As business leaders, we inevitably find ourselves quoting Tom Cruise’s line from Jerry Maguire: “Show me the money!” And it’s our job to lead our teams to where the money is.
Business leaders need to remember that making money is not only about bringing in more of it; learning how to stop losing it due to operational inefficiencies is equally important. This is true for any company, but especially those involved in any part of the supply chain, such as big manufacturers, distributors, retailers and e-commerce players that need to juggle thousands, and sometimes millions, of planning items.
One of the most effective ways to generate more revenue and to stop leaving money on the table is to hit two birds with one stone by streamlining sales and operations planning. Companies that have mastered the sales and operations planning process report an up to 31% revenue growth, an up to 46% inventory reduction and an up to 39% uptake in customer satisfaction. Using artificial intelligence (AI) plays an essential role in this upgrade.
How To Streamline Sales And Operations Planning
Improving sales and operations planning is strategically beneficial as it influences major business and process KPIs. These include but are not limited to fill rate, working capital, demand forecast accuracy, manufacturing and sales costs and inventory turnover. So, how can you learn to plan better?
First and foremost, you need to get your planning processes right. Only after that should you start thinking about introducing any kind of optimization software, including AI solutions. Otherwise, your technology will be just another shiny thing taking up your team’s time and not bringing the results it should.
Ideally, the process of sales and operations planning should consist of six steps. Five of them—demand generator planning, demand generation planning, supply planning, sales and operations consensus and sales and operations executive meeting—should take place monthly. The sixth step—operational execution—should become a weekly activity.
Also, all the stakeholders need to participate in almost every step of the planning, including supply chain director, sales director, marketing director, operations director, planning manager, financial manager and trade marketing manager. Companies may have different names for these stakeholders, but the idea is that all these functions should contribute to planning at different stages.
Introducing AI Solutions To Improve Sales And Operations Planning
Once the organizational step is over—all the stakeholders are identified and informed, KPIs are defined and the roadmap is ready—it’s time to introduce the technology. One technology to consider is AI-powered demand forecasting and inventory planning solutions, as these tools can strengthen your team’s decision making and performance, and they are especially important to use at the stages of demand generation and supply planning.
AI-driven demand forecasting and inventory planning platforms allow your business to make highly accurate forecasts, identify risks and get an action plan to hit your KPIs in an optimal way in any possible scenario. They can also identify and highlight where your inefficiencies—overstock and out of stock—are hidden so that you can start planning better and stop losing money. For example, you can optimize inventory levels and significantly reduce warehouse rental costs, etc.
When using AI to strengthen your team with an accurate forecast, you should remember that such solutions usually require data, and you’ll need to consider what data is available. The amount and type of necessary data differ depending on the type of business and its needs, and therefore this part of the process should be defined case by case. The data can be fed into the system from a spreadsheet, database or an ERP or accounting system. Generally, the more data you can provide, the more accurate your forecast will be.
To sum up, manufacturing, distribution, retail or e-commerce business leaders should consider two things to help make more money and leave less on the table. First of all, optimize your sales and operations planning as it impacts all the major business and process KPIs. Secondly, empower your planning teams with AI solutions while understanding the role of data in this process and forming a strong data strategy based on your company’s specific situation and needs.