Touchless supply chain planning – making a competitive differentiation

For many years, multi-national enterprises have had to deal with disruptions caused by climatic, political, economic, and biological events; with regulatory changes; with sudden demand fluctuations; and with stockouts and high inventories. In recent years, though, they’ve been joined by other challenges. For instance, it’s a given that nowadays, customers are more connected, and they expect greater and more instantaneous choice, and a more personalized service offer.

What’s more, lockdown has altered buying behavior and hence sales channels. With the growth of direct-to-consumer channels and of subscription services, fulfilment models have often had to morph into something that is certainly new, and probably more complex. It has been disruption on a scale that has not been seen before.

If organizations are to meet and manage these challenges, they need fundamental and sustainable transformation – a shift to a supply chain planning model that is comprehensive, smart, and frictionless.

The characteristics of touchless planning

The defining principles of touchless supply chain planning include:

• Reducing manual touchpoints, and both reducing and improving individual decisions through advanced analytics, automation and business rules
• Using the system to create plans that are executable and optimized – enabled by complete and accurate data, optimized parameters, user needs at the center of the system design and set-up, and a focus on building user capabilities and understanding of the system
• End-to-end supply chain visibility, powered by predictive intelligence and digital twins (supply chain control tower and end-to-end performance management)
• A tiered organizational model with a well-defined, consolidated hub, and local responsibilities (supply chain as a service)
• Short planning cycles enabled by concurrent processes (smart forecasting and integrated business planning)
• An ecosystem of partners, with known and quantified capabilities to support and enhance the quality of plans generated.

• The six pillars of the independent supply chain:
  1. Intelligent network design and risk management
  2. Smart forecasting and integrated business planning
  3. 360° sourcing analysis and supplier collaboration
  4. Touchless and agile order to delivery
  5. Supply chain as a service
  6. Supply chain control tower and end-to-end performance management

Operational and customer benefits

A frictionless planning model with these characteristics provides competitive advantage. Operationally, it enables organizations to work seamlessly with multiple providers and partners at an optimum cost, and to make the most of the best resources on a global scale. Information and physical inventory flow seamlessly between them, and their interactions are augmented by artificial intelligence.

The workforce is digitally augmented too: the majority of processes can be run concurrently without manual touch points, leaving planners to focus on exceptions, where their own direct input adds most value . For example, they can take advantage of predictive analytics to identify and act upon risks and opportunities, harnessing data that can now be drawn from across the extended enterprise.

But that’s not all. While the operational benefits are both considerable and welcome, the real differentiator in touchless supply chain planning is the effect it can have on customer relationships. When processes are seamless, and when information drawn from across the supply chain is shared, interpreted, and actioned, organizations can work with their customers to create personalized experiences that meet their individual needs and expectations, and fulfilment models can flex around customer requirements to make things happen.

Traditional vs. frictionless

Frictionless planning models make it possible to work in a radically different way. Let’s make some comparisons.

Traditionally, processes are siloed, focus is mostly on the here-and-now and if things go wrong, the firefighting can be considerable. But with frictionless planning, most of the time-consuming processes are touchless and continuous, allowing the focus to switch to the medium to long term. Also, because data can be drawn from across the business, insights can deliver long-term value, and assist strategic decision-making.

In contrast to traditional approach, touchless planning is driven by an AI-augmented workforce, where the planning architecture takes charge of managing the end-to-end workflow, and where people are assigned to tasks not by transaction volumes, but by exception – because most, if not all, the heavy lifting is done in a touchless manner.

• The benefits of touchless supply chain planning aren’t just possible in theory – they’re already happening:
  • After transforming its supply chain model, a global CPG manufacturer achieved identified 40–50% of its product portfolio as candidates for touchless demand planning using machine learning forecasting
  • A European beverage manufacturer achieved 25–30% relative reduction in forecast error, 10–14% inventory reduction, and 20% planners’ time release from demand sensing
  • A global CPG enterprise achieved 72% no touch purchase order (NTPO) compliance from a starting point of 39%, by improving master data, planning system parameter tuning, and loss tree analysis
  • A global industrial leader had too many processes, systems, and long-lead times in responding to customer needs (over 8 months). The business carried too much inventory ($5 billion), which led to much waste through product obsolescence. The company saved 25% in inventory costs within the first year of adopting an integrated solution.

Deployment model

Now that we understand what touchless planning is, how do we deploy these capabilities across an extended enterprise?

What’s needed is a target operating model that can take advantage of the organization’s worldwide resources and capabilities, connecting them to achieve a truly frictionless process. It’s a model that has three building blocks.

• #1: Plan – a consolidated planning hub, built on an optimized and dynamic technology platform, can develop these plans from end to end, globally, and in a touchless manner
• #2: Connect – the next key part of the model is a team within the market that is focused on business partnering, collaboration with stakeholders to drive adoption, and incorporating feedback to improve the quality of plans create by the hub. Its members harness local and global knowledge and skills in order to create demand, to put plans into action, and to ensure there is flexibility in the response
• #3: Sustain – making a success of supply chain planning isn’t a one-time fix. The third building block is the creation and maintenance of a culture of innovation, to drive continuous improvement. This includes rapid proofs-of-concept to test new ideas, the development of collaborative ideas with industry and academia, a strong governance structure to manage innovations, and establishing a principle of innovation-as-a-service.

A frictionless approach to supply chain planning can make a competitive difference to major businesses – a difference that isn’t just real and immediate, but one that will also scale and flex to meet new challenges, including those we can’t yet even imagine. After all, this is the way it’s always been in the supply chain.