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by Daniel Harris,
Market Research Associate
Last Updated: February 17, 2017


We’ve created this buyer’s guide to help you better understand supply chain planning and optimization software. This guide is intended to help you to evaluate the right solution for your business.

Here's what we'll cover:

What Is Supply Chain Planning and Optimization Software?
Common Features of Supply Chain Planning & Optimization
Evaluating Supply Chain Planning & Optimization Software
Benefits of Supply Chain Planning and Optimization Software
What Type of Buyer Are You?
Deployment Models and Pricing

What Is Supply Chain Planning and Optimization Software?

Supply chain planning software helps organizations manage and replenish their inventory through sales and demand forecasting. As part of a supply chain management (SCM) system, planning solutions, such as sales and operations planning (S&OP), serve an important function in the ongoing effort to reduce waste and increase profitability.

By offering a tool such as demand planning software or S&OP, SCM software providers give organizations the ability to take a glimpse into a number of possible futures. Based on an analysis of historical market trends and an awareness of the organization’s upcoming promotions and product rollouts, demand planning systems enable simulating potential demand and adjusting an organization’s incoming inventories accordingly.

Common Feautres of Supply Chain Planning & Optimization Software

Optimization software handles capacity planning as well as sequencing and scheduling. Beyond simply providing demand estimation data, it allows organizations to act immediately on any pertinent information gathered from the data by altering delivery schedules, shifting stored inventory loads and adjusting revenue and expense projections. These actions ensure that the buyer does not purchase too many or too few supplies to meet demand.

Specific features of this software include:

Cost and capacity modeling This essential feature provides the quantitative tools to model future and anticipated supply and demand activities.
Customizable planning goals The right system will allow you to create plans based on your individual business priorities. This should include the ability to capture and compare multiple versions of a forecast based on different “what-if” scenarios.
Problem detection Ensure that the software will help you identify material shortages in any plan and suggest solutions to address those problems.
Data synchronization This describes the ability to connect to a data source, facilitating delivery schedules, inventory loads and expense/revenue projections.

Evaluating Supply Chain Planning and Optimization Software

Recent advances in networked solutions have brought about a series of collaborative solutions that allow buyers and suppliers to share the burden of planning and reduce the amount of nonproductive inventory. Vendor managed inventory software is one of the many planning systems that takes advantage of e-Kanban technologies, which alert the vendor when the buyer has run out of supplies so that they can send in new batches of products.

When selecting a software, cost will be an obvious concern, as will the features and functionality. You should also consider order consistency, hands-on management activity and inventory levels as important influencers in your decision-making process.

Benefits of Supply Chain Planning and Optimization Software

Businesses will see a variety of benefits that come with the successful implementation of planning and optimization software. The right system will enable you to:

Improve operational planning. Planning and optimization solutions are designed to improve and streamline your supply chain, from procurement to storage and transportation. They enable supply chain managers to redesign and optimize the supply chain by modeling complex logistic routes along with adding model constraints specific to their business. In addition, advanced systems provide analytics capabilities to create queries, maps and reports.

Ensure cost-effective operations. Supply chain planning and optimization is a complex process that involves data analysis, optimization algorithms and simulations to create optimum supply chains for businesses. Optimized supply chains enable companies to reduce transportation costs, manual effort and storage costs. In addition, it allows users to manage demand variation and business constraints.

Create accurate simulation models. Simulation techniques enable users to analyze relationships between relevant factors and their impacts on the supply chain to aid in decision-making. This helps when forecasting storage availability, scheduling production and managing inventory that makes logistics and supply chain operations move forward smoothly.

What Type of Buyer Are You?

Third-party logistics provider. Organizations that manage the supply, storage and transportation of supplies for another business need an planning and optimization software to streamline and optimize their processes. A well-established supply chain planning process allows managers to proactively identify possible challenges and correct them in a timely manner. Logistics companies can also optimize their routes to save on costs by using machine learning and advanced algorithms.

Manufacturing vendor. Planning software lets manufacturers view storage space availability, predict product demand and collaborate with suppliers. The software also allows manufacturers to track and manage inventory levels to prevent stock shortages and the loss of production.

Distributor or supplier. Distributors are the backbone of any supply chain industry and serve as a bridge between manufacturers and retailers. Planning and optimization software enables distributors to manage products from different suppliers and maintain optimum inventory levels in their warehouses. In addition, the transportation of products to different retail or customer endpoints is carried out by these distributors.

Deployment Models and Pricing

Planning and optimization software is typically available in one of two deployment models, which tend to have different pricing structures:

Cloud-based. Cloud-based planning and optimization software is hosted on the vendor’s servers and is generally priced under a software-as-a-service (SaaS) model, which means that users typically pay a monthly or annual subscription fee based on the number of users. There is a gradual shift in the market as more software vendors are opting for cloud-based solutions. Also, customers are more inclined to adopt these solutions, as they offer added flexibility and don’t incur additional IT infrastructure cost. On the flip side, subscription-based solutions tend to be more expensive in the long term compared with solutions that follow a license-based pricing model.

On-premise. On-premise planning and optimization software is hosted on the user’s own servers. Users may need specialized IT infrastructure, such as servers, operating systems and a network configuration that are compatible with the software. Typically, on-premise deployment costs a flat, upfront fee to use the software indefinitely, though there may be recurring support and maintenance fees involved. The upfront fee is also generally based on the number of users on the system.

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