What would happen if almost every touchpoint in your supply chain was affected at the same time? In 2020, the COVID-19 pandemic provided a case study that no one in supply chain management could have predicted. While many supply chains maintained production, many other factories and distribution centers shut down, reducing the available supply of essential goods and medical equipment While many people stayed home, supply chain teams continued to work, providing goods and services to support the population. Supply chains were challenged to keep employees safe and healthy, while others worked to find ways to reopen. Customer demand shifted too quickly for supply chains to catch up. Suppliers blew through safety stock of products that were suddenly in high demand. No amount of demand planning or supply planning could have prepared stakeholders for the chaotic early months of the pandemic last year.
The coronavirus and the crisis it created in supply chain planning have resulted in lessons for the future of supply chain management. This is not the last upheaval we will see in supply chain management. It may not even be the most disruptive. The best supply chains will be nimble, able to pivot quickly as circumstances change.
Future Trends Shaping Transportation—a white paper from the Global Supply Chain Institute at the University of Tennessee, Knoxville’s Haslam College of Business—outlined trends in transportation that reflect the impact of COVID-19. In the white paper, co-authors Mary Holcomb, Mary Long, and Alan Amling interviewed 30 transportation executives on the future of supply chain management across ocean, air, truck, and rail. Their conclusions can be adapted to apply to the supply chain as a whole:
- Technology will bring big changes to planning processes;
- Companies are looking harder at their global supply chains and re-evaluating their structures to allow for a more local approach;
- The focus on improving delivery has narrowed from the last mile to the last yard;
- Supply chain management professionals need to train continuously to keep up with this changing environment; and
- Agility will become standard operating procedure for supply chains.
Distribution resource planning is key to creating the type of agile supply chain we need to meet today’s ever-changing demand. COVID-19 has made this clearer than ever before.
What is distribution resource planning in 2020?
Distribution resource planning, also referred to as distribution requirements planning, is essential for demand and supply planning in supply chain management and beyond. For example, energy resource companies do intensive distribution planning to make sure the grid can meet peak demand. A capacity analysis allows planners to sync energy storage to the overflow needs of the grid so electricity flows uninterrupted.
Distribution planning for supply chain management creates a plan of action to get materials and products from the manufacturer to the distribution center and beyond. This starts with demand planning. Demand planning analyzes data from past customer demand, plus the influence of external factors, both cultural and economic, to predict future demand.
The next step is an assessment of the material requirements to meet projected demand. If you find out there’s a shortage of an essential element for your production when you issue a purchase order, that’s too late. Think of this step as advanced supply planning.
An important aspect of distribution planning is a capacity analysis of every element of the supply chain. Distribution resource planning means thinking ahead, gaming out all the possible scenarios, and preparing to keep production and distribution flowing under even the most challenging circumstances. Which manufacturing facilities can increase production in the event of a spike in customer demand? Are there transportation resources that can deliver greater volumes? Is a distribution center at capacity or does it have shelf space to take on extra volume? Most importantly, how quickly can these resources ramp up to meet customer demand?
One requirement of robust distribution planning is modeling various scenarios to determine which pressure points in the supply chain affect others. This pre-disaster recovery planning enables you to identify weak links in the chain and shore them up. This is also the point at which supply chain management professionals can tap outside resources to meet the material requirements of production in the event of a disaster.
If 2020 has taught supply chain management professionals anything, it’s the importance of pre-disaster recovery planning. While the COVID-19 pandemic drags on, bringing fresh pain to many aspects of distribution and supply, other disasters are waiting on the horizon. Hurricanes, floods, and other types of natural disasters can create sudden and severe breaks in a supply chain. The best supply chain managers have a plan ahead of time and are ready to spring into action when this happens.
To create a pre-disaster recovery plan, you need to plan for every element of your supply chain from raw materials to delivery to the customer. Distribution resources planning optimizes your supply chain by planning every aspect of the process. End-to-end supply chain management requires visibility into every aspect of production, not starting with manufacturers but with the suppliers that provide raw materials for production.
Benefits of distribution resource planning
Distribution resource planning is foundational to the agile supply chain. Many organizations institute Enterprise Resource Planning (ERP) systems to facilitate demand and supply planning. Companies often turn to ERP software to automate complex resource planning. However, supply chain management professionals must understand the underlying processes.
To calculate inventory requirements, you need to not only keep an eye on predicted future demand but to understand the dynamics of dependent demand. Dependent demand is a demand for one product that affects the demand for another. Independent demand is the customer demand for products that don’t impact the sales of other products.
The effect of dependent demand can be positive or negative. In other words, two products may compete for the same customers, leading to reduced demand for one when sales of the other rise. Or the demand for both products may rise and fall together. A clear understanding of these dynamics is essential for distribution resource planning.
Insightful resource planning creates an environment of collaboration with suppliers that fosters end-to-end supply chain planning. When you involve your suppliers in the supply chain planning process, you gain valuable insights. This type of collaborative planning also prepares every element of your distribution network to better respond to potential disruptions.
Skills needed for distribution resource planning jobs during COVID-19
A typical supply chain manager role requires you to handle supply chain planning and operations. You may also create a demand plan and implement a supply chain strategy that factors in logistics, inventory management, and resource planning. You will be called on to collaborate across departments because the supply chain affects all aspects of business operations.
Distribution resource planning jobs include supply chain manager, supply chain planner, demand planner, production planner, purchasing manager, and logistics director. These roles are generally management positions or part of a career path leading to a role in management. If you’re interested in a career in supply chain management, starting with the full skillset is not a requirement. In fact, one of the best ways to prepare for a supply chain job is to pursue an advanced degree, with a course of study that prepares you for the in-demand supply chain field.
In the MS in Supply Chain Management Online (MS SCM - Online) at UT Haslam, you’ll develop proficiency in data analysis, resource management, logistics, and human resource management, among other skills. The MS SCM - Online degree will position you to be on the cutting edge of the rapidly-evolving supply chain field. You’ll be ready to jump into distribution resource planning on day one.