Intelligent Business Planning

Many traditional Integrated Business Planning IBP platforms being hyped these days as the new deal are essentially glorified spreadsheets in the cloud with traditional planning operators like ABC-XYZ segmentation or traditional statistical forecasting. They bring the same failed on-premise manual intensive spreadsheet based S&OP paradigm in a new shiny repackaging: now called IBP in the cloud with an Excel UI interface, with an ability to crunch large volumes of data, and disaggregate / aggregate / visualize results on the fly. Although these ideas do improve the offline spreadsheets driven S&OP environments to some extent and they can be deployed relatively quickly (4-6 months), they fall short on the business value front. Why? The same basic forecast models like triple exponential smoothing that failed to deliver sustainable improvements over the last two decades are being used to drive demand review portion of the S&OP process.

This is a world in which consensus demand forecast provided by simplistic forecast models and/or sales teams is assumed to be correct at product/customer level in all future periods. At best, the demand planner can perform a few local what-if simulations to understand alternative demand scenarios (just a couple upside / downside scenarios or versions). This theoretically produces an accurate consensus demand plan. All that is left to do is to take this demand plan and explode it through Bills of Material in Supply Planning process and develop a capacity constrained Supply Plan and proceed to buy Raw Materials from Vendors.

We all know how this turns out in reality. Sales orders come in different than demand plan: what is ordered is different, when and how much are also different. Results are a lot of turbulence in operational planning / execution horizon as needed Raw Materials are short, leaving Supply Plan sub-optimal on capacity usage front, or worse non-executable. High plan to actual gaps are reported. Supply chain is blamed as On Time Delivery performance suffers. Then the company gets back to the next S&OP cycle to repeat the madness all over again.

Why are we still using demand forecast models developed half a century ago or earlier, when computing power was scarce? Cloud computing and in-memory databases are pointless, if the planning algorithms are still so last century. At GitaCloud, we believe that a fundamentally different approach is required to tame the turbulence. Instead of fighting demand uncertainty and asking for frozen demand fences, we should embrace this uncertainty. Why limit the alternative future consideration to a few ad-hoc what-if simulations? The compute power available in cloud today combined with deep learning algorithms can autonomously model the full range of risk & uncertainty in future demands by deeply analyzing customer buying behaviors for product / quantity / timing risk. 

The result is not a single deterministic demand number for every product/customer/week combination, but a full range of probabilities for all possibilities in a stochastic probabilistic demand prediction. This is essentially what-if simulation on steroids, unconstrained by number of planning combinations or planner bandwidth. 

This approach to demand modeling results in a much better appreciation of risk in the demand signal. Supply chain can now work with the commercial teams to align on what part of the risk spectrum needs to be covered for in terms of buy/make/move plans. This leads to much reduced turbulence in operational horizon as we place optimal buy/make/move calls to optimize revenue/margin with full consideration of risk. 

GitaCloud can provide buy/make/move signals as a service to the planners, who then are freed up from the forecasting/planning chores every cycle and can focus on understanding the business environment to tweak the plans on an exception basis. Think of this as your autonomous car, where you can take control at will, and at the same time, read a book on your morning commute to work.

At GitaCloud, we do not engage through just a technology implementation lens. The technical go-live of an IBP software means little, if the business users see no hard value in terms of sustained improvement in on-time delivery, reduction in expedited shipping costs, reduction in inventory levels, etc., and is a recipe for quick reversion to the same old spreadsheets. We work with you to provide accurate demand & supply signals as a service, all available on your IBP platform to further refine the signal and execute as you please. We track value-added vs. the baseline signal and audit value from our service on an ongoing basis (continuous business case validation as customers can stop the service anytime).

Curious? Send us an email at connect@gitacloud.com, if you would like to learn more.

Digital Supply Chains: How does SAP IBP help?

Digital Supply Chains: How does SAP IBP help?

It is my pleasure to communicate the launch of GitaCloud Digital Learning DL Platform (access it at learning.gitacloud.com). We will provide comprehensive learning on this platform across Digital Supply Chain Fundamentals as well as enabling technology solutions like SAP Leonardo portfolio (of which SAP IBP is a key component). This platform is designed to cater to a wide range of learners: Business Planners and Executives looking to understand why & how to start Digital Supply Chain Transformation programs, IT Analysts and their Managers to understand detailed functional and modeling capabilities of SAP IBP platform, SCM practitioners and independent consultants to learn SAP IBP in a digitally enabled, hands-on, and remote support based comprehensive offering.  

SAP IBP Response & Supply Workshop Conducted Successfully

SAP IBP Response & Supply Workshop Conducted Successfully

SAP Integrated Business Planning IBP platform and applications are growing their footprint rapidly. IBP Supply Optimizer can handle an arbitrarily deep distribution / production network with ways to maximize enterprise profitability or customer service goals. Order Based Planning in IBP for Response which can be reviewed in daily/weekly time buckets real-time through Excel UI is one such notable capability.

We recently concluded our SAP IBP Response & Supply workshop based on IBP 1705 release. It was well attended by learners coming in from US, Europe, India, and Singapore. Many of the learners are repeat learners who have also attended our past IBP workshops on S&OP or Demand & Inventory. We covered several advanced topics over 4 days. It was challenging content for learners to absorb over 4-days, we moved fast through a long list of advanced  topics with effectively balancing slide-ware (concept slides) and software (demos, exercises).

Enabling Customers and SCM Practitioners on IBP

Enabling Customers and SCM Practitioners on IBP

At GitaCloud, we are committed to enabling Customers evaluating SAP IBP and SCM Practitioners looking to transition from SAP APO to SAP IBP. We realized early that the best way to learn and stay on top of a rapidly evolving platform is to teach a diverse set of learners and do this on a monthly basis on top of our customer pursuits and engagement workload. We just completed our fourth IBP workshop in 2017 - this one went the best so far as we continue to refine the product and make it more and more relevant to our learners. This blog post covers the S&OP workshop flow in detail as well as feedback from our learners. These workshops are being very well received and in high demand. We will continue to have similar workshops rest of 2017 across Response & Supply, Demand & Inventory, and Control Tower & Integration topics. 

Automotive Spare Parts Business: Business Challenges and Supply Chain Excellence Strategies

Automotive Spare Parts Business: Business Challenges and Supply Chain Excellence Strategies

This blog post covers business challenges & recommended supply chain excellence strategies to deal with them for Automotive OEM companies, specifically focused on the Automotive Spare Parts Supply Chain.

When we put together the increasing strategic importance of spare part business with the inherent complexity in managing this business, we can appreciate the complex challenges and the large business value of spares supply chain excellence for Auto OEMs. The best in class performers will manage their spare parts business in a forward looking and advanced analytics driven manner when it comes to spare parts demand forecasting, inventory optimization, and integrated business planning across the multi-enterprise landscape.

I will cover the following areas in this post for Automotive Spare Parts Businesses:

1. Growing Strategic Importance of Spares

2. Maturity Stages: Crawl-Walk-Run

3. Organization Structure Choices

4. Multi-tier Distribution Network

5. Forecasting & Planning Challenges

6. Forecasting & Planning Strategies

7. Supply Chain Performance / KPIs

8. Closing Remarks

Integrated Business Planning in Pharmaceuticals: Part 2 - Solutions that Deliver Hard Value

Integrated Business Planning in Pharmaceuticals: Part 2 - Solutions that Deliver Hard Value

This is Part Two of my two-part blog post to evaluate the Pharmaceutical Industry. In this post, we will review Integrated Business Planning and related Decision Analytics as a strategic response to managing complexity and delivering best-in-class business performance in the Pharmaceutical industry. In Part One, we covered current supply chain performance benchmarks and key issues prevalent in the Pharmaceutical industry.

This post is structured across the following topics:

  • Background
  • Long Range Planning
  • Short / Mid-Range Planning
  • Special Demand Situations: Tenders
  • Demand Sensing & Inventory Optimization: How it helps, Hard Benefits
  • Integrated Business Planning IBP: How it helps, Hard Benefits
  • Sales & Operations Planning S&OP vs. Integrated Business Planning IBP
  • IBP: Solution Capabilities Required
  • IBP in Pharma
  • Closing Remarks

Supply Chain Talent: Needle in the Haystack

Supply Chain Talent: Needle in the Haystack

Given the blurring of boundary between Supply Chain business expertise and Supply Chain technology expertise, it is not a surprise that many organizations are facing challenges in filling up open positions in their Supply Chain function currently and for the foreseeable future. Digital transformation enabled by IOT and multi-enterprise supply chain operating networks of tomorrow will make this Supply Chain talent gap even wider. This is the number one concern for most supply chain executives: talent that can learn new platforms & capabilities fast and be able to consistently deliver context-independent insights from a diverse set of data sources. New technology mastery and ability to find needles in big haystacks are necessary but not sufficient going forward for the Supply Chain talent in winning organizations.

Customer Centric...Demand Driven...Outside-In...Is there a difference?

Customer Centric...Demand Driven...Outside-In...Is there a difference?

Lora Cecere of Supply Chain Insights recently came out with crisp definitions of the next generation concepts in Supply Chain. These concepts are overlapping, yet different, and often lead to confusion within Supply Chain Transformation teams. GitaCloud leads with transformative outside-in processes like Demand Sensing. We see some of this confusion first-hand and applaud Lora's effort to drive clarity into the conversation.

The Truth About Size Zero

The Truth About Size Zero

I came across an interesting article from Wayne Brown on AT Kearney's website in their Automotive industry's Ideas & Insights section. The article titled 'Making Sure Lean Stocks Are Properly Nourished' talks about the importance of optimal inventory, not zero inventory as some lean practitioners believe to be the holy grail. The article is well written and hits the mark mostly. There is a key miss though when it comes to planning accuracy, which has prompted me to write this blog post.

Beyond S&OP and IBP ... A Commentary on the Need for New Technology

Beyond S&OP and IBP ... A Commentary on the Need for New Technology

In his article in the previous issue of ForesightDean Sorensen (2016) argued that while there is increasing complexity in business environments, there has not been enough focus on tying strategy to execution. I am in agreement with him: I think the biggest systems integration challenge facing CEOs is how to seamlessly tie strategic decision making to operational execution (S&OP). 

It's complex, it's volatile, but business decisions need to be made. Now what?

It's complex, it's volatile, but business decisions need to be made. Now what?

I recently attended Llamasoft SummerCon 2016, annual conference for the well-established supply network design & optimization player: Llamasoft. Garry Kasparov was one of the keynote speakers. For the chess aficionados among us, this was a once-in-a-lifetime opportunity to interact with the legend and get a picture taken with him.

Garry discussed how as he became the youngest ever chess champion at the age of twenty-two, people routinely hounded him to understand the secret behind this unprecedented success.How did come up with a strategy to defeat veteran grandmasters? How did he plan and replan rapidly in the face of a changing battle competitive landscape, how did he decide on the best move to execute next when faced with multiple options with unclear line of sight in terms of opponent's counter move? Did he have supernatural insight: how many moves ahead could he see to visualize a checkmate on a cluttered board? What went on in his mind during a tense game in the face of missteps? In short, what were the strategic design, tactical planning, and operational execution related decision making processes that led to this extraordinary success.

You will agree we are all looking for similar answers in this increasingly complex, dynamic, and competitive world, moving under time pressure, knowing the risks a single bad move could bring, balancing facts and instinct in the fog of war, which is how business runs in the global marketplace today. If you need insights into your own development as a decision-maker and ideas on how to encourage future growth, then read on.

Consumer Products Industry: How the Smaller Players can Compete

Consumer Products Industry: How the Smaller Players can Compete

Many non-traditional consumer products manufacturers have supply chains designed for business to business commerce of non-consumer products.  Others find that they get a greater return by investing in their product development or manufacturing scale than in improving their supply chain processes.  Still others are early in their overall business maturity and cannot afford to be fully competitive in their supply chain processes, often because their overall volumes do not permit the economy of scale benefits of large volume supply chains.

Can you really understand future demand, when it is nothing like the past?

Can you really understand future demand, when it is nothing like the past?

Multi-enterprise demand sensing is a capability designed to provide business users a demand sensing / shaping (what-if simulation) platform to most accurately sense demand at the point of consumption (retailer store POS) based on a forward looking prescriptive analytics based demand model. It also has the ability to causally relate the end consumer demand signal with the upstream replenishment demand signal for the manufacturers to minimize bullwhip effect and reduce inventory / working capital needed to cover the high error in typical time series based backward looking demand (shipment) forecasting processes. 

Collaborating across business silos harder than herding cats?

Collaborating across business silos harder than herding cats?

Social Project Management breaks the walls between the Project/Program Managers and the team actually doing the work. Cloud based social project management platforms can empower the team to view the plan real-time, make recommendations to edit it, record time against tasks, collaborate on a given task with fellow team members, and have visibility into project progress metrics in a seamless modern environment. 

Can Integrated Business Planning Solutions be agnostic to industry vertical needs?

Can Integrated Business Planning Solutions be agnostic to industry vertical needs?

Integrated Business Planning seems to be just a buzzword for most S&OP vendors from 90s and ERP vendors looking to get to the second generation solutions. True integrated business planning is not inside-out enterprise centric, but an outside-in value network centric idea. Given the value network configurations and push/pull dynamics are quite different by industry, it would make sense to think of IBP offerings in value network terms. However, most offerings in the marketplace are horizontal offerings with vertical functionality added as an after thought.