To say that times have changed is an understatement. It feels like it’s now all too familiar to talk about an environment of economic uncertainty, market volatility, consumer behaviors and preferences shifting frequently, and supply chain disruptions that keep coming. The approach to decision-making, a key process in supply chain planning that influences performance and efficiency, is evolving in response to the need to upgrade processes to stay ahead of this fast-changing landscape.
Supply chain leaders recognize that linear and process-driven planning falls short in meeting the evolving needs of businesses. The traditional approach focused on executing predefined steps without fully considering the changing dynamics of the supply chain, but the rising complexities and uncertainties of today have made it evident that a more adaptive and decision-centric mindset is required.
Decisions need to be increasingly data-driven, predictive and collaborative. As complexities increase, companies need to stop focusing on processes, and shift their attention to focus much more on business priorities and the impact of possible future outcomes, where decisions are at the core. This concept is known as decision-centric planning.
Before we expand upon what decision-centric planning means and how you can get there, there are two important considerations to highlight:
Firstly, supply chain professionals are expected to make faster, more accurate and consistent decisions in real time – and so, data plays a central role. The ability to effectively assess the supply chain hinges on the availability of accurate and timely information. Data is paramount not only to enable companies to digitally represent their supply chain ecosystems – powering a digital supply chain twin – but also to provide critical insights into current and future events that could potentially impact supply chain operations.
Secondly, we must note that not all supply chains are cut from the same cloth. Each supply chain has its own unique characteristics, shaped by factors such as market dynamics, product attributes, and customer preferences and behaviors. So, the planning decisions and processes employed within these supply chains vary significantly.
It’s also important to understand that not all team members need to be involved in some decisions. Companies must focus on implementing the most appropriate teams and processes to execute the decisions.
What is Decision-Centric Planning?
Decision-centric planning entails a fundamental shift in mindset. Instead of solely concentrating on processes, decision-centric planning highlights the importance of business rules, priorities, assumptions, and potential future outcomes, emphasizing that the end game of any planning process is to make high-quality decisions.
This approach to decision-making underscores that decisions are the driving force behind successful supply chain management. Effective decision-making can unlock strategic advantages and mitigate risks, enabling organizations to respond quickly and effectively to changing market conditions and disruptions.
While times are changing fast and challenges persist, many companies are struggling to keep pace because they’re following the same planning processes across key areas of supply chain, such as S&OP. Many of them are tackling the problems by increasing the frequency of processes to alleviate tensions, but this doesn’t fully address the challenge. Instead of focusing on processes, organizations need to re-think their planning and prioritize the decisions – and the kind of planning decision that is required to ensure success.
As companies mature in their supply chain planning, they recognize the importance and the need to shift their focus from people and processes, to focus on the decisions. Decision-centricity means that processes and activities are designed to make the best possible decisions for the business.
Where You Can Start: 3 Steps to Focus on The Decision
1. Focus on The Impact
Rather than keeping a focus on planning horizons, start defining what impact means to your company and to your supply chain. This step involves assessing the type of decisions that will be most relevant for your business and defining roles to determine the decision makers and stakeholders that should be involved, depending on the situation.
While historical data and current insights are vital, decision-centric planning takes a forward-thinking approach, placing emphasis on the impact. It embraces predictive analytics and scenario modeling to assess the potential outcomes of different decisions. By considering various future scenarios, organizations can evaluate the risks and opportunities associated with each choice and make decisions that are more robust and resilient.
2. Determine Your Event-Driven Decisions
Determining the significance of the impact will help you understand that not all events or situations will require re-planning or actions to mitigate. So, start defining business policies, rules, targets and thresholds to help you determine the reaction, and when you will need to do something to address the situation.
Keep in mind that this is not an easy task because it will require alignment across the organization. It can be time-consuming, and priorities may change and evolve along the way.
3. Break Down Supply Chain Processes for Greater Flexibility
Breaking down large processes into sub-processes and smaller tasks that are more adaptable and flexible allows for more specific and accurate planning decisions.
Consider how you can make your processes more adaptable and flexible in terms of structure, frequency and stakeholders. Re-think your supply chain planning processes, keeping the impact and the decision at the center of focus.
Leveraging Supply Chain Planning Technology to Accelerate Decision Velocity
In order to make decisions faster, advanced supply chain planning technology allows for leveraging real-time (or near real-time) data to continuously monitor events and trigger re-planning actions and strategies, as required. With a focus on the end-to-end ecosystem, supply chains must gain the ability to better connect the multiple touchpoints of the network to make decisions that are continuous and contextual; and then accelerate their decision velocity.
As you evolve your approach to embrace decision-centric planning, it is crucial to harness the power of supply chain planning software to empower your company to monitor events in real-time, assess their potential impact, and to make faster data-driven decisions.
The ability to accurately evaluate the impact of various events is a cornerstone of effective decision-centric planning. Advanced technology helps companies stay agile, proactively anticipate disruptions, and enhance decision-making while effectively navigating the complexities of the supply chain landscape with confidence.