Contribution by Karsten Horn – International Sales Director, Inventory & Supply Chain Division at INFORM GmbH
Earlier this year, we conducted a survey to ascertain the general consensus regarding the implementation of integrated internal supply chain planning in German enterprises. Integrated planning is based on gathering all planners, information and processes along the entire internal supply chain into one intelligent network for optimal overall planning results. Seventy-two professionals took part in the questionnaire, working in the logistics departments in a diverse range of sectors, including: automobile, chemical/pharmaceutical, metal, electronics, construction materials, steel, food and consumer goods, mechanical engineering and plant construction, wholesale and retail sectors, as well as forwarding companies.
The results of the survey proved to be quite interesting: although ninety percent of those surveyed noted that integrated planning was ‘important’ or ‘moderately important’, it remains under-utilized in German companies:
Many surveyed cited current organizational structures as well as internal agreements within individual process units as factors restricting the implementation of integrated planning. Furthermore, fifty-six percent of the respondents consider the processes in their companies to be insufficiently integrated. This would suggest that that the companies do not yet plan their internal supply chain processes as a whole. However, further results show that respondents are familiar with integrated planning, with 60 percent claiming to have already searched for an optimization approach.
According to the respondents, the main benefit from an integrated approach lies, with 36 percent, in the high consistency of data and planning figures followed by cost reduction (30 percent) and the integration of all planning divisions (20 percent). The respondents also have certain expectations of what can be done with integrated planning: around 77 percent want the sales planning, 75 percent the purchase planning and 70 percent the production planning to be part of the integrated planning process.
From what we have learned, we can conclude that the integrated planning approach is not lacking in recognition, but rather implementation. In the long run, this will likely change, as logistics managers become increasingly aware of the growing complexity of their internal supply chain. On the other hand, if ‘single-track thinking’ persists along the processes of purchasing, production, distribution and sales, where divisions only prioritize their own goals without considering the supply chain as a whole, conflicts are inevitable. This results in scenarios where the correct product does not reach the customer on-time, and in general, service levels and efficiency suffer, resulting in higher costs.
What do you see as being barriers for implementing integrated planning effectively into internal supply chain management processes?