As we said, Covid-19 has also deeply affected Fashion&Luxury companies. What was the typical scenario, and its limitations, regarding these companies’ ability to plan the entire supply chain and what is the added-value of a modern Supply Chain Planning solution, in your opinion?
The context was that many fashion companies were still planning on spreadsheets or basic solutions and they were not able to integrate all demand and supply data, and simultaneously evaluate all the main critical constraints. Even when a new plan was created, although prepared accurately (but also with a level of high manual effort), it was the only plan. No alternative plans were available; supply planning cycles were still on a weekly frequency (or sometimes every two weeks).
On top of that, different departments in fashion companies were suffering from the silos effect. On the supply side, the poor coordination related to the production, material procurement and product engineering departments. Every department had its own plan and reconciliation was difficult.
When a Supply Chain Planning (SCP) tool is activated to support the supply planning process, things change:
- the production planning department is able to transform the demand analyses collected during sales campaigns and forecast items to have continuously into a feasible plan and share it as the “company plan”;
- product engineering can easily check if its plan is aligned with the planned production start dates;
- material procurement departments can benefit from improved visibility of missing materials actually affecting planned production launches, enabling more focused expediting. Reorders after each cut off of sales campaigns would be aligned to time-phased requirements. Reorders after each cut off of sales campaigns would be aligned to time-phased requirements.
The weekly cycle, which was the target for many years in supply chain planning, shows its weakness as it is now evident that things can change even faster. In some conversations about restarting after lockdown, one recurring statement was: “We don’t need the best plan now, but the ability to create plans every day”. This remark is valid in supply chain planning too. Nowadays the true challenge is the ability to support decision making through a rapid availability of new plans. Creating them on a daily basis is only possible thanks to modern Supply Chain Planning solutions.
Companies that establish a virtuous and frequent supply planning process are able to better react to changes, resulting in cost savings and achieving:
- a better synchronization on planned dates;
- higher production launch feasibility;
- higher capacity utilization;
- on time deliveries to distribution centers;
- compression of production lead times.
This is confirmed by companies and customers. On a recent visit to a company in the luxury world which had evaluated whether or not to implement software supporting the supply planning area for many years, the customer itself told us that the production planning projects completed were considered a company success: the managers are satisfied with the business targets achieved and users are happy to have the support of a solution that provides daily new-updated plans and provides all the necessary data to make decisions.