Switching to SaaS-Based Planning Solutions Yields a 524% Return on Investment for Blue Yonder Customers
Today’s supply chains are facing a new era of uncertainty with global disruption, channel complexity, trade concerns, and supply chain skill shortages. To help ensure that your company’s products and supplies are getting to the people who need them, today’s supply chain solutions must be more intelligent, more intuitive, more predictive and more capable of delivering to your customers when, how and where they want.
The Blue Yonder LuminateTM Planning solutions portfolio provides customers with the ability to accurately predict demand and improve operations from end-to-end. Recently, Blue Yonder commissioned Forrester Consulting to conduct “The Total Economic Impact™ (TEI) of Blue Yonder Luminate Planning” study1 to gain insight into the return on investment we’re delivering for customers and to learn how we can serve them better.
The study included interviews with, and financial analysis of, four existing Blue Yonder customers with several years of experience using the Blue Yonder forecasting, inventory optimization and fulfillment solutions within the Luminate Planning portfolio. A financial model was developed based on the observable benefits uncovered during the customer interviews and data collection.
The results were compelling. The financial model developed for the study estimated that a $10 billion company deploying the Blue Yonder Luminate Planning portfolio can generate a 524% return on investment (ROI) and $109 million in net present value (NPV) over three years2. It also showed larger organizations have the potential to realize an even higher ROI – as much as 570% and almost $220 million in NPV over three years3 – while smaller ones can achieve strong returns of 187% ROI and $9.6 million NPV over three years.4
Customer Benefits Added Up
The study outlined several benefits, including:
- Reduction in inventory carrying cost: Customers saw a 10% improvement in forecast accuracy that led to more inventory reductions without negatively affecting order fulfillment. Blue Yonder allowed customers to have a single solution instance and to run inventory optimization algorithms for the entire company allowing broader sourcing of inventory. Customers were able to standardize planning processes leading to better planning practices and better outcomes. With these improvements, the financial model estimated customers can reduce carrying costs by $61.5 million over three years.
- Reduction in out-of-stock inventory: Due to planning improvements, broadening inventory sourcing and corporate-wide visibility to inventory data with a single tool, customers can increase revenue by reducing stockouts approximately 25%. The out-of-stock reductions can generate savings of $33 million over three years.
- Reduced transportation costs: Customers can achieve a .75% reduction in transportation costs due to the ability to fill orders from any distribution center and a reduction in unplanned transfers and expedited deliveries due to previous inventory sourcing issues. The financial model estimates this greater efficiency can bring $20.6 million in savings over three years.
- Elevated productivity for non-planner reporting and analysis. Customers were able to centralize supply chain data and switch to using just Blue Yonder for reporting and analysis, leading to an average productivity of one hour per week for supply chain managers, financial analysts and others who look at supply chain data.
A Case for SaaS Over Spreadsheets
Prior to using Luminate Planning, these customers had a combination of legacy application and spreadsheet-based planning processes that were not standardized or capable of providing full visibility into the company’s supply chain – inhibiting centralized planning. The legacy application had performance issues even though the company’s data was spread across multiple instances of the application. The spreadsheet-based planning was highly manual, inefficient, produced suboptimal results, and made a single view of planning data impractical. This environment frustrated executives trying to develop best practices and hindered business growth.
Leveraging the Blue Yonder technology, the four customers studied were able to bridge organizational silos and close the loop between demand and supply planning, the upstream and downstream supply chain, and S&OP (Sales & Operations Planning) and S&OE (Sales & Operations Execution).
One customer, the head of supply chain planning at a supply chain service company, who was interviewed for this study said: “We are able to work more closely with our customers now and let the Blue Yonder system, with its analytics, handle the optimization.”
Another customer, the chief technology officer at a supply chain management company, who was also interviewed for this study shared: “During this new world, Blue Yonder has allowed us to mitigate costs while keeping our service levels high and providing real value.”
Do the Math with the ROI Estimator
To complement the study, Blue Yonder is offering an interactive TEI calculator for supply chain planners and CIOs to gauge their company’s potential quantifiable benefits and ROI from an investment in Luminate Planning solutions. The Luminate Planning ROI Estimator is an interactive tool that allows you to input data that reflects your company’s current business and operations, and then see an estimate of potential value from moving to Blue Yonder’s SaaS-based planning solutions. Check out the calculator here.
1 The Total Economic Impact™ of Blue Yonder Luminate Planning
2 Estimate based on actual customer findings for a company with $10 billion USD in revenue using Blue Yonder forecasting, inventory optimization and fulfillment solutions within the Luminate Planning portfolio.
3 Estimate based on actual customer findings for a company with $20 billion USD in revenue using Blue Yonder forecasting, inventory optimization and fulfillment solutions within the Luminate Planning portfolio.
4 Estimate based on actual customer findings for a company with $1 billion USD in revenue using Blue Yonder forecasting, inventory optimization and fulfillment solutions within the Luminate Planning portfolio.
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Marina Renneke, APR
Corporate Communications Manager