The supply chain is a fragile link well known to companies, combining contradictory issues of time and money.
In 2023, 67% of organizations considered their ability to reduce transport times as the main imperative of their supply chain
(Source: KPMG).
At the same time, 71% also identified the cost of raw materials as the main threat to their supply. Faced with increasingly complex and uncertain markets, logisticians today rely on new generation software solutions.
Learn how to reduce your transportation costs and times with AI-powered forecasting.
Define the issues of delivery times and transport costs in the supply chainEn-t
The supply chain is an organized ecosystem aimed at delivering the expected product in the desired quantity and quality, to the right place and within the allotted time, while respecting a profitable cost.
A delay or high cost of logistics transport is a factor that impacts the entire product supply chain as well as customer satisfaction:
- Delays have direct consequences on production and supply operations. The risks are twofold: loss of customers to more responsive competitors and increased inventory immobilization costs.
- High transport costs are more relevant than ever. Increasing logistics costs affect the profit margin and the price of the finished product, making your business less competitive with competitors.
These risks can easily be avoided by optimizing sales forecasts with Advanced Planning Systems (APS).
Indeed, APS have the capacity to anticipate variations in demand with precision as well as to select the optimal routes and modes of transport in terms of costs and time.
Supply chain planning: what is it?
Demand planning is an essential part of the supply chain, going well beyond a simple estimate of sales.
This process determines how a company:
- Organizes its production.
- Manages its warehouse operations.
- Optimize your operating budget.
Planning requires close collaboration between various departments within the company. It typically involves sales management, marketing, operations, finance and even logistics. Robust estimates will then serve as a basis for defining a sales strategy.
In the warehouse environment, demand planning has very real-world implications. For example, it determines:
- The quantities of products to be stored per stock keeping unit (SKU).
- The number of operators and teams required.
- The storage space needed for each item…
Efficient planning is not limited to the company’s internal resources. It also has an impact on its external partners, notably raw material suppliers. The latter will have to align with production rates to avoid any delays in the chain.
Ever more numerous and complex variables
Supply chain planning today faces, in practice, significant obstacles within the majority of companies:
- A fragmentation of the supply chain often deteriorates costs and deadlines. Fragmented, the supply chain generally operates in silos: flows between warehouses are not dictated by consumer demand, but rather by shipments from production sites or the depot. This sometimes results in a severe mismatch between needs and available stocks.
- Sales histories are not always corrected according to new market realities. Professionals are therefore unable to effectively anticipate unforeseen events leading to stock shortages: exceptional promotions and sales, current events, new trends, etc.
- The current situation in many markets is marked by structural shortages of certain goods. It therefore requires the implementation of differentiated strategies for easily substitutable or more strategic products. The priority is to secure the supply of irreplaceable products, by identifying key suppliers. Alternative channels must be planned in the event of a crisis for business continuity.
- Finally, the impact of the activity on the environment is becoming an essential factor. Reducing losses, selecting more ecological modes of transport or reducing waste are at the heart of the priorities.
The factors impacting logistics forecasting, overall, have become more numerous and complex. For example, supply chain managers must take into account:
- Events on social networks.
- New consumer trends (kosher, vegan, halal…).
- More frequent promotional operations, differentiated by consumer profile.
- The impact of loyalty programs or various commercial initiatives…
This multiplication of parameters makes forecasting ever more difficult to understand.
APS solutions: towards AI-assisted forecast management
The new APS tools, or advanced planning systems “benefit directly from advances in artificial intelligence to revolutionize supply chain planning. These solutions integrate advanced predictive and analytical capabilities. In particular, they exploit the power of algorithms to model and anticipate:
- Fluctuations in demand.
- Predictable market trends.
- Various hazards that could impact the supply chain.
One of the great strengths of APS is therefore their ability to take into account multiple, often interdependent, variables.
Good to know: an immediate impact on your results
After six months of use, the Supply Chain Optimix XFR solution generates on average:
- A 75% reduction in out-of-stocks.
- A reduction in inventory of 30%.
- A 25% increase in forecast reliability.
Automated supply chain planning: what are the benefits?
An adjusted forecast of your logistics needs, via next-generation software solutions, has many potential benefits.
First of all, you will be able to reduce the cost of your supply chain. Optimizing resources, but also reducing losses or order errors, leads to a reduction in costs incurred. This includes the budget related to the transportation of goods or their storage. You will also avoid unnecessary costs linked to an overstocking or understocking situation.
The accuracy of demand forecasts also allows you to align allocated resources with your future needs:
- You benefit from timely delivery and sufficient quantity of raw materials or semi-finished products. Your production line does not experience any harmful interruptions, even during peak activity.
- You anticipate fluctuations in consumer demand. This allows you to increase item availability while reducing waste through more accurate inventory management.
- On-time delivery, like the responsiveness of your channel, overall contributes to better customer satisfaction.
But then, how are APS innovative in the management of retailer distribution?
The interests of APS are numerous:
- More relevant decision-making thanks to the constant updating of data, collected in real time by AI.
- Sharp anticipation of variations in demand reducing the risks of over-stocking or under-supply.
- Increased responsiveness to changes and unforeseen events, such as disruptions linked to transport delays.
- A reduction in storage costs by reducing safety stock (a reliable forecast makes it possible to reduce the level of safety stock).
- Early identification of logistical constraints allowing adjustments to be made before they become major problems.
- A macroscopic vision of the entire supply chain for better coordination and communication between the different services.
- Optimization of human and material resources to reduce costs.
- Competitiveness and tenacious flexibility in the face of future changes linked to climate and political developments.
Reconciling APS and AI to maintain its competitiveness in 2024
In 2024, retailers will face persistent growth challenges as increased online sales will not be enough to offset losses caused by store closures during the pandemic.
To remain competitive in this unstable situation, retail brands have every interest in gaining organizational agility. This will allow them to quickly anticipate various crises, while protecting the profitability of their implemented actions.
This approach requires the consolidation of three fundamental pillars: an agile organization, detailed risk analysis (FMEA) and continuous dynamic planning. For this, it is essential to integrate solutions based on artificial intelligence, automation and decision support.
These technologies will help retailers develop potential future scenarios with greater precision, strengthening their ability to anticipate and respond to lightning-fast market changes.
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Supply chain planning is the backbone of your operational efficiency. It helps reduce costs while ensuring a high level of customer satisfaction. APS software, based on artificial intelligence, is an essential ally for anticipating incessant market fluctuations.
The Supply Chain Optimix XFR solution, marketed in SaaS mode, has the capacity to profoundly transform your logistics management. Based on a careful correction of sales histories, it offers a precise, but also adaptable, forecast.
Via its inventory optimization system, Supply Chain Optimix VFR automatically anticipates future flows, for careful planning of your resources. Refined order suggestions reduce inventory levels while increasing the availability of your products.
