Outdated planning tools and processes hampering business

Companies that rely on legacy approaches to planning are potentially cutting their growth prospects and erasing their competitive advantage, research finds.

With growing global risks, evolving supplier networks and economic difficulties in key markets, businesses that do not take advantage of advanced planning and scheduling (APS) systems risk increased costs with limited flexibility to respond to changing market conditions.

Dave Alberts, director at global supply chain consultancy Crimson & Co, says that, following events like Brexit and the rise of extremist terror organisations around the world, businesses looking to operate in a range of global markets face significant challenges.

‘Success in such situations requires robust scenario planning, the ability to respond quickly to changes and the capability to deal with an ever-changing list of suppliers and business partners. Across the globe, agility and the ability to quickly adapt to changes in logistics environments is increasingly important.’

However, a continued reliance upon outdated planning tools like Enterprise Resource Planning (ERP) systems, bolstered by an array of spreadsheets, prevents many businesses rising to these challenges, Alberts adds.

‘If supply routes need to change following disaster, or old trade agreements can no longer direct freight transport, businesses leaning on ERP systems can find themselves on the back foot and unable to take advantage of such changes. All in all, these outdated tools can result in significantly increased capital and service costs in the case of any changes to the supply chain status quo.’

There is a need for businesses to update their planning tools to erase these costs and remain competitive in the global market, Alberts says, with those using ERP systems or similar are less able to innovate and improve their supply chain processes, and fall behind more reactive and agile businesses supported by more flexible planning tools.

Crimson & Co’s research into the planning and scheduling market finds that over two thirds of those surveyed still rely upon ERP and spreadsheet systems. The findings also show that an effective APS system could result in a 20 per cent reduction in working capital, 5 per cent increase in service level, 6 per cent reduction in logistics costs and 3 per cent reduction in the cost of goods sold.

‘There is a clear incentive for businesses to adopt a robust APS system. Through benchmarking of planning and scheduling solutions, companies can quickly work out the systems that need updating and the practices that need improving, working to develop these areas where necessary.

‘In most scenarios, the adoption of an APS system can result in reduced overall supply chain costs and greater ability to deal with complex business decisions,’ Alberts concludes.

Further reading on planning

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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