Adaptive Supply Chains and Profitable Scenario Planning

Adaptive Supply Chains and Profitable Scenario Planning

Knowing how supply chain management platforms work is one thing. But understanding how each member of your team should interact with them is quite another. You can often have a good comprehension of the technical side of these solutions, but not the slightest clue about how your salespeople, supply chain managers or finance managers should be using them.

In this post, we shed light on how various employees in your enterprise can connect with these platforms. The goal is to help you make the most of demand management tools and, ultimately, engage in profitable scenario planning. By avoiding jargon and making the discussion less abstract, you should have a much better idea of how each member of your team fits into the entire demand planning scheme. Ultimately, this post sheds light on adaptive ways of using marketing intelligence, instead of relying on gut feeling alone.

PLATFORM Usage 1 – Optimising A Salesperson’s Time

Salespeople are time-constrained. They only have a set number of hours in the day to prospect clients. For that reason, they need to figure out which customers are most likely to place profitable orders and focus on selling to them.

Demand planning solutions provide metrics for this. With these tools, reps can pull up a dashboard with filters showing the most valuable prospects. The information then flows through the PLATFORM to the demand planning team, allowing them to react to the dashboard alerts and identify and make the necessary adjustments to the forecast.

In some cases, reps will identify which customers are furthest behind their forecasts. Other times, they will discover an overstock situation and start looking for customers who’ve bought that stock before to clear the backlog.

The point is this: when salespeople have access to business intelligence, they can make better decisions about how to use their time. Demand Solutions DSX allows them to focus only on the most profitable activities, leaving the rest for later.

PLATFORM Usage 2 – Leveraging Customer-Related Market Intelligence

Sales representatives can also use business intelligence platforms to warn other team members of previously unanticipated sales.

Let’s say that a salesperson gets off the phone with a client after securing a large order. Instead of manually entering that information into a shared spreadsheet and waiting for other team members (such as demand planners) to see it, they can share it quickly via DSX’s Collaboration component. The information then flows through the platform to the demand planning team, allowing them to react.

PLATFORM Usage 3 – The Sales Managers Sanity Check of the Order

Sales managers act as a kind of “check and balance” on the information coming through from sales reps. Experienced sales managers might react to news of a large order from a sales rep with something like:

“Great news: but are you sure about these quantities and lead times?”

New sales reps can overestimate the true level of demand.

So when the information comes through the platform, the sales manager needs to ask:

  • Does this sales rep have the experience to know whether this order is realistic?
  • Are they viewing the situation naively?
  • And are there any other people on the team who might be able to provide further insight?

Business intelligence platforms are helpful in this situation because they record historical forecast accuracy. Over time, the veracity of spike orders becomes better known and managers can work out whether the order is worth taking seriously or not!

PLATFORM Usage 4 – The Demand Planners’ Reaction

If the order appears legitimate, the next task is to liaise with the demand planning team. Before taking on the order, the enterprise needs to work out whether they have the time and resources to meet the new demand.

Demand planners must ask questions like:

  • Do we have enough stock to cope with the spike?
  • Where is the stock located? (i.e. in warehouse 1, warehouse 2, on water etc.)
  • Are items scarce among local suppliers or do we need to consider air freight?

Finding answers to these questions would usually be difficult. But with platforms, such as DSX, it is simpler than you might think. DSX, for instance, shows planners how they can redeploy goods internally. DSX also lets them raise purchase orders to cover the remaining demand outstanding, if necessary.

Demand planners should use data available through the platform to work out whether the transaction is profitable.

Questions should include:

  • Is it a borderline break-even case?
  • Is the customer worth the spend because of their reliability and orders they’ve made in the past?
  • Does the team have the customer services resources to meet the client’s needs?

These questions are also important to finance managers. But using integrated, collaborative tools, they can easily share their insights.

PLATFORM Usage 5 – The Supply Chain Planner Reaction

Supply chain planners also play a vital role in this situation. They use the platform to assess whether demand increases are within their capacity to supply.

Sometimes, they will report back with:

“We can move some stock internally to meet some of the demand, but not all.”

Other times they might say:

“We can meet the demand, but only if the customer accepts phased deliveries.”

Sales will then need to find out from the customer whether this is okay. If it’s not okay, sales planners will also need to ask themselves:

“Is it worth the increased cost of airfreighting stock to meet demand?”

If yes, then deliveries can go ahead. If not, the sales rep will have to renegotiate with the client.

Sales planners, however, can also use the platform to think strategically about customer orders.

For instance, is this spike in demand highlighting product scarcity? Or is it just a fluke order from one customer?

If there is an issue in scarcity, it suggests that pricing strategy will need to change. Sales planners should use the platform to gain insights on whether the buy price is going to rise if they start placing significantly more orders?

When demand spikes hit, supply planners also need to consider storing the goods. They should ask:

  • Have we got somewhere to put goods if they are not all going straight to the customer?
  • Will this negatively impact our safety stock plan for this territory?
  • Again, sales planners can use the platform to find answers.

PLATFORM Usage 6 – Finance Manager Calculates the Costs of Meeting A Demand Spike

Lastly, the platform alerts the finance manager to work out whether the firm has the cash available it needs to:

  • Buy the additional stock
  • Move the stock internally (logistics costs)
  • Cover overtime costs in the warehouse (pickers, packers)
  • Cover increased logistics costs (drivers, 3PL)

The finance manager also needs to decide whether he or she can sign off the spending personally or must raise this to the finance director to approve a budget increase.

The ultimate goal of the finance manager is to use the platform to consider whether the business is profitable. If it is, then the process for this particular order comes to an end. If it is not, the loop has to start back over again.

All through this process, the finance manager should be adapting to the next piece of market intelligence, qualifying if it is profitable to pursue orders and the impact on the different safety stock levels across the territories. And they can only do that with the right tools.

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