Integrating planning processes across your business enables you to rapidly adapt to changes in supply and demand, reduce costs, outsmart the competition and keep customers happy.
Integrated Business Planning (IBP) accelerates business performance by breaking down siloed working practices and aligning strategy, sales, operations, logistics, and finance. With increased visibility, speed, and depth of planning, IBP gives businesses a competitive edge in today’s volatile market by improving customer service while reducing operating costs.
Bill Tonetti, EVP of Integrated Business Planning at Netstock, shares his views on how working with an IBP solution can optimize business processes and deliver large-scale improvements in forecast accuracy.
#Q: How did your career start in the supply chain industry?
Bill: After graduate school, I started in the corporate marketing department of a large paper manufacturer. Shortly afterward, I moved into production planning, customer service, and logistics. Around the same time, a supply chain revolution was underway, utilizing computer technology to improve performance, service, and costs. I had an affinity for all of that and implemented many improvements while working for the paper company. Eventually, I was so taken by it that I joined forces with Eric Townson at his software startup, “Advanced Planning Systems” (APSI). We sold APSI in 1999 to a company that’s now known as Infor, and we left and started Demand Works in 2003. I’ve partnered with Eric throughout all these changes, and we’ve been helping companies make better sales, production, procurement, and inventory decisions for over 20 years.
#Q: What’s an ongoing supply chain challenge? And how has that changed since the global pandemic, or if at all?
Bill: In the hustle and bustle of buying and receiving materials, making goods, shipping them, and selling them, planning can sometimes be overlooked. Weak planning processes result in lower customer satisfaction and/or escalating inventory costs, and they can also be associated with costly re-keying information into spreadsheets. I honestly think the biggest challenge to good integrated planning is siloed planning and an excessive emphasis on execution over preparedness. Catastrophic events like COVID-19 or geopolitical instability are big challenges that make the need for integrated business planning even more obvious and essential.
#Q: With so much uncertainty going into 2023, what’s the most crucial component of supply chain planning businesses need to get right?
Bill: The key is agility in times like this. It’s never easy to optimize plans, but when situations change so rapidly, the most important thing is to be able to identify changes and re-plan them swiftly. Nobody has enough time to take data from bunches of screens and reports, then type them into spreadsheets. By the time the data is in the spreadsheets, the plans are already obsolete. Companies that can identify and respond to changing environments significantly outperform their competitors.
#Q: What inspired you to create the pivot forecasting feature Netstock offers?
Bill: We started experimenting with pivot tables and thought it would be amazing if we could make a writable one. Eric Townson had done some experimentation with Relational Online Analytical Processing (ROLAP) for reporting. After that, we decided that we could build a planning app based on the same principles. We knew it would be great for forecasting by customers, channels, item groupings, etc., but it turned out to be just as much of a game changer for inventory and production planning. At its core, Netstock IBP plans are made from attributes, measures, policies, periods of time, and calculations to tie them all together.
#Q: How can Pivot Forecasting save time, money and increase visibility?
Bill: Pivot Forecasting makes it possible to align sales plans with operational and financial ones. By allowing different participants to work at group levels and with measures that are meaningful to them. For example, sales can work in dollars by account, while production will be able to view and work with plant capacity, and also procurement and logistics can work with vendors, items and warehouses, at cost or in conversions that matter to logistics like weights or space requirements. Only a fully integrated platform with Pivot Forecasting and Planning can support this kind of alignment and it can do it in live IBP meetings.
#Q: Why is machine learning [ML] enhanced software vital for supply chain planning?
Bill: Machine learning is a modern and superior way to plan for promotional and other events and is superior to classic regression in that it can make estimates based on channel, geographic and product “attributes.” It’s also more robust due to its ability to churn through large amounts of data with less risk of being thrown off by irrelevant data.
#Q: Tell us more about IBP’s new ML Casual Event Forecasting feature.
Bill: We recently launched this new ML functionality for our Netstock IBP customers to help them predict the effects of promotions and other events on demand. This feature will also help to better understand the financial and operational impacts that events will have on their business. The goal here is to enable our customers to facilitate agility and preparedness, particularly for higher-volume products.
A cool fact to highlight is that since the machine learning feature in Netstock IBP is based on training in a multi-attribute model, it will produce usable estimates of event effects for items or customers that have never been promoted.
#Q: Advice for customers who’ve not used ML-enhanced software before.
Bill: Machine learning helps us to do things better, but they are the same things we have all been doing for a long time. Machine learning takes planning one step further ahead so companies can provide superior service and do so with minimal costs. Unlike most machine learning, the new ML forecasting feature is easy to use and doesn’t require assistance from a team of data scientists.
#Q: What advice do you have for businesses considering implementing an IBP solution?
Bill: Here are a few key things that come to mind.
- There must be buy-in from the executive teams and middle management within the business. The IBP solution will provide the tools that enable a healthy business process, but the business needs to be committed and aligned.
- Without ongoing effort and communication throughout the business, software adoption becomes a challenge and businesses can fail to experience the real ROI that should be otherwise achievable.
- Understand your business maturity, as there is no ‘one size fits all’ approach to IBP. Start simple, then improve.
- Appropriate “views” of aligned data are the keystone of an effective integrated business plan.
- Demand drives the business, not supply. Demand plans improve with sales, marketing, and external market intelligence. Good statistical forecasting is essential, but it’s not enough.
Investing in the right IBP supply chain planning solution.
As supply chain disruptions continue, businesses are focusing more on their cash flow and margins across operations, adding pressure on supply chain planning to reduce waste, unlock operating cash and manage working capital more effectively.