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Decoding Supply Planning the AI Way

By
Niki Khokale
July 27, 2022
4
min
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Blog

Decoding Supply Planning the AI Way

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Access The Case Study

Global supply chains have been disrupted and redefined over the last two years, revealing the shortcomings of a system that impacts everyday life. These disruptions have compelled businesses across geographies to rethink their operations strategy. 

In the food and beverage industry, proactive supply planning and ideal supplier selection plays a critical role given the perishable nature of goods. When done right, it can become your competitive strength  and help you create leaner and optimized inventory plans. That’s why it is important to ask the right questions while planning supply and choosing the ideal supplier to procure from.

      

Supply Planning and Supplier Selection with Kronoscope

Traditionally, operations managers create purchase plans manually and evaluate suppliers based on factors such as price, quality, location, reliability and previous experience. These aspects hold good as a general rule. However, the highly volatile and unpredictable demand levels make effective supply planning difficult. Managers are in a quandary when it comes to making decisions in real time to plan supply effectively. Further, it becomes taxing to continuously evaluate thousands of suppliers across hundreds of SKUs manually and identify the ideal supplier. This may lead to choosing the wrong supplier resulting in under stocking or over stocking.

Here’s when Kronoscope comes in to save the day. It helps in planning the supply and determining procurement quantities in real time to fulfill changing business goals. Let's understand this with the case of David. 

David is the Procurement Manager at “Tasty Dots”, a DTC food brand that sells instant food products across multiple channels including website, online marketplace and physical stores as well. He is in charge of procuring various finished goods from third party manufacturers and planning inventory. There were  multiple instances when David was in a dilemma as to how much quantity he had to procure and which supplier he had to choose while keeping in mind the various factors like ensuring product availability, reduced inventory turns and maximizing profits. However, he was able to solve this in no time with Kronoscope’s help. Let’s find out what goes into solving this dilemma.

Challenge: Tackling Uncertainties and Managing Risks

David was not able to procure the finished goods from the third party manufacturers due to a disruption in the supply chain. There was a nation wide strike by the Road Transport Union which led to an unprecedented delay in delivery of goods and shortage of supply. This situation would require quick attention and there should be proactive measures taken in order to be optimally stocked until they receive the next delivery. But a manual supply planning system with rigid processes in place would not be able to implement and re-adjust safety and inventory norms in real time.

Kronoscope’s Fix: 

Uncertain times like these call for an agile planning system. In this case, Kronoscope takes into account the prolonged lead time and lower fill rates for inventory planning. So, it would dynamically adjust the safety stock levels and recommend a higher level of safety stock in order to make up for the shortage in supply. The purchase order quantities are also increased accordingly. Further, once the finished goods are procured the safety stock levels and other inventory norms are re-adjusted to align with the updated inventory levels. 

This domino effect across the supply chain is seamlessly captured and adjusted by Kronoscope using the Theory of Constraints. It helps to constantly monitor crucial factors like demand predictability, changes in lead times, fill rate and service level targets in order to ensure consistent availability of all products across multiple supply chain nodes. In this way, businesses can plan supply in a better way and achieve availability targets irrespective of highly volatile demand levels or other unanticipated setbacks.

Challenge: Biased Supplier Preferences

During monsoon, there was a sudden surge in demand for Instant Tomato Soup Mix. But David's usual supplier informed him that he would not be able to deliver the required quantity of soup packs anytime soon. By any means, David had to quickly procure enough soup packs to meet this surge in demand without running out of stock. But he was still hesitant to switch from his preferred supplier due to inconvenience and a long standing relationship with the current suppliers. Now, this might not be a wise thing to do keeping in mind the best interests of his business.

Kronoscope’s Fix: 

Kronoscope’s Inventory Control Tower feature would help determine the runway for current inventory, potential stock out period and the potential stock out loss SKU level (Instant Tomato Soup Mix here). This would be an early warning that would help take precautionary measures.

Kronoscope then recommends the supplier who can offer David the highest fill rate and shortest lead time by carefully evaluating multiple suppliers present for that particular SKU. It also shows the percentage difference in terms of lead time and fill rate between David’s preferred supplier and Kronoscope recommended supplier. This helps David choose the right supplier as per his specific business needs at the time instead of simply procuring from his preferred supplier who would not be able to meet his demands. This enables him to weigh different suppliers and evaluate their performance continuously to identify the ideal supplier from time to time based on important factors like lead time, fill rate, and price. This supplier scoring basis supplymetrics could be an eye opener for many businesses to overcome any predispositions that they have towards a specific supplier and make informed decisions.

Challenge: Rigid Supply Practices

David was glad to see an increase in sales on their website. However, they were often running out of stock quickly as their inventory turns became shorter. This would require him to make procurement from their manufacturers more frequently and on a need basis. But David had a rigid supply plan that had a weekly procurement schedule. It was difficult for him to manually look at real time demand and adjust all safety buffers and inventory norms to align with those numbers. He would rather continue to follow his routine weekly schedule.

Kronoscope’s Fix: 

Kronoscope saves one all the effort and time that would go into manually creating a purchase plan. David would be able to create purchase plans instantly for different products across multiple stores for a selected duration at just the click of a mouse. Kronoscope with its sophisticated AI engine, helps by automatically creating purchase plans, factoring in lead times, fill rates, shelf life, current inventory levels, open orders, and dynamic safety stock levels. Dynamic safety levels are assigned based on the demand variability, service levels, plan coverage days, and supplier fill rates. It gives the final purchase order quantity and values which can also be edited by the users, if need be.

David can now easily determine what quantities he should be ordering and when instantaneously. This can help procure more frequently and achieve service level targets in a better manner. They can also gradually move away from rigid supply chain practices to a more flexible and adaptive one.

Challenge : Tedious Activity

Tasty Dots has planned to expand across more geographies and channels which would require better inventory planning for more effective day to day operations. Planning supply manually could be a tedious task in itself where there are a plethora of excel sheets and numerous calculations which have to be brought together and integrated to then arrive at final numbers. Further, it becomes almost impossible to repeat and reconcile this whole process to align with any real time changes that could happen in the supply chain. 

Kronoscope’s Fix: 

It is crucial to have an agile supply chain that's responsive to real time changes with changing business priorities. Kronoscope’s bottom up approach enables accurate demand predictions at the most granular level. This is then followed by bringing together the demand and supply side of things to create dynamic purchase and replenishment plans. Businesses need to account for dynamically changing lead times, fill rates, pricing, shelf life, current inventory levels, and open orders for different SKUs across stores to bring in motion shorter cycles of purchasing as businesses move to lower days on hand needs  and expand across geographies.

This is further layered with the inventory control tower feature where we give out potential stock outs and potential inventory pile up alerts. It prevents potential loss of revenue due to empty shelves by proactively identifying different SKUs that could soon run out of stock. Also, inventory pile up predictions help businesses optimize their working capital and reduce the complexity and costs of managing multiple inventories by identifying SKUs which are ideal for liquidation. 

Kronoscope helps predict demand accurately to ensure risk mitigation for Food and Beverage businesses. Furthermore, the automated inventory planning ensures they  maintain high availability levels.The dynamic safety stock recommendations, inventory control towers, and real time supplier selection act as a safety net that will secure the business from unforeseen impediments. 

It goes without saying, business can gain a competitive advantage with AI based supply planning. 

 

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Oops! Something went wrong while submitting the form.
Blog

Decoding Supply Planning the AI Way

Share this

Global supply chains have been disrupted and redefined over the last two years, revealing the shortcomings of a system that impacts everyday life. These disruptions have compelled businesses across geographies to rethink their operations strategy. 

In the food and beverage industry, proactive supply planning and ideal supplier selection plays a critical role given the perishable nature of goods. When done right, it can become your competitive strength  and help you create leaner and optimized inventory plans. That’s why it is important to ask the right questions while planning supply and choosing the ideal supplier to procure from.

      

Supply Planning and Supplier Selection with Kronoscope

Traditionally, operations managers create purchase plans manually and evaluate suppliers based on factors such as price, quality, location, reliability and previous experience. These aspects hold good as a general rule. However, the highly volatile and unpredictable demand levels make effective supply planning difficult. Managers are in a quandary when it comes to making decisions in real time to plan supply effectively. Further, it becomes taxing to continuously evaluate thousands of suppliers across hundreds of SKUs manually and identify the ideal supplier. This may lead to choosing the wrong supplier resulting in under stocking or over stocking.

Here’s when Kronoscope comes in to save the day. It helps in planning the supply and determining procurement quantities in real time to fulfill changing business goals. Let's understand this with the case of David. 

David is the Procurement Manager at “Tasty Dots”, a DTC food brand that sells instant food products across multiple channels including website, online marketplace and physical stores as well. He is in charge of procuring various finished goods from third party manufacturers and planning inventory. There were  multiple instances when David was in a dilemma as to how much quantity he had to procure and which supplier he had to choose while keeping in mind the various factors like ensuring product availability, reduced inventory turns and maximizing profits. However, he was able to solve this in no time with Kronoscope’s help. Let’s find out what goes into solving this dilemma.

Challenge: Tackling Uncertainties and Managing Risks

David was not able to procure the finished goods from the third party manufacturers due to a disruption in the supply chain. There was a nation wide strike by the Road Transport Union which led to an unprecedented delay in delivery of goods and shortage of supply. This situation would require quick attention and there should be proactive measures taken in order to be optimally stocked until they receive the next delivery. But a manual supply planning system with rigid processes in place would not be able to implement and re-adjust safety and inventory norms in real time.

Kronoscope’s Fix: 

Uncertain times like these call for an agile planning system. In this case, Kronoscope takes into account the prolonged lead time and lower fill rates for inventory planning. So, it would dynamically adjust the safety stock levels and recommend a higher level of safety stock in order to make up for the shortage in supply. The purchase order quantities are also increased accordingly. Further, once the finished goods are procured the safety stock levels and other inventory norms are re-adjusted to align with the updated inventory levels. 

This domino effect across the supply chain is seamlessly captured and adjusted by Kronoscope using the Theory of Constraints. It helps to constantly monitor crucial factors like demand predictability, changes in lead times, fill rate and service level targets in order to ensure consistent availability of all products across multiple supply chain nodes. In this way, businesses can plan supply in a better way and achieve availability targets irrespective of highly volatile demand levels or other unanticipated setbacks.

Challenge: Biased Supplier Preferences

During monsoon, there was a sudden surge in demand for Instant Tomato Soup Mix. But David's usual supplier informed him that he would not be able to deliver the required quantity of soup packs anytime soon. By any means, David had to quickly procure enough soup packs to meet this surge in demand without running out of stock. But he was still hesitant to switch from his preferred supplier due to inconvenience and a long standing relationship with the current suppliers. Now, this might not be a wise thing to do keeping in mind the best interests of his business.

Kronoscope’s Fix: 

Kronoscope’s Inventory Control Tower feature would help determine the runway for current inventory, potential stock out period and the potential stock out loss SKU level (Instant Tomato Soup Mix here). This would be an early warning that would help take precautionary measures.

Kronoscope then recommends the supplier who can offer David the highest fill rate and shortest lead time by carefully evaluating multiple suppliers present for that particular SKU. It also shows the percentage difference in terms of lead time and fill rate between David’s preferred supplier and Kronoscope recommended supplier. This helps David choose the right supplier as per his specific business needs at the time instead of simply procuring from his preferred supplier who would not be able to meet his demands. This enables him to weigh different suppliers and evaluate their performance continuously to identify the ideal supplier from time to time based on important factors like lead time, fill rate, and price. This supplier scoring basis supplymetrics could be an eye opener for many businesses to overcome any predispositions that they have towards a specific supplier and make informed decisions.

Challenge: Rigid Supply Practices

David was glad to see an increase in sales on their website. However, they were often running out of stock quickly as their inventory turns became shorter. This would require him to make procurement from their manufacturers more frequently and on a need basis. But David had a rigid supply plan that had a weekly procurement schedule. It was difficult for him to manually look at real time demand and adjust all safety buffers and inventory norms to align with those numbers. He would rather continue to follow his routine weekly schedule.

Kronoscope’s Fix: 

Kronoscope saves one all the effort and time that would go into manually creating a purchase plan. David would be able to create purchase plans instantly for different products across multiple stores for a selected duration at just the click of a mouse. Kronoscope with its sophisticated AI engine, helps by automatically creating purchase plans, factoring in lead times, fill rates, shelf life, current inventory levels, open orders, and dynamic safety stock levels. Dynamic safety levels are assigned based on the demand variability, service levels, plan coverage days, and supplier fill rates. It gives the final purchase order quantity and values which can also be edited by the users, if need be.

David can now easily determine what quantities he should be ordering and when instantaneously. This can help procure more frequently and achieve service level targets in a better manner. They can also gradually move away from rigid supply chain practices to a more flexible and adaptive one.

Challenge : Tedious Activity

Tasty Dots has planned to expand across more geographies and channels which would require better inventory planning for more effective day to day operations. Planning supply manually could be a tedious task in itself where there are a plethora of excel sheets and numerous calculations which have to be brought together and integrated to then arrive at final numbers. Further, it becomes almost impossible to repeat and reconcile this whole process to align with any real time changes that could happen in the supply chain. 

Kronoscope’s Fix: 

It is crucial to have an agile supply chain that's responsive to real time changes with changing business priorities. Kronoscope’s bottom up approach enables accurate demand predictions at the most granular level. This is then followed by bringing together the demand and supply side of things to create dynamic purchase and replenishment plans. Businesses need to account for dynamically changing lead times, fill rates, pricing, shelf life, current inventory levels, and open orders for different SKUs across stores to bring in motion shorter cycles of purchasing as businesses move to lower days on hand needs  and expand across geographies.

This is further layered with the inventory control tower feature where we give out potential stock outs and potential inventory pile up alerts. It prevents potential loss of revenue due to empty shelves by proactively identifying different SKUs that could soon run out of stock. Also, inventory pile up predictions help businesses optimize their working capital and reduce the complexity and costs of managing multiple inventories by identifying SKUs which are ideal for liquidation. 

Kronoscope helps predict demand accurately to ensure risk mitigation for Food and Beverage businesses. Furthermore, the automated inventory planning ensures they  maintain high availability levels.The dynamic safety stock recommendations, inventory control towers, and real time supplier selection act as a safety net that will secure the business from unforeseen impediments. 

It goes without saying, business can gain a competitive advantage with AI based supply planning. 

 

Access the

Blog

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Global supply chains have been disrupted and redefined over the last two years, revealing the shortcomings of a system that impacts everyday life. These disruptions have compelled businesses across geographies to rethink their operations strategy. 

In the food and beverage industry, proactive supply planning and ideal supplier selection plays a critical role given the perishable nature of goods. When done right, it can become your competitive strength  and help you create leaner and optimized inventory plans. That’s why it is important to ask the right questions while planning supply and choosing the ideal supplier to procure from.

      

Supply Planning and Supplier Selection with Kronoscope

Traditionally, operations managers create purchase plans manually and evaluate suppliers based on factors such as price, quality, location, reliability and previous experience. These aspects hold good as a general rule. However, the highly volatile and unpredictable demand levels make effective supply planning difficult. Managers are in a quandary when it comes to making decisions in real time to plan supply effectively. Further, it becomes taxing to continuously evaluate thousands of suppliers across hundreds of SKUs manually and identify the ideal supplier. This may lead to choosing the wrong supplier resulting in under stocking or over stocking.

Here’s when Kronoscope comes in to save the day. It helps in planning the supply and determining procurement quantities in real time to fulfill changing business goals. Let's understand this with the case of David. 

David is the Procurement Manager at “Tasty Dots”, a DTC food brand that sells instant food products across multiple channels including website, online marketplace and physical stores as well. He is in charge of procuring various finished goods from third party manufacturers and planning inventory. There were  multiple instances when David was in a dilemma as to how much quantity he had to procure and which supplier he had to choose while keeping in mind the various factors like ensuring product availability, reduced inventory turns and maximizing profits. However, he was able to solve this in no time with Kronoscope’s help. Let’s find out what goes into solving this dilemma.

Challenge: Tackling Uncertainties and Managing Risks

David was not able to procure the finished goods from the third party manufacturers due to a disruption in the supply chain. There was a nation wide strike by the Road Transport Union which led to an unprecedented delay in delivery of goods and shortage of supply. This situation would require quick attention and there should be proactive measures taken in order to be optimally stocked until they receive the next delivery. But a manual supply planning system with rigid processes in place would not be able to implement and re-adjust safety and inventory norms in real time.

Kronoscope’s Fix: 

Uncertain times like these call for an agile planning system. In this case, Kronoscope takes into account the prolonged lead time and lower fill rates for inventory planning. So, it would dynamically adjust the safety stock levels and recommend a higher level of safety stock in order to make up for the shortage in supply. The purchase order quantities are also increased accordingly. Further, once the finished goods are procured the safety stock levels and other inventory norms are re-adjusted to align with the updated inventory levels. 

This domino effect across the supply chain is seamlessly captured and adjusted by Kronoscope using the Theory of Constraints. It helps to constantly monitor crucial factors like demand predictability, changes in lead times, fill rate and service level targets in order to ensure consistent availability of all products across multiple supply chain nodes. In this way, businesses can plan supply in a better way and achieve availability targets irrespective of highly volatile demand levels or other unanticipated setbacks.

Challenge: Biased Supplier Preferences

During monsoon, there was a sudden surge in demand for Instant Tomato Soup Mix. But David's usual supplier informed him that he would not be able to deliver the required quantity of soup packs anytime soon. By any means, David had to quickly procure enough soup packs to meet this surge in demand without running out of stock. But he was still hesitant to switch from his preferred supplier due to inconvenience and a long standing relationship with the current suppliers. Now, this might not be a wise thing to do keeping in mind the best interests of his business.

Kronoscope’s Fix: 

Kronoscope’s Inventory Control Tower feature would help determine the runway for current inventory, potential stock out period and the potential stock out loss SKU level (Instant Tomato Soup Mix here). This would be an early warning that would help take precautionary measures.

Kronoscope then recommends the supplier who can offer David the highest fill rate and shortest lead time by carefully evaluating multiple suppliers present for that particular SKU. It also shows the percentage difference in terms of lead time and fill rate between David’s preferred supplier and Kronoscope recommended supplier. This helps David choose the right supplier as per his specific business needs at the time instead of simply procuring from his preferred supplier who would not be able to meet his demands. This enables him to weigh different suppliers and evaluate their performance continuously to identify the ideal supplier from time to time based on important factors like lead time, fill rate, and price. This supplier scoring basis supplymetrics could be an eye opener for many businesses to overcome any predispositions that they have towards a specific supplier and make informed decisions.

Challenge: Rigid Supply Practices

David was glad to see an increase in sales on their website. However, they were often running out of stock quickly as their inventory turns became shorter. This would require him to make procurement from their manufacturers more frequently and on a need basis. But David had a rigid supply plan that had a weekly procurement schedule. It was difficult for him to manually look at real time demand and adjust all safety buffers and inventory norms to align with those numbers. He would rather continue to follow his routine weekly schedule.

Kronoscope’s Fix: 

Kronoscope saves one all the effort and time that would go into manually creating a purchase plan. David would be able to create purchase plans instantly for different products across multiple stores for a selected duration at just the click of a mouse. Kronoscope with its sophisticated AI engine, helps by automatically creating purchase plans, factoring in lead times, fill rates, shelf life, current inventory levels, open orders, and dynamic safety stock levels. Dynamic safety levels are assigned based on the demand variability, service levels, plan coverage days, and supplier fill rates. It gives the final purchase order quantity and values which can also be edited by the users, if need be.

David can now easily determine what quantities he should be ordering and when instantaneously. This can help procure more frequently and achieve service level targets in a better manner. They can also gradually move away from rigid supply chain practices to a more flexible and adaptive one.

Challenge : Tedious Activity

Tasty Dots has planned to expand across more geographies and channels which would require better inventory planning for more effective day to day operations. Planning supply manually could be a tedious task in itself where there are a plethora of excel sheets and numerous calculations which have to be brought together and integrated to then arrive at final numbers. Further, it becomes almost impossible to repeat and reconcile this whole process to align with any real time changes that could happen in the supply chain. 

Kronoscope’s Fix: 

It is crucial to have an agile supply chain that's responsive to real time changes with changing business priorities. Kronoscope’s bottom up approach enables accurate demand predictions at the most granular level. This is then followed by bringing together the demand and supply side of things to create dynamic purchase and replenishment plans. Businesses need to account for dynamically changing lead times, fill rates, pricing, shelf life, current inventory levels, and open orders for different SKUs across stores to bring in motion shorter cycles of purchasing as businesses move to lower days on hand needs  and expand across geographies.

This is further layered with the inventory control tower feature where we give out potential stock outs and potential inventory pile up alerts. It prevents potential loss of revenue due to empty shelves by proactively identifying different SKUs that could soon run out of stock. Also, inventory pile up predictions help businesses optimize their working capital and reduce the complexity and costs of managing multiple inventories by identifying SKUs which are ideal for liquidation. 

Kronoscope helps predict demand accurately to ensure risk mitigation for Food and Beverage businesses. Furthermore, the automated inventory planning ensures they  maintain high availability levels.The dynamic safety stock recommendations, inventory control towers, and real time supplier selection act as a safety net that will secure the business from unforeseen impediments. 

It goes without saying, business can gain a competitive advantage with AI based supply planning. 

 

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