Visibility is a hot topic in supply chain management.
There are many aspects of visibility, but one key is being able to easily see and work with supply chain data in a way that’s relevant to you.
All supply chain planning software supports some degree of multi-level product and location hierarchies. But the ease and flexibility of using those hierarchies can vary widely.
If you’ve used Excel and business intelligence (BI) systems, you might underappreciate these capabilities until you actually start using a Supply Chain Planning (SCP) system.
The danger, of course, is that you invest in an SCP system that won’t serve your needs.
In this article, we’ll show you what to look for in a system and why, with insight from Chao-Ming Ying, Co-Founder and CTO at New Horizon.
Why Organizations Need Flexible Data Hierarchies
Example Hierarchies
Different roles within a company need to be able to work with data according to different hierarchies. For example, a brand manager might want to look at demand data by brand and region, whereas a supply planner might want to look at it by item, product family, and distribution center.
While everyone shares the same underlying data, users with different roles view and edit data according to the hierarchies that matter most to them.
Systems not only need to support viewing and editing multiple dimensions — for example, product and location in the example above — but also multiple levels within the same dimension, for example, item and product family in the product dimension above.
In addition, they should support ad hoc hierarchies that don’t exist in the corporate product and customer master data hierarchies.
Being able to work with data using the appropriate hierarchies and levels is key to giving your organization the ability to collaborate based on a shared understanding of supply and demand.
This flexibility allows the organization to avoid functional silos and optimize overall company supply chain performance.
Because many users are used to the flexibility of Excel and the powerful slice and dice capabilities of BI systems like Power BI and Tableau, they may assume such capabilities are standard in SCP systems.
But that’s often not the case.
And that presents problems.
The Drawbacks of Rigid Hierarchies
In some systems, hierarchies are often rigidly defined during implementation, creating major limitations.
“Just because you have brand, product line, and item on the product hierarchy, and account, DC, and store levels on the location hierarchy, you can’t necessarily look at data by DC and item,” Chao-Ming explains. “The flexibility to slice and dice the data along any level of the product dimension and any level of the location dimension requires a sophisticated multidimensional data model.”
The problem with some systems is that you have to decide what views you need upfront, and the data model is then structured accordingly. “If you want to look at brand, you may only be able to do it by region. You can’t look at it by brand and account or DC,” Chao-Ming notes. “That was baked in during the implementation, and if you want to change that, you have to re-implement the software.”
This inflexibility leads to significant business challenges. Organizations often find themselves unable to perform crucial analyses when market conditions or business priorities change. As a workaround, many companies implement separate BI systems like Cognos or Power BI to provide the flexible analysis capabilities their planning systems lack.
The Challenges for Legacy SCP Systems
The main reason SCP systems lack this flexibility is that they do a lot more than simply allow you to view and analyze data.
SCP systems support activities like forecasting, capacity planning, what-if analysis, constraint-based optimization, process workflow automation, and more. So it’s not easy for an SCP system to support flexible hierarchies the way a BI system can, because a BI system is more narrowly focused on analyzing data.
In particular, SCP systems give you the ability to edit data, whereas BI systems are typically limited to viewing data. When you edit data, the system needs to split changes down to the lowest level and aggregate changes up to the highest level, making support for flexible hierarchies more complicated.
Why Support for Multiple Hierarchies is Sometimes Lacking
Some SCP systems, particularly ones that are part of ERP systems, limit hierarchies to a company’s standard master product and location data hierarchies, which might be something like
Item → Product → Category; or Customer → Region → Channel
Better solutions offer the flexibility to establish other hierarchies during the software implementation process, but after the initial software implementation, adding new hierarchies may be very difficult if not impossible.
Enter new generation supply chain planning systems.
Moving Beyond Traditional Approaches with Dynamic Hierarchies
“Let’s say you want to do more sophisticated analysis,” Ying explains. “You want to look at your top 10% of accounts by revenue separately from your mid-tier accounts and long-tail accounts. You may come to more accurate conclusions about what’s going on in your business, but you didn’t plan for this analysis during implementation. With dynamic hierarchies, you can set that up easily — no IT resources needed.”
It’s because of this that modern supply chain planning systems have evolved beyond fixed hierarchies to offer:
Dynamic hierarchies
The most flexible solutions support dynamic hierarchies, meaning users can create new ad hoc hierarchies at any time and are not limited to those defined during initial implementation. Such hierarchies may be based on qualitative or quantitative attributes of the data that change over time. For instance, you could group customers by revenue tier and create hierarchy levels of Top Customers, Mid-Range Customers, and Long Tail Customers based on your annual sales to each customer.
Cross-hierarchy views
As noted above, some systems do not allow you to slice and dice data by any combination of the product and location hierarchies and can only show specific cross-hierarchy views if the data model has been configured to support such views. The most advanced SCP systems employ sophisticated multidimensional data models that can support slicing and dicing data by any combination of hierarchies.
User-friendly data filtering
Data filtering capabilities are related to data hierarchies.
While hierarchies define how data is structured, filters are what make those hierarchies truly usable in day-to-day planning. Filters let planners quickly zero in on specific slices of the data, such as high-margin items, underperforming regions, or top-tier customers.
Filtering complements flexible hierarchies by adding precision and control, enabling users to focus only on what matters most.
Ultimately, the combination of flexible hierarchies and robust filtering is what gives planners the power to analyze and act with speed and clarity.
For example, let’s say you are viewing shipments data by customer. You may want to limit your data view to those customers who have received more than 10,000 cases, or you may want to limit your view to those customers that use Product A.
The ability to filter data is key to being able to fully take advantage of your data hierarchies, give planners visibility, and enable them to focus on the most important issues.
An SCP Visibility “Aha” Moment
Chao-Ming shared an example. “We were at a consumer electronics company. During a demo with their VP of Sales, I showed how we could configure new views on the fly. Within seconds, I could drag and drop to show ‘how many of this category did Target or Best Buy take last month?’ The VP stood up and said, ‘If you can do that, I don’t care about anything else. This has my vote,’ and walked out of the room. We won the deal.”
His reaction shows just how transformative this capability is compared to the rigid systems many companies use.
But the advantages don’t stop there.
Benefits Beyond Traditional Planning Roles
The impact of these flexible data views extends well beyond the traditional supply chain planning function.
Cross-functional accessibility
“At Faribault Foods, salespeople are primary users for their demand planning system,” Chao-Ming says. “They’re doing all kinds of ad hoc analyses not directly related to supply chain planning. They just find our system the most useful for quickly getting information.”
Reduced reporting overhead
Flexible data views save planners and admins from ad hoc reporting requests. When users from other functional areas can easily access and analyze the data themselves, it eliminates the back-and-forth of specialized report requests.
Seamless data integration
There are no data latency issues involved with moving data from one system to another — a definite advantage over separate BI systems.
Easier transitions from Excel
Many organizations still rely heavily on Excel, despite the clear advantages of advanced planning systems.
“About 40% of manufacturers are still using Excel as their primary planning tool,” Ying shared. “What we often find is companies using one of the leading ERP systems. They’ve licensed the planning module, but it’s sometimes so cumbersome that they do much of their planning in Excel and then upload the data into the ERP system.”
With its familiar, user-friendly interface, an intuitive tool like New Horizon lessens the learning curve for users familiar with planning systems as well as those transitioning from Excel-based processes.
What Makes Modern Planning Systems Stand Out
While many supply chain planning systems now offer multiple hierarchies, the most advanced systems differentiate themselves through:
True cross-hierarchy flexibility
The ability to view data by any combination of product and location hierarchies without predefined limitations.
Dynamic hierarchy creation
Adding new hierarchies without IT involvement.
User-friendly filtering
Easily focusing on subsets of data, like products with forecast errors greater than, say, 35%.
Personalized views
Users can create and save their own custom views based on their specific roles and needs.
Some systems make claims in these areas, but the way these capabilities are designed can have a huge impact on their ease of use and practicality. The devil is in the details.
For example, you’ll want to look for:
- The ability to view multiple levels of a hierarchy in the same view, e.g., the user can view product-level data and the same data at a summary product category level in the same view.
- On-the-fly drag and drop pivoting of hierarchies, without having to go into a separate administrative UI.
- Intuitive filtering of data based on data values and qualitative attributes.
- Ability for users to create ad-hoc dynamic hierarchies on their own in the software UI without requiring an IT resource.
- Ability to save role- and user-specific views for future use.
Get True Supply Chain Visibility
As supply chains grow more complex, the ability to plan, analyze, and make quick decisions based on your supply chain data becomes a competitive advantage.
That includes making sure your SCP system supports flexible product and location hierarchies and dynamic filtering.
Whether you’re looking to upgrade from Excel-based planning or replace an outdated planning system, these capabilities should be high on your list of requirements for any solution you consider.
To Learn More
Contact us to find out how New Horizon software can help you respond more quickly to changing conditions and discover insights that would otherwise remain hidden.