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Planning Strategies in 2023: What Has Changed and Why · Speaking of Supply Chain

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  You're listening to Speaking of Supply Chain, a mebok podcast. This is a
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  show for logistics professionals looking to learn more about the latest innovations in supply chain.
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  Each episode will feature a conversation on topics such as mitigating supply chain disruption
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  and reducing risk, current automation trends, sustainability initiatives, and more. Let's
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  dive right in. Hello, and welcome to Speaking of Supply Chain, where
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  we explore trends, current events, and innovations impacting the supply chain and logistics
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  industries. I'm your host, Ellen Wood. Today we're excited to be joined
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  by Brian Nielsen, director and fmcg lead for North America with MeBot Consulting,
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  who will be talking with us about supply chain planning. Hi. Brian,
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  Welcome to the show. Him welcome to be here. Obviously, events in
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  the past few years have reached havoc on the supply chain and especially planning techniques,
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  because you can't plan for a pandemic. I don't care how robust plans
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  were prior to March of twenty twenty, they had no idea that this was
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  coming and they had no way to prepare for it. So what things have
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  changed in the past couple of years in regard to the way companies approach their
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  planning strategy. Hellen, great question. I think let's start out with,
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  you know, the breaking apart between people, process and tools from a planning
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  perspective. Okay, And I think if you start with, you know,
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  if you step back from it and I think, what the what the pandemic
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  did or enable was an output of it? Was really the I would say,
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  firstus a general awareness of supply chain. For example, I mean people,
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  you know, they weren't aware of what supply chain is. You know,
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  thirty five years ago when I started supply chain, what what is that?
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  Today people know that you know that what there's cargo issues at the port's,
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  potential rail strike, driver shortage, I mean, the baby formula shortages,
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  and you know, the new cars with the available of chips. Everyone
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  understands the supply chain today, at least in general terms. So that's a
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  I think that's a very interesting you know, just a more awareness of supply
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  chain and the value supply chain brings um. So you know, you can
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  tell I get a little excited about it that you know, you kind of
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  have a seat at the table did the adult table, so to speak,
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  right from supply chain poet of view. And I say that jokingly, but
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  I think, you know, how does that translate into business? Uh?
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  In the boardroom? I think the C suites, Um, you know,
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  they they kind of look at supply chain and how they discuss it today it's
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  all about supply chain resiliency and reliability and what are those strategy strategies to for
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  risk mitigation. So I think that from an organizational perspective and peel perspective,
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  those are the topics and this is how they look at it. And I
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  think, you know what's changed from that perspective. I think there's more of
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  an integrated structure and approach and discussion. Uh. You know you had there's
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  less, there's less around you know, throwing it over the fence, so
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  to speak into a different function, there's more and there's there's more desiloing of
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  the supply chain from end to end. I think is what is an output
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  of this as well? I mean there was a migration path of desiloing with
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  the ERP system, but I think this this actually made it even exceler even
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  further mature for a lot of companies as well. That we're probably earlier in
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  the mature process for de siloing. So it really helped I think people understand
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  the supply chain, um in what what were the what are the handoffs in
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  the supply chain between different functions and how do you bring that all together?
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  Um, you know going forward. So to me, you know that that
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  from noizational prospective people perspective, that was a positive thing coming out of it.
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  Um. And then you know one of the other things and jump in
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  anytime, Ellen, if I talk, if I talk too much, because
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  I could keep going, But there's this the other it's always you know,
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  a ten year cycle or so fifteen years. You know, the face between
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  each of the functions and who had decision rights and is it centralized versus decentralized
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  decision making, you know, from the field to corporate and so that that
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  conversation cominarly goes back and forth what makes sense or not. So that's probably
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  a whole topic in itself, centralization versus decentralization within a corporation and planning and
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  how that works. And you know who's in best lane of cycle with the
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  information that you have to make the best decision. That's true, Yeah,
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  and breaking down those silos in those walls really facilitate conversation throughout the c suite,
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  as you were saying, to make sure that different groups know what their
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  different objectives are, what their different plans are, what they're different goals are
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  in terms of moving the business forward and having that open communication. Like you
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  said, you know, breaking all of that down certainly does make it easier
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  for each of those groups to plan accordingly with the other groups in mind.
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  But is it even still a good practice to spend the amount of time looking
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  at the longer planning horizons. Is that still something that they're doing, or
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  is the resurgence of COVID, you know, at the end of the year
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  and cold and flu season. Are these types of things still knocking people off
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  off balance in terms of what they had originally planned for and what's happening in
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  reality. That's a real good question, because if you simplify it and say,
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  well, you know, we need to shorten our planning rising because of
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  all this all this disruption, it's actually that's that's the natural reaction. But
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  intuitively, you want to be able to actually plan, you have to plan
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  longer. With these disruptions, you have to plan further out six to nine
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  twelve months up because of the availability of the materials, the the ingredients or
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  packaging UH in order to have that committed to your to your business. So
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  it's what ends up happening is you have to plan for the future further out
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  with these volatility, but then the challenges to execute in the short UH in
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  the shorter and it's all about execution U and the handoffs, the integration the
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  execution UH in the short term UH. And what that what that? What
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  this disruption did as far as planning horizon and the short term is you had
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  to create UM this environment where you're very flexible. So if the if the
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  delivery was a day late or two days later or a week late, you
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  had to run something else to obviously ensure that you were a producing product and
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  not underutizing your capacity on your lines and your people and so you so you
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  had to be very flexible and that and so power of being that flexible is
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  what we see is you have to simplify your supply chain because the two biggest
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  challenges I think in planning were labor shortages to your point, and then second
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  is obviously was the was the material product available to convert it into a finished
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  product. And so from that perspective, uh, you know, the the
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  planning horizons was extended out, but the execution became more of a focus on
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  the day to day, week to week going forward. And we just step
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  back. I think from a you know, your earlier question around what were
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  some of the processes or approaches from a planning perspective, I think if you
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  look at it, uh, you know what what's changed a little bit?
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  Uh, you know in the planning process. You know, in a longer
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  horizon would be I would tell you is the sourcing, uh you know,
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  and there's a couple different sourcing I think from a supplier perspective, um,
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  you know, how do you how do you reduce um the risk to a
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  supplier of delivering the product that you need when you need it with the amoungs
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  you need the specification requirements. And I think so there's there's this need for
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  expanding your sourcing capability instead of having maybe one or two having a tertiary supplier
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  with that meat to specifications and maybe bringing that supplier closer to your manufacturing or
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  conversion point. Was is what we see in the trends a little bit versus
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  having it the supplier source to the Agent Pacific market and coming to the North
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  America, just trying to have more of a near shore supplier that can provide
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  that to the conversion with the North America. And then I think on the
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  other element, which is a little more complex, is the production facilities.
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  How they plan the production facilities. You know, can you source those facilities
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  you know nearshore which is closer to the North American demand, which becomes you
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  know, much more challenging because of the infrastructure requirement and the asset resources with
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  a production facility, and how do you you just can't move that overnight.
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  So I think those are some of the things we see in the planning perspective
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  that you know, have changed or are migrating towards how do we how do
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  we near shore and how do we bring that production closer to the customer?
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  Uh? And so there's more of a regionalization per se of how you look
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  at your planning, UH. You know going forward now is this is this
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  specific to the FMCG industry or is this you know, across multiple industries because
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  I know with with FMCG, obviously you want to be close to where your
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  your clients are so that you or your customers are so that you can you
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  know, have that that e commerce and how of that flexibility in terms of
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  where you're producing and storing everything. But does this apply to automotive or manufacturing
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  or pharmaceutical does it? Does it apply? Yeah? So if you think
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  about it in the vehicle of you know, CpG at fast Wood, Consimer
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  Goods, the cycle time and the automobile industry, uh that they are many
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  times they're supply chain midel is just in time for the auto industry. So
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  so yes, you have to have you know, that supply network or supply
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  or village sorts be close to that's their mile close to the manufacturing facility because
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  of the expense of shutting down the line in the automobile industry is into the
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  seven figures. So it's you know, you have to have that design or
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  that you have that regional and local supplier base. And I think in the
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  FMCG in the CpG is in the same camp where they're migrating towards having some
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  the supplier villages and having that supplier closer to to the manufacturing conversion location.
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  Uh. And I think the other piece of that also is you know who
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  owns the inventory, and so if you think about it with you know,
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  proc availability issues, the inventory levels and safety stocks and psycho stocks have gone
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  down due to COVID, and so you have less inventory and so you have
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  to rely on that replenishment and rely on the reliability of the supplier to deliver
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  when they said they're going to deliver. Is there a certain aspect of the
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  planning we've got demand planning resources production? Has it shifted in importance as to
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  which is more important than another? Or is that is that similar to what
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  it was prior to COVID, because we're talking about you know, having that
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  that sourcing in place and making short you know, depending on the industry,
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  whether it's just in time or having enough on hand for six months, depending
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  on on what would what you should do. Um, is that different than
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  the actual production plan now? Or it has that shifted traded places? You're
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  asking some very challenging questions. I think thank you for that. I think
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  there's it depends on who the who the client or customer is where you're asking.
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  So if you're talking to a production planner, that's going to be more
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  of the scheduling. If you're talking to a C suite person, I think
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  it's gonna be more about the SNOP process sales and operation planning UM, because
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  I think, you know, so it depends on who you who you're asking
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  a question too, quite frankly, and I think you know, if you
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  talk to the the C suite, you know, SNOP becomes much more of
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  a topic and more important emphasis today, you know, because the SNOP you
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  know, obviously addresses the strategic you know, the budgetary process and also the
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  operation and then actually the execution. It touches across the entire supply chain SNOP
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  UM, you know. And I in s OP sometimes I think it's a
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  bad name and they think it's a supply chain uh, you know process,
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  but it really is a business process across the entire or uh business and you
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  know, and and how I view SNOP is really a simplication of your all
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  decision making, UH. And that's really what SNOP allows you to do.
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  And you know, and I think one of the things that you see in
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  SNOP today, UH is that you know, it really is taking the right
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  decisions but also making sure they get executed. And I think that we're making
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  sure it gets executed because where I think a lot of companies fall short.
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  They have these great plans in sn OP, but then as far as how
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  they execute them, uh, they fall short. And it's and it's whether
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  you know, it's the structure, it's whether it's the tools or the process
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  or the people. You know, it's it's a letting you of different challenges
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  that they have. But I think that's that's I think some of the challenges
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  that that I see over the over the years as far as SNOP and the
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  execution piece of that SNOP and operationalizing so to speak. So with with some
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  of those challenges you listed people, you listed processes, where do you think
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  that companies can focus in order to make the biggest quick improvements the quick wins
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  wow? And planning that's that's that's a if we I mean, that's a
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  real good question on planning, because planning, you know, is a lot
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  about the tools and the information. And I would I would probably say at
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  this stage, you know, I wouldn't have said this five years ago,
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  but I'd say today is you know, some of the tools in digitalization today,
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  in the intersection between digitalization and planning are it's a really big enabler for
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  planning. To have this digitalization, uh in leverage machine learning for complex problems.
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  Uh, you know, whether it's even just forecasting and predictions going forward
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  and understanding root cause problems. I think digitalization and uh computer learning has gone
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  to the next level in the least a couple of years, and that could
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  really help drive improvement and planning and forecasting. So I think, you know,
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  having some some of that digitalization understanding and what the impact is today I
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  think is probably you know, top of mind from from my perspective, um,
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  you know, And I think the other element of that is probably simulation.
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  We do a lot of simulation within MEBACH, and you know, you
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  can simulate the operational bionecks and do alternative planning and scheduling and do what its
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  scenarios, and so I think that's that's pretty how would I say it.
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  It's a robust tool that gives you a lot of capability to mitigate risk without
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  having to invest in assets or learning from after the fact. So it's it's
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  something I think today is it would if in my recommendation, is something a
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  lot of companies should invest in going forward. It's funny that you mentioned you
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  wouldn't have said this five years ago, because I've I've only been in this
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  industry for almost eight years, but I can agree in fact, not even
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  five years ago, a lot of companies were still doing all of their planning
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  and collecting all of their data in Excel spreadsheets and that way. Then they
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  just have to run a formula or have an analyst looking through all of the
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  da ada on trying to to uncover those uh, those those key insights into
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  what they could be doing or what they should be doing. And now all
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  of that can be done through some of these these transformational digital tools, this
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  technology that allows the data to be you know, compiled and modified and just
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  pulled together and then spits out results that then you know, obviously a human
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  has to make the decision on whether or not to move forward with with with
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  these recommendations that the data indicates should be done. But are using more companies
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  leaning heavier on that technology, or more companies adopting technology that allows these things,
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  or are those there's still holdouts that are tied to their Excel sheets.
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  So so you know, full disclosure, there's we have clients today that are
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  still using Excel spreadshet Excel. Uh, you know, is is very predominantly
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  in the CpG industry and a lot of companies as a supporting tool. You'll
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  have a RAPE system, but a lot of data is offset into EXCELS structure
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  each today and I think, I mean it EXCELS a powerful tool. Let's
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  let's not denegrate it. It's it's very but that means I mean it's it's
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  it's a subtimonal tool. But the challenge with it is you have you know,
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  it's it's the integration of data. I mean, you have data links
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  and data warehouses, but how do you integrate What's that integration point where you
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  can take that data in real time and then you know, share that with
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  with with other processes to really understand the behavior and predict it in advance versus
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  you know, trying to manually look at the data. So I think there's
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  an opportunity with the data links and warehousing, uh, in that level of
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  of of of of data that you can really integrate today into your decision making
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  process so and improve your accuracy, uh you know, going forward. So
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  I would definitely recommend, you know, people look at the opportunity in the
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  technology that they have today, and it's just growing. It's just the technology
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  is going by leafs and bowling. So definitely, Uh, if you haven't
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  had a chance to look at uh, you know digitalization in the areas,
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  definitely give us give me back a call, because we could definitely help you
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  out. So when it when it comes to planning, having that technology available
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  and at at your disposal certainly does make the planning easier. It makes it
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  faster, and it makes companies able to adapt and correct changes or or react
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  to changes in in their own organization and pivot, make different decisions and just
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  react better. Is that Is that what I'm hearing? Yeah? That you
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  know that you're absolutely right, And I think you know the standard you know
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  SAP modules for for planning is great. Uh, they're where they're at today,
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  but it's all the other information and inputs from manufacturing or or from transportation
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  that may not be incorporated into the planning modules. And I think the what
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  ends up packing with digitalization, you're able to take those inputs and then have
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  an overall best solution and understand the trade offs altogether. So because because you
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  end up being myopic and your decision making and planning today because you're not considering
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  you know, the transportation or it maybe something in procurement with a supplier and
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  that's not included in the in the planning inputs. So I think, you
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  know, having the ability to take all those inputs from different processes and integrate
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  them into the planning process through digitalization is where we need to go in the
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  future. So, just like we were talking earlier about breaking down those silos
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  and those communication barriers when it comes to the different you know, business units
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  within a company, it's also with the data, breaking down those silos and
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  making sure that all the data is accessible and it can be utilized to find
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  these these issues within within the data to make actionable decisions. Absolutely, absolutely
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  have data driven and where you're reducing your time responsiveness versus waiting to download a
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  week later, a day later, it's it's more instantaneously when you can integrate
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  the data inputs. So fantastic, Absolutely all right, So what else,
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  if if you could give one piece of advice to our listeners out there in
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  regard to their supply chain planning that they're they're doing for twenty twenty three,
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  what would you advise them? Another great question. I mean there's there's probably
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  three three of that come to my mind. But as far as the top,
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  you know, to advise you, you've got three I think we've brought
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  out time, but I would my recommendation is really look at your s and
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  okey process and understand is it working? Uh? And if not? I
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  think in order in order to be successful in the future, you really need
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  to have us a strong s and process within your company and at and at
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  the c suite level, And if you're not, you're definitely missing opportunity and
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  at improving your your revenue and your eve it up. Well. That brings
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  us to the end of this episode. Thank you so much Brian for joining
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  us and talking about planning, because you know, at the end of the
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  year and at the beginning of the year, that's when everybody is trying to
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  execute this plan that they they've come up with for the new year. And
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  hopefully all of our listeners have a great plan in place, and if not,
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  they know who the expert is who they should come talk to. I
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  hope our listeners enjoyed the discussion as much as I did. We are excited
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  for twenty twenty three and looking forward to many more episodes of speaking of supply
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  Chain this year. If anyone out there has a suggestion for a topic,
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  or would like to be a guest on our show. We'd love to hear
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  from you. You can contact me at podcast at mebach at any time.
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  As always, thank you for listening to Speaking of Supply Chain. If you
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  enjoyed our show, please rate it in whatever podcast platform you prefer. We're
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