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Copyright © 2018 Journal of Business Forecasting | All Rights Reserved | Winter 2017-2018 | www.ibf.org
Event-Driven Planning:
An Inflection Point for
Operations Planning
By Gregory L. Schlegel

E X E C U T I V E S U M M A R Y | As a 30-year supply chain practitioner for several Fortune 100 companies, an S&OP process
owner, a Big 5 supply chain consultant, an academic, and a certified lifelong member of APICS, I’ve lived in the wonderful world
of supply chain and demand planning management my entire career. This profession is always looking for new tools, techniques,
and frameworks to drive supply chain performance, and now good supply chain risk management and resiliency. In this article,
we’ll discuss where we came from, where we are today, and what tomorrow looks like. We feel the next 10 years will be quite
exciting for operations and supply chain planning. Will it be disruptive? You bet. Will it be transformative? You bet. Will it drive
overwhelming value? Let’s talk about what’s on the horizon.

G R E G O R Y L . S C H L E G E L | Mr. Schlegel is founder of The Supply Chain Risk Management Consortium,

consisting of 20 companies. He is Executive in Residence-Risk Management at Lehigh University, Adjunct Professor
of enterprise risk management at Villanova University, and Past President of the APICS organization. Greg has served
as a supply chain executive for several Fortune 100 manufacturing companies, including working as a Supply Chain
Executive Consultant for IBM. He holds certificates of CPIM, CSP, and Theory of Constraints certified Jonah.

T
he supply chain arena has grown
from a concept to a discipline and
now to a bona fide profession.
With that came tools, techniques, tactics,
solutions, management frameworks,
and professional certifications. All critical
success factors of continued growth
and maturity for the express purpose
of efficient and effective supply chain
management. As profiled in Figure 1,
our profession was coined “Supply Chain
Management,” back in the 1970s, because
we truly took a linear approach to moving
materials, cash, and information through
a host of disparate facilities, which
certainly resembled a chain. Thus, the
mantra was “you’re only as strong as your
weakest link!”
And, to further solidify our linear
approach, in terms of moving products
from raw materials to end customers,
we developed linear, ridged planning
horizons (à la Operational, Tactical,
Strategic), supported by segmented-

Copyright © 2018 Journal of Business Forecasting | All Rights Reserved | Winter 2017-2018 | www.ibf.org 5
 Figure 1 | Plan-Source-Make-Deliver-Return: A Linear Chain
Raw-Material
Inventory
Procurement Shop
Suppliers
Orders Orders
linear solutions, such as Demand
Planning, Supply Planning, Materials
Requirements Planning, Distribution
Requirements Planning, Strategic
Sourcing, and more. Have we made an
impact utilizing this linear approach?
You bet! The concept is now a
profession, supported by certification
credentials, university-level four-year
degree programs, MBA curriculum, and
continued executive education. Wall
Street has figured out that a profession
managing over 80% of all cost of goods
sold for manufacturers is very important.
Figure 2 | World Economic Forum’s View
Data fraud/theft
Liquidity crisis
Decline of importance
of US dollar
Service (SaaS), Platform-as-a-Service
(PaaS), Artificial Intelligence (AI),
The Cloud, Probabilistic/Stochastic
Modeling, Discrete-Event Simulation,
In-Process Finished Distribution Selling from
Inventory Factory
Inventory
Inventory Inventory just to name a few. All residing on
several “Hype Cycle Curves.” We’ll get
back to this thread in a minute. I want
MPS Factory Distribution Customer
to make one observation about our
Customer
Orders Orders Orders Orders
supply chains today. This could be
construed as an academic exercise,
but, because of the Internet and
almost all companies going global, do
And one last lament: Even though more we really have linear supply chains?
than 50% of all demand forecasting and I submit to you Figure 2. This is the
production scheduling is still executed World Economic Forum’s view of the
using Excel spreadsheets, we have made risks around the globe.
a tremendous impact around the globe. Every year the World Economic
And that leads us to our next segment. Forum spends two weeks identifying
and classifying global risks. They also
TODAY assess those risks in terms of scope
and scale of impact, and then do a
In the last five years, we’ve seen causal factor analysis, or what we who
the emergence of many new tools, subscribe to the Theory of Constraints
techniques, and solutions. There’s would call, “If this happens, then
Predictive Analytics (PA), Big Data, the this will happen, because—A Reality
Internet of Things (IoT), Software-as-a- Tree.” Folks, as an academic, I submit
to you—does this look like a linear
chain? I would advocate this is exactly
what our global supply chains look
Critical information like today, fraught with uncertainty,
infrastructure breakdown
complexity, and risk! One last point
Failure of financial
mechanism or institution
Cyber attacks
on this observation: our supply chains
Man-made
Corruption Terrorist attack
environmental have now become complex networks.
catastrophes
Let’s use an analogy. What happens
Organized crime
and illicit trade Failure of critical
infrastructure Biodiversity loss and when you grab a water balloon and
ecosystem collapse

Fiscal crisis Global attempt to squeeze one side? Yes of

goverance
failure
Climate change
course—it morphs and bulges across
Political
and social
the entire surface area. Folks, this is
instabiltiy
Unemployment and
underemployment
Natural
catastrophes
what we call—Multivariate, Nonlinear
Oil price shock
Water crisis
Relationships.” This is what our supply
chains have become. They’re not linear
Income Food crisis Extreme
Economic
and resource
disparity weather events by any means. I’ll stop this thread
nationalization Interstate conflict
State collapse Mismanaged here, for now, because changing our
Economic urbanization
and resource
nationalization Chronic diseases Weapons of
lexicon will take another 10 years.
Anitbiotic-resistant mass destruction
bacteria Pandemic Let’s get back to a key set of tools and
techniques emerging right now.
Source:
Economic
Risks
Geopolitical
Risks
Technological
Risks
The tools are Predictive Analytics
Number and strength
Global Risks Perception Survey 2013-2014, p. 21. Environmental
Risks
Societal
Risks
of connections
(“weighted degree”)
(PA) and Big Data. We, at The Supply

6 Copyright © 2018 Journal of Business Forecasting | All Rights Reserved | Winter 2017-2018 | www.ibf.org
Chain Risk Management Consortium
at Lehigh University, feel these
methodologies are driving value and
will continue to enhance supply chain
performance, and support solid supply
chain risk management. Some statistics
and quotes from E&Y/Forbes and APQC
follow.1
1. Nearly two-thirds of companies with
well-established advanced analytics
are reporting operating margins and
revenue growth of 15% or more.
2. 60% of surveyed companies said they
also improved their risk profiles.
3. Top three disciplines that have
increased their activity in Predictive
Analytics are: HR, Risk Management,
and Supply Chain/Operations. The
top five industrial sectors utilizing PA/
Big Data are: telecommunications,
technology, manufacturing, financial
services, and pharmaceuticals.
4. Top three areas of concentration utiliz-
ing PA/BIG DATA are: Reducing costs,
providing visualization/dashboards,
and improving customer service.
5. 32% surveyed stated they have a
centralized analytics function.
6. 15% stated they have a decentralized
function.
7. 29% stated they have a hybrid
approach.
According to Becky Partida, as stated
in the APQC Research Study (March
2017), “ The traditional supply chain model
does not have the flexibility to adapt when
constrained capacity, fluctuating demand
and political trade uncertainties affect the
market.”
TOMORROW
As mentioned earlier, our existing tools,
techniques, and frameworks are linear in
nature, and quite rigid. It’s a classic case of
A goes to B, and then B goes to C, and so
on. Also, our existing methodologies are
built around descriptive and predictive
Copyright © 2018 Journal of Business Forecasting | All Rights Reserved | Winter 2017-2018 | www.ibf.org 7
Figure 3 | A
 New Predictive Analytics Where is the Next Step-
Change in Driving an
Intelligent Response?
Maturity Model
Cognitive
Highly automated
optimization solutions that
What Should We Do
get smarter over time.
About it?
Prescriptive
Collaborate for maximum
business value, informed by
advanced analytics.
What Will Happen?
Predictive
Understand the most likely
future scenario and its business
implications.
What Happened
Descriptive
Get in touch with reality, a
single source of the truth.
Largely reporting.
Source: Lora Cecere, Beet Fusion Blog, Sept 2017
analytics. Lora Cecere, founder of Supply that there will be many more new jobs
Chain Insights and a thought leader in requiring skills and training that have no
supply chain excellence for years, profiled precedents. Three new job categories
the PA/BIG DATA future journey quite surfaced.
nicely in her recent Beet Fusion blog of 1. Trainers—humans who will teach AI
September 2017. Figure 3 depicts the systems how they should perform and
upcoming journey. It’s an addendum to how to mimic human behavior.
Dr. Tom Davenport’s classic Predictive 2. Explainers—These folks will bridge
Analytics Maturity Model. The most the gap between technologists and
recent addition is Cognitive Learning. business leaders, and provide clarity
We are in total agreement with Lora regarding what a technique did, why it
that part of the inflection point for our did it, and what it will do next.
planning discipline will be leveraging 3. Sustainers—These folks will help
prescriptive and cognitive tools and ensure AI systems are operating
techniques. This will include tools that can as designed, and that unintended
predict what might happen with statistical consequences are addressed with
confidence, prescribe a solution, and then appropriate urgency.
continue to learn over time. Along with Lora Cecere and Accenture even
these new tools, will new jobs come? As mentioned the use of “Virtual Assistants,”
Forbes mentioned back in 2013, with such as Siri, Cortana, and Alexa,
every new Artificial Intelligence, Predictive complimenting humans in this new
Analytics, and Cognitive Learning job, event-driven planning age. It is very
there could be three additional non-IT exciting and possible as we move through
positions required, which could result two new stages of the Predictive Analytics
in over 4 million new jobs worldwide!
Staying on the jobs opportunity thread, a
Maturity Curve, leveraging Prescriptive
and Cognitive techniques. The author
recent article in MIT’s Sloan Management has not witnessed this environment
Review magazine discussed Accenture’s yet, but I can say that a few advanced
PLC study of more than 1,000 large process manufacturers, using some of
companies already utilizing AI/PA and our tools, have developed an event-
BIG Data techniques.2 The upshot is that driven S&OP process supported by
companies are thoroughly convinced BIG Data, PA techniques, supply chain
modeling tools, and more to run their
S&OP process and then monitor the
execution of that process during the
month. If a KPI gets out of tolerance and
shows up on their dashboards as Red or
Yellow, they dial in, pick up their phones,
iPads, and laptops, and hold an ad hoc,
event-driven S&OP meeting. This involves
making a copy of the as-is condition,
then running new scenarios until the
dashboard becomes green, and then
executing the new plan. That’s what we
at The Supply Chain Risk Management
Consortium call “Identifying, Assessing,
Mitigating, and Managing Risk!” A few
other quick “case-lets” are next.
• GE and Siemens get data from sensors
on machines to schedule maintenance
calls, improve machine efficiency, and
reduce downtime.
• An Italian tire manufacturer, Pirelli, has
embedded sensors in tires to track
wear and tear, offering data for a fee
to fleet managers and insurers.3
• Volvo has embedded sensors in all its
recent models. When you bring your
car into the dealer, service hooks the
car up to diagnostic tools that evaluate
key areas of the automobile, look for
patterns of wear and trouble, and all
the data from your car goes directly to
Volvo headquarters for analysis. Volvo
compiles data by model for analysis
and pattern recognition to support
warranty, quality goals, safety, and
new design.
• Harley-Davidson, Inc. has installed
hundreds of sensors on its assembly
floors to monitor temperature, humid-
ity, throughput of vehicles, and more.
This use of new technology is driven
by the objectives to reduce dwell time
in each assembly position, increase
throughput of vehicles, reduce manu-
facturing costs associated with bottle-
necks, and improve the bottom line.
Event-driven planning and reschedul-
ing is now down routinely.
Copyright © 2018 Journal of Business Forecasting | All Rights Reserved | Winter 2017-2018 | www.ibf.org 9
Figure 4 | The Future of Planning
THE
TRANSFORMATION
PROCESS
Kevin O’Marah of SCM World talked
with Gartner’s Managing VP, Matt Davis,
at the SCM World Live Americas event in
Miami this year. The discussion covered
digitization of the planning arena. Three
themes emerged from the discussion.
1. Analytics will democratize decision
making, meaning much more high-
frequency/high-impact decision mak-
ing across the entire enterprise;
2. A shift away from procedural, pre-
planned decision making to real-time,
concurrent processes, which will sup-
port our supply chain risk themes,
“Know sooner and act faster” and
“Speed is life”; and
3. Data historian tools will provide trans-
parency for all planners in terms of the
context of decisions, greatly accelerat-
ing learning from experience that has
been codified within the enterprise.
Figure 4 attempts to profile the
future of planning from SCM World’s
discussion, encompassing many of the
new disruptive tools and techniques
discussed. Very exciting!
We leave you with this thread. Think
about when we all travel for work or with
the family. What do we do? We start up
Google maps on our phones and we
immediately know where we are. We
then click an app and see traffic to and
from the airport. If we’re hungry, we click
on restaurants close by, and on and on.
But, for us in supply chain, it’s not about
restaurants. It’s about…
• Best product batch, quality, and
process time;
• Best service delivery profile; and
• Optimum schedules, least-cost logis-
tics, and much more. (Adapted from
The Hackett Group 2016 Report as well
as discussions with Peter Martin of
Invensys).
So, the new event-driven S&OP In-
flection Point processes need to tell us:
• What’s out in our supply chain?
• What resources are immediately
available?
• What does it all mean?
• What should we do, today and
tomorrow?
• Why should we do it?
—Send comments to: JBF@ibf.org
REFERENCES
1. E&Y/Forbes Insight Research, February 2017.
2. MIT Sloan Management Review, Feb. 18, 2016.
3. Pirelli.com, March 23, 2016.
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