How Supply Chain Teams Rate Their Planning Process Effectiveness

Once upon a time, supply chains were much more straightforward. Processes were fairly linear and easy to control. Complexity was somewhat contained. Today, supply chains are networked, global ecosystems that are increasingly prone to disruption. An event upstream, in a different country or region, can cause considerable disarray downstream. The COVID-19 pandemic is an extreme example of how this unfolds in practice. Manufacturers were forced to halt production due to stay-at-home orders and component shortages. The travel industry is experiencing its biggest crisis in decades. Some retailers were forced to close their stores, while others are struggling to cope with demand.

Coincidentally, AIMMS started conducting planning maturity research as the pandemic was starting to take hold outside of China. The purpose was to discover how supply chain professionals rate the maturity of their planning processes and what percentage of them are familiar with scenario-based planning. More than 320 professionals participated in the assessment survey. Respondents work in a variety of industries, including manufacturing, logistics, food and beverages, petrochemicals, pharmaceuticals, medical equipment and business services. Most have supply chain, purchasing and demand planning functions.

When asked to rate the effectives of their planning processes, 54% of survey respondents said their planning process was “somewhat effective,” regardless of the technology used. A combined 28% stated that their planning process was “very effective” or “extremely effective,” 15% said their process was “not so effective,” and 2% said it was “not at all effective.” What this tells us is that most supply chain organizations think they are in the middle of the road when it comes to planning effectiveness.

When it comes to accuracy in long-term planning, 52% are looking to attain enough accuracy to make a resilient decision, while 22% don’t have enough time for long-term planning. Another 26% are looking to attain the same level of accuracy for short- and long-term planning. However, accuracy in long-term planning is increasingly difficult to attain.

Accuracy in the short-term and resilience in the long run is key to uphold service levels. Just under half (47%) of respondents seek to provide overall great service for every client, while 22% stated that they seek to attain triaged service, focusing resources on their most valuable clients. For 31%, upholding service levels is a constant challenge given the chaos they face day-to-day.

The findings were similar when we asked respondents how much time they allocate to innovation: 34% of respondents said they have no time for innovation, with most of their efforts dedicated to firefighting. Only 17% stated that they allocate a great deal of time to innovation, aiming to have a wider impact beyond the financials.

We also asked respondents how much time they allocate to advancing their planning skills. Some 32% of organizations in the research commit 5% or more of their time to advancing planning capabilities. The majority spend less than 5% of their time on this or don’t have a formal commitment toward advancing planning.

Have Prepared, Have Not So Much

What does this tell us about the level of preparedness?

The report shows that about half of supply chain professionals believe their planning process is effective enough. These organizations may be better prepared to cope with today’s scope of disruption and growing uncertainty. For the other half, weathering the storm of events like the coronavirus pandemic, and preparing for the next disruption, may not be as easy.

There are several factors that appear to be hindering teams’ ability to advance their planning capabilities. Besides lacking a formal commitment to this purpose, many are still using spreadsheets, which can be difficult to collaborate on. Data quality is also a considerable pain point, with more than half either neutral or dissatisfied with their data’s quality.

Traditionally, supply chain teams have focused on having perfect data to arrive at accurate supply chain plans. While data quality is certainly important, the focus on accuracy and deterministic planning is not adequate to respond in an agile way to far-reaching disruptions. Gartner advises that organizations embrace resilient planning instead. Gartner defines resilient planning as “mid- and long-term plans that mitigate against uncertainty by ensuring the right degree of resiliency is built in so that short-term plans are more executable.”

This type of proactive planning is a result of evaluating multiple future uncertainties through scenario modeling. Such analyses should provide visibility across the entire supply chain and enable users to plan both reactively and proactively. Our research shows that 45% of teams are using scenarios prior to planning meetings, and 17% run scenarios live when they meet. With disruptions like pandemics, politically imposed tariffs or natural disasters becoming more common, we expect more teams to shift toward this capability. For more insights, download the full report.