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Don't Mistake Simple For Simplistic In Supply Chain Planning

Don't Mistake Simple for Simplistic in Supply Chain Planning

Simple and simplistic are words often misused interchangeably, but Albert Einstein understood the difference when he observed “Everything should be made as simple as possible, but not simpler.”

Einstein valued simple solutions. Yet, he also knew that over-simplifying complexity leads to simplistic solutions that have limited value. From our perspective, simple = elegant and valuable, while simplistic = shallow, under-considered, and of limited use to our users.

In my last post, Simple Ain’t Easy In Supply Chain Planning, we talked about how the Solvoyo platform is easy and simple for organizations to test, buy, install and use. This shouldn’t, however, be mistaken to mean that the Solvoyo platform is simplistic – nothing could be further from the truth.

The Solvoyo platform is as comprehensive as it needs to be to optimize planning around complex supply chain requirements faced by our customers. Some examples:

  • Automated Best-pick forecasting with multiple forecasting algorithms, forecast parameter optimization through smart search, automated history correction for SKU transitions and known special events such as promotions, weather, disasters, etc.
  • Prioritized fulfillment (due dates, customer priorities, rush orders, etc.) with automated ATP/CTP quotes, tied directly to multi-objective capacitated production planning capability.
  • Multi-echelon inventory optimization tied to demand variability, forecast error, service level or OTIF targets, shipment frequencies, planning calendars, lead-times and its variability, and many fulfillment- and vendor-specific constraints.
  • Multi- -mode, multi-stop transportation optimization with prioritized inventory allocation, time windows, shipping/receiving calendars, customer-based delivery constraints, links to global digital data, road restrictions, etc.

The platform is not complex for complexity’s sake. It’s built to fulfill the most complex requirements of larger companies while at the same time allowing mid-size businesses to use our simplified templates and turn on only the functionality they need to plan their supply chain. Think of it like an electronic Daisy Chain; elegant in its simplicity but robust and scalable in order to accommodate the unique and complex need of different businesses.

Everyone can divide

One case to drive this point is the work Solvoyo does for a consumer packaged goods (CPG) company that offers vendor-managed inventory program to many of its channel partners. With $350M in annual turnover, the company valued simplicity in their operations to keep management costs low and to focus on core marketing activities. For its retailers, the CPG co. had a simple min-max inventory policy calculated based on average daily sales in the previous X weeks.

While the CPG co. had simplified their planning operations, the true cost of this simplicity was showing up in lost sales penalties and excess inventory at the same time. In partnering with Solvoyo – the goal was to retain a simple planning regime yet have powerful analytics on the back end to remove the simplistic arithmetic approach.

The company today – using the Solvoyo platform – automatically generates detailed forecasts based on daily sell-through data with automated adjustments for seasonality, yearly trends, months within season, weeks within months and days within weeks. This granular forecast is then run on a multi-objective planning model allowing the CPG co. on a daily basis to plan replenishments. The result is significant reduction in lost sales, lower overall inventory and lower transportation costs – all at the same time!

From a 36,000 feet view – planning at the CPG co. is still a simple daily process whereby planners set inventory targets without much time wasted on analysis and review. Yet with Solvoyo, planners at the company today have ready access to a bigger dashboard of data points allowing them to make smarter decisions without the additional analytical burden or planning complexity.

We’ve all experienced simple and elegant solutions that take our breath away with their brilliance. I consider iPhone, Tesla and USB standard to be great examples. Likewise, we’ve all been frustrated by a simplistic solution that failed to properly acknowledge underlying complexity and account for nuanced relationships and interdependencies. At Solvoyo we believe we’ve created a platform that would have made Einstein proud: simple….but not simpler.

To learn more about the Solvoyo Elevate platform, download our Closed Loop Operational Whitepaper.

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