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The most comprehensive form of planning that companies engage in is integrated business planning. IBP balances what can be produced against projected demand. Based on this, a multiple-month financial, supply chain, and capital expenditure plan is produced. A supply chain planning application is the core technology that enables robust planning.
Historically, the supply chain plan that resulted from the IBP process was too static. Production plans might be locked for as long as a month, regardless of how accurate the forecast was. Executives came to understand that IBP should not constrain a company’s ability to react to what was happening in the market. A production plan from an IBP meeting should be considered a rough-cut long-term plan, merely the best estimation of what was likely, not something written in stone. Production, in the short term, needed to flex to meet new opportunities and unexpected constraints.
This realization led to a new focus on agile planning. Agile planning is short-term planning that allows companies to flex to meet market demands. COVID accelerated executives’ understanding that supply chains needed to be agile.
However, according to research by Ernst & Young LLP, the global consulting firm, as the Covid crisis recedes, supply chain executives are losing the strategic gains they made with their C-suite counterparts. During and immediately after the pandemic, supply chain leaders were in an unfamiliar position: they had the attention of top management and a once-in-a-generation opportunity to make their supply chains more agile and resilient. EY and ARC’s research suggests that at many companies, that opportunity is receding.
A recent supply chain planning market analysis released by the ARC Advisory Group suggests EY has picked up on a trend. The supply chain planning market, which had been growing at double-digit rates during and after COVID-19, has slowed considerably, particularly in Europe.
Interestingly, while demand for SCP applications has slowed, the investments made by leading SCP suppliers show that they are determined to make their planning platforms capable of supporting greater agility. While executive support for purchasing SCP has waned, future sales of supply planning are still linked to a supplier’s ability to support agile planning. The best way to accomplish this is to attach the planning to a multi-enterprise supply chain network.
In May, Blue Yonder completed its acquisition of One Network, a provider of MESN, for $839 million. A multi-enterprise supply chain network platform is a solution built on a public cloud with a many-to-many architecture that supports a community of trading partners. The One Network platform connects over 150,000 organizations, including over 49,000 suppliers and 20,000 carriers. More than 5.6 million transactions that impact supply chain operations occur every day on the platform.
Leading suppliers that offer both supply planning and MSCN include Blue Yonder, Coupa, Infor, Kinaxis, and SAP. Coupa and Kinaxis joined the club in only the last few years. Kinaxis refers to its combination of MSCN and SCP as “an AI-infused supply chain orchestration platform that delivers fast, intelligent, and proactive decision-making.” Coupa is building out functionality designed to move planning scenarios from being merely internally built and consumed into a more collaborative, multi-enterprise approach to planning.
Infor sees better connections to a supply chain network as an important first step. But, the supply plans also need to have what they refer to as “network feasibility.” It is important for a supply planner who sees that a plan is not meeting service or revenue objectives to be able to dig into the plan and discover why that is the case. Where in the extended network of suppliers, customers, and logistics partners has the problem that limits the plan arisen? This idea of explainability is something most SCP suppliers are addressing, particularly through investments in generative AI.
For SAP, good planning relies on robust collaboration. The most common trading partner collaborative processes covered in MSCN suites are purchase order/procurement collaboration, demand forecast collaboration and the transportation shipper tender/carrier accept process. SAP announced a new transportation collaboration solution that involved messaging not just between shippers and carriers but also three-way communication involving logistics service providers. However, SAP has a broader suite of collaboration solutions than other vendors. They also cover supplier-managed inventory, quality collaboration, manufacturing line collaboration, and asset collaboration.
Potential customers of planning ask about the ability of an SCP solution to support environmental, social, and governance considerations, even though almost all companies use the supply planning engine to achieve cost and service level goals, not to drive better performance on ESG. But, at some point, SCP vendors believe their customers will be driven to include ESG tradeoffs in their supply plans. MSCN solutions are likely to become the best solution for allowing trading partners to exchange ESG performance data with each other.
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