The question of the value of supply chain planning is back on the table. As supply chain planning leaders grapple with the question of why so much is spent on planning, it’s time to reassess the value and contribution of this function.
The Value Perception Problem
Supply chain planning often faces scrutiny regarding its cost and value. Despite efforts to manage spend and increase efficiency, questions persist about the value of planning processes. A recent survey revealed that planning processes like NPI, demand forecasting, supply planning, and S&OP/IBP were perceived as adding low value compared to Make, Source, and Deliver functions. This perception problem suggests a deeper issue: if senior executives don’t see the value in planning, they will treat it as a cost.
Addressing the Issue
To change this perception, planning leaders need to demonstrate the value of their function and link it to improved business outcomes. This involves focusing on business objectives, prioritizing resources, and delivering results.
Focus:
Planning leaders should align with the business objectives of executives and business leaders. This involves understanding and sharing their goals, and ensuring that every member of the planning team understands how their role influences these outcomes.
Prioritize:
Resources should be allocated where they can drive the most value. This involves focusing on products that deliver high business value but are difficult to predict, and leveraging technology to generate plans and evaluate risks and opportunities. For more insights on this, you can read about Strategic Integration in Supply Chain Management.
Deliver:
Planning leaders need to demonstrate their value to the business. This involves tracking key planning decisions, recording their financial impact, and providing a narrative that explains the story behind the numbers. For more on this, you can read about Unlocking the Power of Supply Chain KPIs for Efficient Business Operations.
In supply chain planning is not just a cost to be managed. By focusing on business objectives, prioritizing resources, and delivering results, planning leaders can demonstrate the value of their function and change the perception of their role in the business. For more on this, you can read about Master Planning: A Proactive Approach to Supply Chain Resilience and Strategic Shift: Supply Chain Resilience Over Cost-Cutting.
