Reliance on outdated planning tools and processes hamstrings growth in global business environments - September 2016

Not adopting flexible supply chain processes and systems cuts international competitive advantage

In an increasingly complex international business environment, companies that rely on legacy approaches to planning are potentially cutting their growth prospects and erasing their competitive advantage. With growing global risks, evolving supplier networks and economic difficulties in key markets, businesses that do not take advantage of Advanced Planning & Scheduling (APS) systems risk increased costs with limited flexibility to respond to changing market conditions.

Dave Alberts, Director at global supply chain consultancy Crimson & Co, explained:

“Following events like Brexit and the rise of extremist terror organisations around the world, businesses looking to operate in a range of global markets face significant challenges. Success in such situations requires robust scenario planning, the ability to respond quickly to changes and the capability to deal with an ever-changing list of suppliers and business partners. Across the globe, agility and the ability to quickly adapt to changes in logistics environments is increasingly important.

“However, a continued reliance upon outdated planning tools like Enterprise Resource Planning (ERP) systems, bolstered by an array of spreadsheets, prevents many businesses rising to these challenges. If supply routes need to change following disaster, or old trade agreements can no longer direct freight transport, businesses leaning on ERP systems can find themselves on the back foot and unable to take advantage of such changes. All in all, these outdated tools can result in significantly increased capital and service costs in the case of any changes to the supply chain status quo.

“Evidently, there is a need for businesses to update their planning tools to erase these costs and remain competitive in the global market. Those using ERP systems or similar are less able to innovate and improve their supply chain processes, and fall behind more reactive and agile businesses supported by more flexible planning tools.”

Crimson & Co’s recent research into the planning and scheduling market found that over two-thirds of those surveyed still relied upon ERP and spreadsheet systems. The findings also showed that an effective APS system could result in a 20 per cent reduction in working capital, 5 per cent increase in service level, 6 per cent reduction in logistics costs and 3 per cent reduction in the cost of goods sold.

“There is a clear incentive for businesses to adopt a robust APS system. Through benchmarking of planning and scheduling solutions, companies can quickly work out the systems that need updating and the practices that need improving, addressing these where necessary. In most scenarios, the adoption of an APS system can result in reduced overall supply chain costs and a greater ability to deal with complex business decisions,” Dave concluded.

 

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