SUPPLY CHAIN STANDARD NOVEMBER 2008
www.supplychainstandard.com
Planning tools
are a method of
quantifying risk
in a supply
chain. With offshoring
to Asia
supply chains are
getting longer,
lead times are
getting longer,
and there are
more parts of
the network
that can break.
one you want to get right first. “So long as you have some
indication of demand coming in you can do something
with the plan. Of course, the better the forecast, the
better the planning process. But a good forecast with a
poor planning process is completely useless; a good
planning process with a poor forecast will enable you to
fare a bit better, because your planning process can use
historical analysis to give you something.”
Barloworld Optimus is a planning software vendor
with two well established planning tools: Cast, a strategic
network modelling tool, and Optimiza, a program used
for managing inventory within the warehouse. And now,
the company has just developed Cino, which stands for
combined inventory network optimisation, which sort of
combines the two.
Fraser Ironside, the company’s global business
development director, sees an emerging trend in
optimisation as being the emergence of green or
environmentally sensitive planning functions. “The Cast
tool now permits the calculation of the carbon footprint of
a supply chain and the optimisation of that supply chain in
terms of its carbon footprint.”
Strategic
He also sees planning as a strategic tool for
determining levels of risk. “Planning
tools are a method of quantifying risk
in a supply chain. With off-shoring
to Asia, supply chains are
getting longer, lead times are
getting longer, and there are
more parts of the network
that can break. The risk
associated with those
“I have to grow
my business with
what I’ve got” and
that means you have
to be smarter about
how you plan, smarter
about how you manage your
supply chain and your inventory.
supply chains is much higher, you only have to look at
what happened when the west coast ports went on strike
in the United States in 2004, Wal-Mart couldn’t get its
product into the country. The costs can be catastrophic
for a business if there is a significant disruption to the
supply chain and its supply chain isn’t responsive
enough. So we are seeing planning tools being used to do
contingency and disaster planning.”
In the current economic climate supply chain planners
are going back to basics. When the economy starts to
soften and sales stop growing there is an increased focus
on cost and, as Ironside sees it, particularly regarding
transport. “There is a need to reorganise and replan
supply chains to identify opportunities for savings. That
could be the closing of warehouses; it could be the
switching of transport mode options. Also, the cost of
holding inventory has gone up, and with the credit
SCS:PLANNING SYSTEMS 19
crunch there is much greater urgency to free up working
capital – therefore, inventory optimisation is at the
forefront of businesses thinking.”
Lorraine White, senior director of planning for
software vendor, Manhattan Associates, also highlights
the importance of good planning in managing costs and
retaining healthy margins. “When you are looking to
grow your business, and gain profitability, in countries
like the UK or South Africa, where there are not the
opportunities to grow the store base or to open new
stores and DCs due to space or economic constraints,
you have to be smarter about what you have and manage
your supply chain more effectively as a result. You have
to plan smarter – planning becomes instrumental in
becoming more profitable. And most companies in the
UK recognise the fact that supply chain planning
provides a lot of value.”
White believes sophisticated planning helps you become
smarter about how you optimise your supply chain
operations, “planning ahead and tracking and managing to
that plan and proactively doing order scenarios to evaluate
the best decision course to react to a given situation like
change in demand or an economic downturn”.
She sees how thinking has changed in the US. In the
recent past, “growth has been perceived as adding more
stores and expanding the supply chain has been about
opening new DCs, widening and broadening your supply
chain network and increasing the geography in which
you operate – and in a country like the US that has been
quite a reasonable strategy to date. But right now the
country is severely over-shopped, there are far too many
shopping malls and there aren’t enough people going to
the stores. So now companies have to be smarter with
the infrastructure that they have. ‘I have to grow my
business with what I’ve got’ and that means you have to
be smarter about how you plan, smarter about how you
manage your supply chain and your inventory.”
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