Supply chain management is regarded as a critical function focused on operational efficiency and controlling costs, but it has been elevated into a board-level discussion in the wake of the pandemic. Supply chain professionals are now managing significant disruptions like inflation and price increases stemming from a volatile economy, labor shortages, and the growing consumer demand for faster and more dependable deliveries. The desire for better, more cohesive planning might be a priority for professionals — but it can be difficult given the day-to-day challenges from pressures and unplanned disruptions.
The pandemic truly underscored how connected the world is and the vulnerability of the supply chain process. As noted at the World Economic Forum, supply chain disruptions have resulted from factors that include geopolitical uncertainties, climate change, and inflation. The rising cost of living could also reduce the availability of goods and impact demand.
With these pressures mounting, the need to optimize supply chains with new and emerging technologies becomes clear. This makes it imperative to consider integrated supply chain planning in organization planning cycles.
This is the first article in a supply chain series that will first look at integrated supply chain planning, the digital supply chain, greening the supply chain, and finally, how the Regional Comprehensive Economic Partnership (RCEP) can impact supply chains in ASEAN.
The digital world is constantly evolving, with innovative technologies ranging from AI to the metaverse. Yet, the logistics industry still relies on antiquated systems and processes, creating risks for organizations. Businesses must consider adopting digital solutions to create value, mitigate risks, and optimize trade flows.
Given the growing pressure to optimize supply chains with novel tools and technologies, it is imperative for organizations to prioritize their integrated supply chain planning. Accordingly, companies should balance two critical areas: sales and operations. It will be vital to focus on a sustainable planning approach that underscores stability and long-term growth with the following priorities:
PEOPLE: CROSS-FUNCTION COLLABORATION
Managing talent effectively is crucial to integrated planning. Organizations should first consider how they can leverage their people to truly collaborate in creating, executing and monitoring plans to realize strategic objectives. It is essential to upskill key individuals across business functions to boost collaboration, identify gaps in skills, and prepare them for the increasing pace of the modern supply chain.
It is also crucial for organizations not to execute plans in silos but in a holistic alignment with various business functions. Businesses must build plans by aligning the sales and marketing, procurement, operations, supply chain, and finance functions. Furthermore, having a cohesive business plan can help companies optimize inventory, manage resources, and cut costs. Bridging customer service and fulfillment functions can also enable further strategic planning to meet developing consumer demands and instill stakeholder trust.
PROCESSES: INCREMENTAL IMPROVEMENTS VERSUS A SIGNIFICANT OVERHAUL
The supply chain process depends on technology, but this may involve legacy platforms and outdated applications that are incompatible. It could be time for organizations to overhaul their platforms, though this will be costly and may not be a priority in the budget yet. Alternatively, gradually adopting intelligent tools could improve process outputs without putting a heavy financial strain on organizations. Proper planning and using an integrated business planning (IBP) tool could also help. IBPs can capitalize on the Cloud’s considerable data processing capabilities, driving significant progress in crucial areas.
IBPs tools can bridge enterprise resource planning (ERP), customer relationship management (CRM), and financial planning platforms to provide a comprehensive business view, allowing organizations to track their progress versus their plans. These tools also facilitate scenario planning for a dynamic landscape, tactical planning that utilizes historical and market data, predictive analytics for trend forecasting, and machine learning algorithms to forecast demand that will help businesses plan and operate more effectively.
DATA AND METRICS: INPUTS AND PROGRESS MEASUREMENT
While planning tools can be helpful, high-quality data and experience-led dashboards are imperative to create a timely and accurate internal business view that appraises external market conditions and generates meaningful business insights. Consequently, organizations should define standard terms for consistency and suitable key performance indicators (KPIs) to measure progress. Board oversight and data governance will be requisite to establish appropriate policies and practices, thereby managing standards, guidelines, and data security. Finally, organizations must use data quality assessments, documentation and dashboarding tools, and lifecycle management to reduce the risks of data degradation and loss.
While managing supply chain issues is a complex task, addressing the pain points of this manifold process is necessary to drive long-term value and results.
OPTIMIZING THE SUPPLY CHAIN
Supply chain disruptions are ubiquitous — and staying abreast of these developments is vital to identifying opportunities, managing risks, and future-proofing organizations.
Volatile economies, more complex and interconnected regional and global supply chain ecosystems, and highly evolving consumer demands signify that business leaders should focus on integrated supply chain planning. Embracing the IBP concept and leveraging available tools could be a game-changer because digital solutions can elevate and streamline the supply chain process, significantly improving user and customer experiences, while outdated systems can compound business risks. However, businesses should integrate technologies into existing infrastructures in an end-to-end manner and not in silos.
Optimizing the supply chain entails focusing on significant areas like people, processes, and data and metrics. It is crucial to find the balance between planning and execution while carving a path for sustainability and long-term growth.
The next article in this series will discuss what is next for the digital supply chain and how supply chain leaders have the opportunity to reimagine their supply chains for the future.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Jan Ray G. Manlapaz is a consulting partner and Mary Andrea T. Bacani is a supply chain and operations (SCO) senior manager of SGV & Co.