and deficiency situations.
In a physical disaster, people can grasp information on the affected area, but in a logical disaster where people responsible for information linkage are affected (such as the current pandemic), the current situation and future prospects are not known at all sites.
In response to such situations, management that can respond to uncertainty should always be carried out with logical measures.
As a result of interviewing multiple companies about the status of understanding information along with the impact of the pandemic, I have heard that they "grasped the situation and information only by e-mail and telephone between each site." This is one of the phenomena caused by logical disasters.
Until now, supply chain management has only dealt with superficial problems in each area and site. It is important to digitize the universal SCM model in order to solve essential problems and prepare a foundation and data that can be shared by all departments and entities, for better decision-making.
The SCM model that will be required in the future will eliminate barriers between bases and enable speedy information sharing. It is necessary to incorporate human judgments into decision-making, but using AI/ML can help to eliminate short-term human cognitive bias.