What is agile Planning
Simply put, Agile Supply Chain Planning is the ability to sense and respond to unanticipated changes in demand or supply quickly and reliably, without sacrificing cost or quality.
Agile planning requires a change in mindset and business process to enable responsive and flexible decision making.
Many industries experience unprecedented changes over the past year. For example, many Food and Beverage manufacturers experienced large scale changes in demand and supply as consumption moved from restaurants to groceries, and demand shifted from in-store to online. Not all of these manufacturers were sufficiently agile to rapidly adapt to the shifts in demand and supply. The adoption of Agile planning techniques was a difference between those that thrived and those that struggled to survive.
Often it also requires an upgrade in supply chain planning applications to support this very different way of making planning decisions.
The role of agile planning
Firstly, it is important to position the role of Agile correctly within the company. Agile planning is not an end-game to be sought. Agile is not a binary state of being agile or not being agile. Agility exists on a spectrum. And being agile doesn’t come for free. However, in some ways agility exists as the antithesis of efficient supply chains. Being efficient focuses on the lowest unit cost, with long manufacturing runs, large order quantities and full vehicle & container loads. In contrast, agile supply chains require the ability to detect, analyse & execute the best possible business decision in a more holistic way. The challenge for any company is to gain situational awareness to determine which prioritization factors are more relevant at that specific moment in time.
Also, change management should not be underestimated. Agile companies think differently about planning. With agile, planning is a continual process, not an outcome. Planning is performed faster and in smaller planning cycles. Self-imposed constraints to agile such as frozen horizons and minimum run-lengths are questioned. A key challenge is the adoption of KPIs which serve agile planning. Also, KPIs such as resource utilization or number of changeovers give way to profitability and customer service.
Then, manufacturers need to recognize that agile requires access to more data and it uses the data in different ways.
Agile requires more granular data with a lower latency to be able to be more responsive. We can achieve that by greater connectivity to trading partner systems, IoT, and digital trading platforms.
Finally, agile requires a wider scope of data in order to synchronize all parts of the supply chain organization (demand, production, finance etc) on an end-to-end basis.
Agile planning capabilities
Modern day agile planning is extremely capable. It combines the best of supply chain technologies.
Firstly, End-to-End Supply Chain Visibility enables manufacturers to continually react to unforeseen changes anywhere across the supply chain – demand, distribution, production, supply. Such visibility involves demand sensing to provide early detection of changes in demand and advanced data analytics to leverage volumes of real-time data streams to detect plan violations and prepare analysis on appropriate alternative plans.
A core capability of agile planning is scenario management. This enables planners to rapidly engage scenario analysis on-the-fly to determine the impact of potential events and propose an alternative course of action. When analysing scenarios planners must balance operational metrics, against financial metrics, and also against risk. Agile planning needs to measure risk across the supply chain and facilitate stakeholders mitigation strategies.
The speed of agile planning requires an enhanced level of human collaboration. Plans, scenarios, tasks and risks need to be socialized across all cross-functional stakeholders from marketing, to sales, to distribution to manufacturing, to procurement, to product engineering, to finance. Social-like collaboration harnesses the human intelligence hidden in the experience of supply chain stakeholders.
This level of capability is available on the cloud to simplify technical adoption and lowering both upfront costs and total cost of ownership.
Gartner research shows that 89% of supply chain professionals want to invest to make their supply chain more agile.
Business outcomes for executives
Executives expect Agile to provide a holistic business outcome instead of a functional silo perspective. More cross-functional collaboration delivers decisions that are best for the business, not a single department. Executives expect that we compare and analyze potential plans using financial, operational, and risk metrics.
Moreover, risk is an inherent part of disruption. Any deviation from the status-quo naturally comes with risk. Agile planning ensures to evaluate risks by severity and likelihood and appropriately mitigated.
Executives expect speed. In periods of disruption, any data signal has the ability to pose a new risk or opportunity. Executives expect that we rapidly analyze all potentially relevant data to ensure that planners are working with the most current picture of demand and supply. Also, Executives expect that technology will identify key trends that provide planners with actionable and fact-based decision support.
At the end of the day, Executives understand that agile planning will have an immediate impact on their capacity to deliver to their customers but also a direct impact on the profitability and the cash flow.
Future of agile supply chains
As technology advances, so will agile planning capabilities continue to evolve. We should expect to see more advanced capabilities including the adoption of Cognitive Learning to respond to exceptions in an augmented or automated manner. As the digitization of everything continues we should expect to collect Device Data across the supply chain using IoT technologies that we can use to drive Supply Chain digital twins.
Finally, World leaders are talking about it. Senior Executives are focusing on it. According to Gartner, 89% of supply chain professionals will invest in supply chain agility. This will continue to be a hot topic for many years to come.