Top 10: Supply chain planning ploys to mitigate uncertainty

By Doug Kimball
Firms with Intelligent supply chain planning and pricing solutions can improve the management of daily operations and their response to supply disruption

Supply chain uncertainties show no signs of easing, as inventories continue to balloon and consumer demand fluctuates. While most organizations rely on some set process and tools for their supply chain planning, those who have adopted intelligent planning and pricing solutions are bolstering management of daily operations and their response to disruptions, with speed and assurance. 

Here are 10 ways businesses can deploy intelligent supply chain planning and pricing to manage current and future disruptions.

Top supply chain planning strategies: Price optimisation tools

The right price optimisation tools enable teams to make pricing tweaks across large assortments and channels, easily and accurately. Even with large assortments, distributors can utilise these technologies to intentionally shape demand. These systems apply artificial intelligence (AI) and machine learning (ML) to merge data with computational power to be able to deliver these results across large demand forecasts.

With the constant disruptions businesses see today, it’s important that product teams quickly respond to ensure the least impact on sales and profitability. 

Resilience requires being flexible to changes, so being able to shape pricing as needed can help maximise profit even in times of challenge. When pricing optimisation tools are in place before disruption hits, you can lower prices to dispose of inventory which is not selling and raise prices on fast movers to increase margins. 

Top supply chain planning strategies: Manage demand 

Multi-Echelon Inventory Optimisation (MEIO) calculates businesses’ daily need for inventory across the entire supply chain network based on both customer demand and the unique configurations of the business and its network. The tool helps create a prediction of customer demand that reflects constraints that impact the actual ordering of goods, including joined-order logic, store order schedules, supplier capacity, holidays, buying minimums, maximums, lead times and a host of other factors that often occur during disruptions.

When product teams use intelligent technology to analyze their entire supply chain network as a single, holistic unit, they can ensure the most precise and cost-effective allocation of inventory across their various nodes – reducing risk, increasing service goals, and optimising inventory investment.

Top supply chain planning strategies: Intelligent forecasting 

The most innovative forecasting technology in supply chain management analyses historical sales data, current market research, and consumer trends to accurately predict demand. These forecasting techniques allow you to manage your supply chain to ensure you have enough product to meet consumer demands without overbuying. 

On average, 20-30% of all inventory is over-ordered or obsolete. When disruption hits, it can be difficult to forecast what the next few months will look like, but the process is critical to success. On one hand, you don’t want to run out of inventory when there is strong demand, but on the other, you don't want to have extra inventory sitting on the shelf for months on end. 

While there may be light at the end of the tunnel, shortages, delays, and bottlenecks continue and many businesses are making the mistake of overbuying inventory in fear of the next disruption halting their productions. 

However, having unnecessary capital tied up can throw off sales forecasting. Get it right, and you maximise profitability and survive disruptions.

Top supply chain planning strategies: S&OP Tools

Disruptions force businesses to adapt to new models of selling to accommodate buying preferences and practices when demand shifts. Sales and operations planning tools can blend intelligence and automation to create a single version of ‘demand truth’. This truth helps you make informed, joint decisions across functional silos, establish accountability, reduce risk and act swiftly on new opportunities.

The alignment between departments, such as sales, production, procurement and supply chain operations, is crucial to weathering frequent disruptions. S&OP can break down the walls that typically exist to deliver a truly agile and collaborative planning experience. When you align the revenue, demand, supply and financial plans to have consensus, you can focus on competitive differentiation, market agility and speed to ROI.

Top supply chain planning strategies: Insight and analytics

Predictive data analytics combined with AI and ML-equipped software hold the key to supply chain management excellence. Using data to drive relevant information, combined with intelligent supply chain planning software can drive performance improvements through real-time, actionable insights into planning inventory levels. 

Instead of reacting to disruptions, companies can be proactive by using supply chain data to ask what-if. These diagnostics allow teams to be able to quickly take action when disaster hits with a properly modeled plan in place. With the level of unpredictability in today’s supply and demand, it’s crucial that businesses have this next level of intelligent planning.

    Top supply chain planning strategies: Intelligent pricing optimisation 

    Intelligent pricing optimisation software built into your supply chain planning allows you to quickly adjust demand and maximise overall profits versus maximising unit profit or unit margin. This happens because the technology can identify the best products to respond to price changes, uncover quick revenue opportunities, and right-size inventory levels to free up working capital.

    Too much is changing too fast in today’s marketplace. When your operations are set up to automatically move with, and even sense, the ebbs and flows of consumer demand you don’t leave any capital tied up in unwanted merchandise.

    Top supply chain planning strategies: Manage promotions 

    Promotions can typically be difficult for companies to manage as they create a skewed distribution with an abrupt increase in demand. When AI is built into your demand forecasting, businesses can factor-in when promotions have occurred in the past to automatically adjust inventory and avoid stockouts.

    Considering the uncertainty in today's consumer demand, it’s important to get the things we can predict right. Making sure your supply chain management software is equipped to intelligently understand repetitive buying patterns and adjust forecasting is vital for success.

    Top supply chain planning strategies: Balance supply & demand

    The secret to ultimate supply chain planning success is finding the sweet spot between supply and demand. The right technology can help you get the most value from this balance. By incorporating AI and ML into supply chain planning software, businesses can accurately forecast consumer demand and optimise inventory levels to avoid severe financial repercussions.

    Today we are seeing major retailers struggling with overstocked inventory and waning demand. This results in lost profits and the inability to keep the right products on the shelves. What these brands are missing is the intelligent technology that can create visibility across supply chain nodes and ultimately tell companies where and when to move their inventory based on regional insights. 

    Top supply chain planning strategies: Maintain customer satisfaction

    Customer loyalty is a fleeting thing and maintaining both differentiation and satisfaction requires showing businesses know their customers. Leveraging AI and technology can add a personalised aspect to your supply chain planning to maintain customer satisfaction. 

    While supply chain planning software monitors disruptions and market changes, providing the best recommendations and avoiding risk, teams can focus on advising and collaborating with the customer with these insights. 

    This creates a superior level of rapid value and long-term ROI, ensuring customer satisfaction and loyalty.

    Top supply chain planning strategies: Improve service levels 

    The best way to improve service levels is with supply chain planning software that will do the tactical heavy lifting. Accurate order projections are a must, but they are not enough without action. 

    A cloud-native planning system that can deliver nightly updated projections provides invaluable information to the supplier that allows them to adjust their production planning to meet the unique service needs of your business. Whether it is a pandemic, hurricane, port shutdown, or tariffs, the analysis happens nightly, so you can adapt to the disruption quickly and minimise the impact on your service levels. 

    Using the right technology to manage the larger issues allows companies the flexibility of automation, coupled with using their people to shape projections as needed, gives the greatest resiliency and response to supply chain challenges. 

    • Doug Kimball is VP Product Marketing and Alliances at Blue Ridge, a cloud-based supply chain solution for wholesale distributors, specialty retailers and manufacturers.
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