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Close Relationships Lead to Superior Planning

Partner involvement in supply chain planning is beneficial, but now may be the time to take it to the next level.

By ·

Superior supply chain planning requires excellent insight into customer demand for products and the availability of materials from suppliers. Many organizations look to data collected internally to better understand these factors, but others collaborate with external supply chain partners as well. Collaboration with customers and suppliers can provide organizations with valuable perspectives on the supply chain that can result in benefits for all involved.

To determine the extent to which external collaboration can benefit supply chain planning efforts, APQC looked at data from its Open Standards Benchmarking in supply chain planning.* Participating organizations provided the extent to which their sales and operations planning processes involve external demand collaboration with customers, and the extent to which these processes involve external supply planning collaboration with suppliers. APQC grouped organizations based on the degree to which they engage in each type of external collaboration. The data indicates that organizations with more collaboration with either of these external groups have more accurate forecasts and more efficient planning operations.

Working with Customers Means Getting More
The data indicates that organizations collaborating more with their customers to determine demand more accurately predict the needs of their businesses with fewer staff and for a similar cost as organizations that conduct less collaboration with their customers. Those organizations collaborating more with their customers from some to a very great extent have a lower average monthly national forecast error than organizations that only collaborate with their customers to little or no extent. Those with more collaboration have a median error of 5.2 percent, whereas organizations with less collaboration have a median error of 13 percent. Organizations are clearly seeing benefits from greater collaboration with their customers to better determine demand for products. By getting the customer perspective on the market, organizations are able to more accurately determine how much product they should produce and keep on hand.

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By ·
Download Article PDF

Superior supply chain planning requires excellent insight into customer demand for products and the availability of materials from suppliers. Many organizations look to data collected internally to better understand these factors, but others collaborate with external supply chain partners as well. Collaboration with customers and suppliers can provide organizations with valuable perspectives on the supply chain that can result in benefits for all involved.

To determine the extent to which external collaboration can benefit supply chain planning efforts, APQC looked at data from its Open Standards Benchmarking in supply chain planning.* Participating organizations provided the extent to which their sales and operations planning processes involve external demand collaboration with customers, and the extent to which these processes involve external supply planning collaboration with suppliers. APQC grouped organizations based on the degree to which they engage in each type of external collaboration. The data indicates that organizations with more collaboration with either of these external groups have more accurate forecasts and more efficient planning operations.

Working with Customers Means Getting More
The data indicates that organizations collaborating more with their customers to determine demand more accurately predict the needs of their businesses with fewer staff and for a similar cost as organizations that conduct less collaboration with their customers. Those organizations collaborating more with their customers from some to a very great extent have a lower average monthly national forecast error than organizations that only collaborate with their customers to little or no extent. Those with more collaboration have a median error of 5.2 percent, whereas organizations with less collaboration have a median error of 13 percent. Organizations are clearly seeing benefits from greater collaboration with their customers to better determine demand for products. By getting the customer perspective on the market, organizations are able to more accurately determine how much product they should produce and keep on hand.

SUBSCRIBERS: Click here to download PDF of the full article.

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Third Party Risk: Too Close for Comfort
You’ve got a handle on many of the potential supply chain "disrupters" that can paralyze your business. But the real risk is embedded in areas you may have overlooked.
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From the December 2017
This is a comprehensive guide to services, products and educational opportunities targeted specifically to supply chain professionals. As with years past, we’re also featuring several articles we trust will offer food for thought in your supply chain throughout the coming year.
Transportation Trends: The last mile, history repeating
Economic Outlook: A Complex and Uneven Scenario for Global Supply Chains
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