Supply chain planning in an xP&A world
The evolution of Financial Planning and Analytics (FP&A) is well underway. Today’s best planning solutions are more accurately described by Gartner’s new terminology “Extended Planning and Analytics (xP&A),” where business planning and forecasting is streamlined and integrated across every part of the organization. At IBM, we’ve embraced this mentality for years and are taking it further with the continuous integrated planning approach to business planning, which is currently being applied across all business units, from finance, to sales to supply chain and beyond.
Supply chain leaders know that true collaboration across business units is a baseline requirement for building accurate demand forecasts. To achieve this goal, they’ll need an upgrade from legacy planning tools and manual, spreadsheet-based processes. Gaining real-time visibility into disparate data is key to driving operational efficiency and actionable insights. But in today’s world, it’s not only about having internal data, or even historical data, at your disposal. To plan with greater certainty, especially during volatile times, organizations need to incorporate external data, such as weather data and employment trends, as well as scenario planning, into their planning process. Predictive analytics and scenario modeling are no longer nice-to-haves in planning but are necessary to provide the foresight organizations need to make critical business decisions. Nowhere has this requirement been more evident than in supply chain planning within the last 16 months.
With demand volatility on the rise and customer expectations continually evolving due to globalization, the risks of fragmented business processes and legacy operation management systems are too great to ignore. The correlation of external and client data allows organizations to gain deeper insights into what is driving demand, resulting in more accurate forecasts and subsequently more optimized levels of inventory.
Using one integrated planning solution also allows organizations to strategize and build plans with a synthesized view of the organization in mind. An integrated approach allows operational plans to automatically update financial plans, providing business leaders a more accurate picture of organizational performance. This enables the identification of new growth opportunities, optimized spending and the ability to achieve business goals with confident momentum.
Here’s how three companies have been able to utilize supply chain planning across their organization to do just that.
Carhartt: How AI can help you capitalize on increased demand
The retailer Carhartt has been making rugged, durable work and weekend wear for more than 130 years, selling through a traditional wholesale model. But when growth outshot expectations a few years ago, they experienced a replenishment problem and lost key revenue. By using AI and predictive analytics, Carhartt was able to build algorithms that take into account a huge range of factors—from economic indicators to weather, in order to generate demand forecasts and automate replenishment at a SKU level.
Novolex: How to make supply chain plans better-and faster during turbulent times
Food packaging leader Novolex was struggling with lengthy annual planning cycles and the time it took to coordinate the company’s multiple locations and various systems. By switching to an integrated planning solution, they can now receive an accurate, timely view of what is happening at any given time along with clear prescriptive analytics, recommending the best course of action when facing dynamic demand.
“This year, we’ve been able to improve our inventory position by about 16%. That means the company is able to support the business with 16% less inventory than it maintained a year ago”
– Violeta Nedelcu, Supply Chain Director, Novolex
Jabil: Track costs and maximize margins with real-time data
Jabil engineers and builds a wide array of components and products for many Fortune 500 companies. With over 120 corporate clients in 10 sites, Regional Cost Accounting Manager, Martin Gonzalez, needed a truly integrated planning solution to gain transparency and agility. With IBM Planning Analytics with Watson, he created a margin analysis business intelligence dashboard that works at every level of the organization. Martin estimates that the dashboard lets his company create reports 25 times faster than the previous system: doing them manually in Excel.
“We’re saving each cost accountant on every site 7.5 hours a week. Now they can produce reports in two or three minutes.”
– Martin Gonzalez, Regional Cost Accounting Manager, Jabil
In summary, while businesses have historically focused on financial planning and analysis, it’s clear that integrating with operational planning and extending across all functional departments allows leaders to stay better informed and drive stronger business results. Supply chain organizations can reap the rewards of xP&A and continuous integrated planning, with processes that are consistent, intuitively collaborative, and incorporate AI to provide both predictive insights and prescriptive guidance to business leaders. IBM Planning Analytics with Watson is the only partner that can provide a truly modern AI-powered, Extended Planning and Analysis (xP&A) solution that unifies, streamlines and scales planning across every part of the organization.