Connected Planning turns every disruption into an opportunity

The COVID-19 outbreak has revealed weaknesses in many supply chains. Every link in the chain does its own planning, but there is often no tool in place to connect all those plans together. In a webinar on July 9th, PwC demonstrated how the Anaplan platform is being used to increase a pharmaceutical company’s responsiveness. “If companies are able to react quickly and efficiently, disruptions suddenly become less disruptive.”

By Marcel te Lindert 

The coronavirus pandemic hit businesses with the double whammy of disrupted supplies of raw materials and components on the one hand and unexpected peaks and troughs in customer demand on the other. Companies quickly had to figure out which customer orders would be delayed due to disrupted deliveries from specific suppliers, and which products – if any – they could still sell. “In situations like that, it all comes down to supply chain transparency and the ability to make quick decisions,” said Marjolein Cuypers, Supply Chain Manager at PwC in Belgium.

In traditional supply chains, the speed of decision-making often leaves a lot to be desired. Because information is passed on from one link to the next, it can often take days or even weeks before crucial information reaches the right people further along the chain. “Today’s digital tools allow us to speed things up significantly,” stated Cuypers. “So we can create an ecosystem where we can connect the plans of customers and the company’s own sales team with those of distribution, production, purchasing and even suppliers. That enables us to react quickly and efficiently, so disruptions suddenly become less disruptive. In fact, companies can turn a disruption to their advantage and strengthen their competitive edge.”

Connected Planning

Cuypers mentioned the term ‘Connected Planning’. Breaking down the silos within companies makes it possible to interconnect the separate plans, thus forming the basis for cross-functional collaboration. Cuypers: “And we don’t need to limit it to the plans about the volumes that we need to source, manufacture and distribute. We can also connect to the financial planning to gain insight into revenue and costs. Many companies struggle to translate volumes into monetary value, but that’s essential if we’re to connect with our financial and commercial colleagues because they think in monetary terms. If we don’t make that link, we’ll stay stuck in the silos that we’re so keen to break down.”

Numerous businesses are already working on connecting their plans at strategic and tactical level. “That’s what we call ‘Sales & Operations Planning’. But it’s also advisable to connect the plans at operational level so that we can respond quickly to unexpected changes in the market or supply chain. The investments in Connected Planning pay for themselves by creating a better balance between supply and demand, better customer service, a better product mix and better margins. Besides that, it reduces the buffers in terms of lead times and inventory, and that frees up cash – which is especially welcome in the current times.”

Significantly lower stocks

Aided by the Anaplan platform, PwC has implemented Connected Planning for a pharmaceutical company in Belgium which ships to pharmacies and drugstores throughout Europe from a large number of local warehouses. The company works with an extensive network of European suppliers. “The local demand levels were not being sufficiently shared with the suppliers, which led to high minimum order quantities and long lead times – resulting in extremely high stock levels,” explained Cuypers.

The company contacted PwC for help with making its supply chain more agile and responsive. Cuypers and her team set up a control tower with a central planner who had visibility of the end-to-end chain. As a result, the planner was able to consolidate orders from the various markets and divide the minimum order quantities over multiple countries. That put the company in a stronger negotiating position with its suppliers, enabling it to secure shorter lead times. The outcome: significantly lower stocks. “It was also important to be able to model what-if scenarios. That’s especially crucial at times like these. If you can analyse the impact of a sudden rise or fall in demand, you’re better prepared for the future. That definitely pays off.”

Speed of implementation

PwC chose Anaplan because of its flexibility and speed of implementation. It is possible to develop a concrete application and implement the first proof of concept within the space of just a couple of weeks, instantly revealing the initial benefits of the new approach. “Anaplan is a cloud-based platform that we can use to model any planning process. It enables us to develop a planning solution that is fully aligned with the company’s specific operation and that is easy to scale up and extend, which makes it possible to interconnect different plans.”

During the webinar, the solution was compared against Excel. Many planners still use Excel, but discover that it’s difficult to share details of how their solution works with colleagues, which doesn’t help to build trust between employees. Besides being more robust than Excel, Anaplan also provides insight into the underlying intelligence. “It has the flexibility of Excel – so during a crisis like we’re currently experiencing it’s possible to quickly build a new model or dashboard – but without the hassle of data errors and version management,” said Cuypers.

Coronavirus dashboard

Bert Appels, a colleague of Cuypers, gave a demo of the solution that PwC has developed for the pharma company. He showed a dashboard visualizing the impact of the coronavirus outbreak on demand. In the dashboard, the curve of the original demand forecast had been overlaid with curves representing the best-case and worst-case scenarios. Next to that, the demand patterns were translated into revenue figures. A KPI indicated how much revenue the company stood to miss out on over the next 12 months. The user can view similar data per product group or per region in just a couple of clicks. “The advantage of Anaplan is that it makes it easy for users to create and compare new scenarios,” claimed Appels.

He went on to present more scenarios. If ‘social distancing’ means that fewer people can work in a factory at any one time, how will that impact on production capacity? And what happens if a lockdown means that the warehouse in Amsterdam can no longer receive deliveries from the warehouse in Frankfurt? “Then, using this tool, it’s easy to create master scenarios in which we can see the overall impact of all sub-scenarios,” added Appels. “PwC consultants developed this solution in a short time frame. You don’t need the specialized knowledge of IT experts. It makes it easy for supply chain professionals themselves to develop new models and dashboards too.”