The digital planning gap between vision and reality

Thou shalt… define a clear goal and make choices

Digital planning is high on the agenda of chief supply chain officers (CSCOs), but many companies struggle to fulfil the potential of their initiatives. The degree of success often depends not on the technology itself, but on the company’s ability to keep the transformation simple and focused.

By Peter Schram, independent consultant at Breakthrough Advisory

New technologies such as nanotechnology, blockchain, robotics, machine learning (ML) and artificial intelligence (AI) are advancing at an exponential rate, and the supply chain planning domain is not immune to this ‘boom’. Technology providers and consultants are very skilled at presenting an inspiring vision of the future of digital planning, leaving businesses feeling that they can’t afford to miss the boat.

However, there is a yawning gap between that vision and reality. In my previous role as research director at Gartner, I spoke to more than 300 companies. This led me to conclude that most companies’ planning processes are functional, slow and labour-intensive, and that Excel is still the most widely used planning tool. Moreover, few companies have a successful track record when it comes to digital planning transformation. It often takes them a long time to implement planning systems and tools, which then subsequently often fail to deliver the expected results.

As a consequence, the supply chain performance benefits remain disappointing. Many of the companies I hear from achieve little long-term improvement in supply chain performance, if any at all. According to research by Lora Cecere, the renowned analyst from the US firm Supply Chain Insights, inventory turnover rates have declined in most industries over the past decade. While this does not mean that companies should abandon their digital planning ambitions, they must make some wise choices if they want to increase the chance of success for their digital planning initiatives.

Clear goal

I recently spoke to the manager of a multi-million-dollar investment programme in digital supply chain. He told me that, because of all the new requirements, the programme had become so large and complex that he now found it difficult to explain its added value for the organization. This example illustrates the need to go back to basics: what is the purpose of the digital planning transformation? Some companies will be most interested in optimization: how can we deliver better-quality planning at a lower cost? Others will be focused on digitalization: how can supply chain planning help us to offer new products and business models?

That’s why I urge every company to clearly define the purpose of digital planning – not only from a supply chain perspective, but also for the organization as a whole. Unless that goal is clear, it will be impossible to determine what is (and isn’t!) needed to achieve it and the role of digital technology in that process.

Make a realistic plan

Digital planning transformations often lead to changes in the way of working, have an impact on the skills that planners require and also lead to organizational change. In addition, there are substantial data challenges in these types of projects, such as due to the limited availability and quality of master data, for example. As a result, these initiatives demand a lot of time and effort.

I still see too many cases of companies that underestimate the amount of effort required, overestimate their internal capacity and therefore overoptimistically commit themselves to too many projects. This rarely produces a better outcome; in fact, the more marbles you put into the funnel at one end, the fewer seem to come out at the other.

Companies must therefore be more realistic when planning digital transformation projects. This starts with accurately estimating the time needed to get things done and the available capacity. This means that less can be done simultaneously, so companies will need to make a longer-term plan to accommodate all their initiatives. A simple project management tool such as the Eisenhower matrix, which plots initiatives based on urgency and degree of importance, can help to prioritize them.

Dare to say no

The key to successful digital planning transformation only partly lies in the technology. The real challenge is to focus on the activities that truly add value, and to get the whole company on board with the change. That sounds obvious – but I know from experience that very few companies actually consistently do that. It takes courage and leadership to say no and to focus on a longer horizon.

‘The Sermon’ in Supply Chain Movement is a speech in which the speaker expresses the message he or she has about the field of supply chain management. A sermon aims to teach, to encourage, to correct, so that the recipients may grow in their faith and become strong, mature supply chain professionals.