Extract Maximum ROI from Cloud Planning Solutions through Continuous Innovation

Supply chain planning solutions are essential across industries. They enable you to solve and prepare for tomorrow’s problems rather than getting bogged down with the challenges of today. While supply chain planning is a broad term, it essentially involves two key aspects:

• Predicting and shaping the demand of your products or services for the future.
• Trying to come up with the most optimal way of servicing demand.

Technology plays a key role in enabling these supply chain planning solutions. Supply chain and technology strategy depends on what each company views as their core differentiator.

You don’t need to build your own supply chain planning solutions.

There are the Amazons and other e-commerce firms, which are tech-first, so to speak. The ‘product’ of these companies is often defined by the service and customer experience they deliver. Since supply chain is core to their ‘product,’ these companies build their own solutions and innovations. They have strong technology teams in place for building solutions, such as automated pricing algorithms, enabling new supply chain delivery models, and leveraging advanced algorithms to guide purchasing and inventory management decisions.

Then there are the CPG, pharmaceutical, chemical and other such manufacturing industries that focus on the end-to-end design, manufacturing, marketing and sales of a physical product. Supply chains here are a vital cog to enable innovations and differentiation in the products and services they bring to the market. However, it is not feasible for most manufacturing firms to build their own supply chain planning solutions since:

• Their supply chains are often complex, global and multifunctional in nature, involving longer lead times, manufacturing processes and a wide supplier base.
• Other initiatives like product-based R&D, physical capacity investments and strategic sourcing often take priority over supply chain technology developments.
• There is an abundance of excellent supply chain solutions on the market – SAP IBP, Blue Yonder, Kinaxis, etc. – that cater to all requirements and a variety of use cases.

Leveraging established supply chain planning products is an easy and pragmatic choice since best practices and industry-specific nuances are readily available in most of the solutions. Additional innovations and nuances can further be added as per each organization’s needs.

Cloud planning solutions need a cloud approach.

Industries are changing, and new technologies such as artificial intelligence and machine learning are gradually becoming essential capabilities, even for traditional manufacturing companies. Moreover, speed of such innovations has considerably increased, driven by the following advances in data and technology:

• Companies now have a lot more data that can be leveraged for AI applications. Data volume in the world is increasing at a rate of 18% YoY and has already reached 6.8 zettabytes.
• GPU computing performance has exponentially increased, leading to advances in use case complexity and data processing power.

Rather than being considered a niche, AI/ML has become completely mainstream. AI use cases are being implemented at a rapid pace as can be observed in Deep Learning chipset sales numbers, which are growing at a staggering 37% YoY.

Moreover, a significant portion of this growth is achieved through cloud solutions. In fact, according to recent Red Hat research, about 50% of enterprises use open-source technology, and this number is projected to grow to 63% by 2023. Open-source technology is projected to grow much faster than closed-source due to the nature of AI/ML developments, which rely on continuous enhancement over previous innovations. Like a relay race, new techniques and capabilities are added and handed over to enable further developments tomorrow.

To leverage and enable rapid innovations in the supply chain space, all leading supply chain solution providers have moved their newer, modern, intelligent solutions to the cloud. As you can imagine, cloud solutions are perfect for such brick-by-brick development models. Apart from security, reduced operational hassles and scalability, the primary reason why industries prefer cloud solutions is the anticipation of continuous enhancements and new functionalities that are regularly provided in the form of solution upgrades. No one would argue the benefits these upgrades provide, so much so that companies often prefer solutions with a stronger roadmap over solutions that best fulfill current business challenges and requirements.

However, there is a gap here since we are currently living in a hybrid world with a certain set of solutions on cloud, and other solutions that remain on-premise. We are often trying to manage cloud solutions with the same approach and model that was typical of the on-premise world – but cloud solutions are innovative by design and have a roadmap of upgrade releases. Antithetical to the whole premise of cloud solutions, these upgrades are sometimes viewed as a hassle and potential risk because of changes and the impact they may have on end users – when the opposite is actually true. It’s time to ditch the ‘maintain and support’ mindset and transition to a cloud solution mindset, which relies heavily on continuous innovation.

When it comes to upgrades, details matter!

I would like to illustrate my point that continuous innovation is necessary, using SAP IBP and its upgrade roadmap as an example. Let’s start by categorizing the type of quarterly upgrades.

1. New Functionalities: Algorithms, upgrades and new functionalities in previously released algorithms, new reports, analysis capabilities, etc.
2. New Technical Features: Back-end configuration features that enable advanced scenario modeling, roles and authorization features, simplification in back-end build and monitoring of supply chain solutions, enhancements in back-end performance, etc.
3. New Usability Features: New ways of filtering, visualization and analysis that provide greater power to end users, contextual navigation enhancements, etc.
4. Industry-Relevant Functionalities: New industry-specific scenarios and modeling.

While things like new AI/ML algorithms are always appreciated and often clear in terms of their business impact, let me take a seemingly innocuous example of new calculation operators being enabled in SAP IBP in the last few releases. A small thing like a new operator, which often goes unnoticed in the new upgrade release details, can have a huge impact on front-end and back-end performance, solution scalability, usability, and functionality.

New operators and calculation methods in SAP IBP can have the following impact:

1. New algorithms can enable better system performance and enhance the usability of planning views, reports and dashboards. For example:

• • Replace complex front-end local member key figures with standard calculations.
  • Complex calculations often involve multiple steps and can have a negative impact on system performance. These can be simplified to optimize the number of key figures needed and calculation steps involved with new operators released during upgrades (e.g., attribute transformations can be replaced by a single line calculation with new operators).

2. There is a whole host of new functionalities and requirements that can now be enabled with the help of new operators. For example, easily calculate dynamic safety stock based on future days of supply parameters, and days of supply and inventory coverage, and build custom logics for projected stock using new simplified planning operators.

3. Simplification of complexities and unnecessary baggage from the past. For example, remove a common workaround without advanced operators with copy operators instead of calculation steps. Unless you ran these copy operators, you would not see the new calculated value desired. Many such complexities can now be removed and replaced with a simple calculation.

4. Remove custom L-codes enabled by SAP and develop the same functionality using operators.

5. If you don’t leverage such upgrades and comply with new system rules and restrictions, solutions can potentially become outdated, and even minor changes may require considerable efforts, after which a reimplementation is the only remaining path forward.

A continuous innovation model is key to cloud planning solution success.

What’s the best way to manage cloud solutions like SAP IBP? What can we learn from those who are comfortable with the continuous change cloud technologies bring? The following factors are key to continuous innovation for cloud-based supply chain planning solutions:

1. Ability to measure effectiveness and adoption.

• • Are you able to proactively measure system effectiveness? Is the plan created in SAP IBP actually being used in execution systems? What percentage of the plan is adhered to?
  • Do you have insights into how well the solution is being adopted by your stakeholders?
  • Can you compare performance between geographies, business units or product lines?

2. Ability to capture insights from all relevant stakeholders.

• • Do your solution owners have insight into various stakeholder pain points and needs?
  • Do you have insights into questions like – what is working well, where are the gaps, what functionalities are not being used and why, etc.?
  • Are you able to correlate and understand the nuances of different geographies, business units or product lines?

3. Ability to ideate solution refinements and enhancements.

• • Are you able to figure out the root cause of problems, which may span data issues, process issues, reporting issues, system issues, or training and change management issues?
  • Are you able to ideate new functionalities and solution approaches for user adoption challenges, plan adherence challenges and business insights you receive?

4. Ability to create an internal solution roadmap aligned to the SAP IBP roadmap.

• • Are you able to identify new functionalities that are relevant to you?
  • Do you know how much time and effort would be needed to enable these functionalities?
  • Are you able to implement these new functionalities or solution enhancements?

5. Ability to control solution scalability and ensure processes remain harmonized.

• • Can you identify and differentiate between local processes and global processes?
  • Do you have a mechanism to approve system changes to SAP IBP, which involves approvals from process owners as well as system owners?
  • Are you able to make informed decisions based on the complexity, effort and time required for solution modifications?

If your answer to any or all of the above questions is no, then it’s time to talk to us. We have a comprehensive continuous innovation model that can position you for cloud planning success.

VIVEK JHA
Principal Consultant, DiSC Planning
Bristlecone