As an industry, linking supply chain planning and execution has been discussed for decades. Why, in 2024 are we still talking about it and what can be done to move in the right direction?
The ability to unify key processes is closely tied to making timely, informed decisions – and the speed and quality of decision-making are crucial factors that significantly impact overall company performance. McKinsey’s findings highlight that only 48% of organizations are perceived to make decisions quickly—a concerning statistic given the need for agility in today’s fast-paced markets. Swift decision-making processes, coupled with efficient execution, serve as catalysts for driving returns and maintaining a competitive advantage.
It is well understood disconnected planning and execution processes can lead to costly disruptions, missed opportunities, and inefficiencies. Countless companies grapple with the fundamental flaw of disjointed processes, which leaves planning blind to crucial factors such as transportation, warehouse, and labor constraints. Why do some organizations struggle to bridge this critical gap? Before we jump into the how we move forward, let’s explore three underlying causes that contribute to this challenge:
Decision Dilemma: A common hurdle we hear is the ambiguity surrounding decision-making authority. Local versus global governance often sparks debates over who holds the reins in critical choices, which is compounded in organizations where planning teams are centralized (global) and execution is local. Intelligent workflows offer a solution by delineating responsibilities based on impact and necessity. By leveraging a combination of top-down directives and facility-level autonomy, organizations can strike a balance that promotes efficiency and agility. However, without clear guidelines, rules management, and collaborative frameworks, decision-making paralysis ensues, impeding progress and stifling innovation.
Disconnected Systems: The inability of systems to communicate exacerbates the gap between planning and execution. In an intricate supply chain landscape, where multiple touchpoints intersect, the continuous flow and exchange of data is paramount. From order placement to product delivery, every stage demands synchronization to ensure fluidity and responsiveness. Yet, disparate systems breed ambiguity, leading to missed signals and operational bottlenecks. Bridging this technological divide requires a concerted effort to harmonize data flows and establish a unified source of truth.
Organizational Silos: One of the primary culprits hindering the integration of planning and execution is the existence of organizational silos. These silos erect barriers between departments, impeding the effective flow of information and decision-making. When planning and execution operate in isolation, coordination becomes arduous, leading to disjointed efforts and suboptimal outcomes. Breaking down these barriers is essential for fostering collaboration, aligning objectives, and ensuring that decisions are made with a holistic view of the supply chain. Aligning objectives and fostering joint ownership in the rules and policies being used helps eliminate silos while building trust and confidence in decisions.
In a marketplace shaped by fluctuations in demand, shifting consumer preferences, and ongoing material shortages, strategic planning is non-negotiable. Yet, even the most meticulously crafted plans can crumble if execution falls short. The ability to translate strategic intent into actionable plans hinges on the alignment of planning and execution. This link is essential for fostering the agility and resilience necessary to navigate uncertainties, seize opportunities, and effectively mitigate risks.
The Digital Imperative to Link Supply Chain Planning and Execution
Leveraging technology for comprehensive supply chain insights – i.e. the relevant data, delivered at the right time, with contextual intelligence – is key to keep pace with today’s hyper-accelerated business landscape. It’s crucial to extend visibility beyond transportation, beyond facilities and customer locations to encompass the end-to-end supply chain. This is how you begin to predict disruptions, mitigate their impact, and automate responses with greater speed and efficacy. With the ability to swiftly detect and mitigate risks, adjust plans, and maintain continuous visibility across the extended ecosystem, companies can orchestrate their end-to-end supply chain decisions more effectively than ever before.
Embracing digital supply chain transformation is paramount to overcoming these inherent challenges. This includes technologies like advanced supply chain analytics, AI-driven algorithms and digital supply chain twins, providing a clear pathway for enhanced visibility across the ecosystem, delivering continuous intelligence to support both automated and augmented decision-making. Real-time data along with predictive and prescriptive insights allows organizations to harness automation to optimize resource allocation, improve supply chain operations, and enhance business performance. To be clear – the true value of these technologies lies not solely in their implementation, but rather in their ability to orchestrate business processes, including connecting planning and execution, to facilitate decisions that drive tangible outcomes. It’s about enabling actionable intelligence at scale, to guide faster and more effective decision-making.
Power Enhanced Decision Making
Amid rapidly changing market conditions and increasing business complexity, effective decision-making stands as a cornerstone of organizational success. However, many companies encounter obstacles in improving their business processes for decision-making, grappling with inefficiencies, delays, misalignment, and a lack of clear visibility.
When all facets of the supply chain—from planning strategies to execution tactics—are effectively integrated and aligned with organizational objectives, stakeholders gain the clarity and insight needed to act swiftly and decisively.
Consider the scenario where decision-makers spend an inordinate amount of time gathering data, seeking consensus or clarification on responsibilities. This common pitfall consumes finite valuable resources as well as hampers productivity and delays crucial actions. Ineffective decision making exacts a steep toll on company productivity, with studies indicating that a significant portion of managerial time is squandered on indecisiveness. McKinsey’s research underscores this point, revealing that an average Fortune 500 company loses roughly $250 million annually due to inefficient decision-making processes.
The question then becomes, why do we create processes and silos that effectively slow decisions? There’s simply no room for complacency. The digital imperative is here, urging companies not to lag behind. Relying solely on outdated philosophies and processes simply because it is the conventional way is no longer sufficient, it’s not even sustainable.
A holistic approach that aligns supply chain planning and execution empowers organizations to transcend the constraints of traditional silos, foster visibility and cross-functional collaboration. Business leaders become empowered to respond decisively to opportunities and threats. It’s a journey that promises to unlock new efficiencies, enhance agility, and propel organizations toward their strategic objectives in supply chain resilience and profitable growth.
Alex Pradhan is the Global Product Strategy Leader and Member of the Executive Leadership team at John Galt Solutions. In this position, Alex is responsible for leading the strategic development and product vision of John Galt Solutions’ end-to-end supply chain planning software solution. Alex has extensive expertise at the intersection of digital, supply chain and technology and is passionate about the role that technology plays in creating resilient, high performing supply chains.
In her prior role as a Research Analyst, she advised over 1000 global companies on a range of supply chain strategic and operational topics at the intersection of digital and technology. Before this experience, Alex spent several years at Subway where she was responsible for managing demand planning for promotional, limited time offers, and R&D test products. Alex received her MBA from the University of Miami and her post graduate degree in Data Science from the University of California, Irvine. She lives in the Miami-Ft Lauderdale area with her family.
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