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Supply Chain Planning Beyond the Spreadsheet By Akhil Oltikar, CEO, Omnics
rut for nearly two decades. Their common theme: most of them have spent a significant amount of money implementing ERP and best-of-breed software solutions, but when it comes to tactical and operational planning, one stands out. For everything from 3- to 12-
N
week horizons, demand, inventory and supply planning, Microsoft Excel is still the popular choice. This is true primarily for small and midsize companies, but also for many large, global firms. While supply chain planning by
Excel is not entirely wrong, there is a point where it breaks down. This break point is determined by the complexity of planning, business growth, data volume, domain expert- ise, and other factors. These reasons are certainly sufficient to make the decision to move planning away from spreadsheets. This shift is important for effi-
cient and effective planning with the resources at hand, but also extreme-
umerous companies with a broad range of supply chain issues have been stuck in a
ly important to be able to leverage historical planning data for subse- quent planning cycles. In more than 90 percent of cases, these data are discarded or lost, due to the con- straints of spreadsheet planning.
Buried in Spreadsheets Companies often implement
multiple systems or, most efficiently, one single ERP to handle fundamen- tal functions, such as finance, CRM, PLM, MES, etc. These functions have fairly well defined processes and data standards. However, when it comes to planning, there is not a “one-size-fits-all” solution. Either the solution is too gener-
ic or it is too complex to meet the company’s planning requirements. If the company needs to customize the planning module it may not have the budget or time to do so. This results in the creation of a spreadsheet plan- ning tool. These tools work well at the
start because there is collaboration among a small, close-knit planning team and the complexity of data is not too great. Typically, such solu-
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tions are layered with visualization solutions to provide graphical out- puts. For example, Jane develops and enhances the planning tool and soon only she knows how it works. As the planning complexity
grows, the data collection, tool update, verification, and reporting outputs from the tool take days rather than hours. Instead of weekly planning, it becomes monthly planning due to re- source, data and time constraints. Then Jane leaves the company or changes her role and Joe becomes the unwitting owner of this spreadsheet tool…and the cycle continues. It is ironic that the goal of all
the systems a company has is to pro- vide coherent inputs to processes at the heart of its operations. Planning should be smart, automated, scala- ble, fast, and objective, but it is often far from that. The Excel planning tool or legacy tools may provide these plans, but they are far from optimal and may impact a company’s top and bottom lines. Everyone in the organ- ization recognizes the problem, but more urgent activities take priority. There are always daily operating is- sues that are prioritized over fixing the planning tool.
No Magic Bullet What can be done to improve
supply chain planning? There is no magic bullet, but companies can fol- low a few basic principles.
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Avoid the one-size-fits-all ap- proach. There are specific business requirements for supply chain solu- tions. One can argue that 80 percent of the solution is generic and 20 per- cent is unique. But, this 20 percent is where companies go wrong trying to fit a generic solution to a unique problem. Implement a focused plan- ning solution that works with the company’s underlying transactional systems, and not vice-versa.
Important takes priority over ur- gent. The spreadsheet scenario be- comes much more complicated and unwieldy as days, weeks and months go by. Make it a priority to fix it be- fore it implodes. Put together a “tiger team” with domain expertise in plan- ning, along with senior operational leaders, analysts and IT; do not sim- ply hand it over to the IT team, be- cause it is not an IT problem. Once you have a foundational solution, fo- cus on continuous improvement to make your planning team efficient and effective.
It all starts with data. A planning solution requires a universal data structure that not only collects infor- mation and reports it but also con- nects the dots between data sets and categories. This data structure needs to be aligned with the product and go-to-market (channel) strategy. The planning logic could be
unique or may become unique as business conditions change, so tweak the logic as needed and implement optimization algorithms to make it smarter.
Machine learning. We live in a world of tremendous data growth. A human brain cannot analyze big data without tools. Planning data contain a wealth of information about supply chain operations, actions and results.
Planning should be smart, automated, scalable, fast, and objective, but it is often far from that.
The Excel planning tool or legacy tools may provide these plans, but they are far from optimal and may impact a company’s top and bottom lines.
Information from the previous
planning cycle is as important as cur- rent plan cycle data. Augment hu- man intelligence with cutting-edge technology. This is where machine learning plays a significant role. Ma- chine learning enables automated, data-driven answers.
Think big, but act small. The im- plementation of planning solutions is unlike others, due to the complexity of the problem. These issues are ex- acerbated, because planning crosses functional and organizational lines. The implementation can be managed through a “minimum viable product” approach. Do not try to automate every-
thing from the start. Break down the process map to identify key areas that would provide immediate re- sults to make the planning team’s life easier, without committing to a multi-month project. Take a pragmatic approach and
use these simple principles to man- age the growing complexity of supply chain planning. Be sure to maintain agility and flexibility as business pri- orities change and impact the supply chain itself. Make your supply chain great by freeing it from the spread- sheet.r
Akhil Oltikar is a co-
founder and the CEO of Omnics, Inc., and has over 16 years of global supply chain planning and management experience. Oltikar works with clients to optimize supply chains by identifying strategic and tactical issues that affect profitable growth, and by implementing business process and technology solutions.
June, 2017
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