CEO MONTHLY / DECEMBER 2025 26 Most supply chain leaders believe they’ve modernised their planning capabilities. They’ve moved beyond spreadsheets, implemented enterprise systems costing millions, and invested in the latest forecasting technology. But here’s the uncomfortable truth: they’re still bleeding cash by using these systems. They’ve just automated the obsolescence. Whether it’s Excel or a £10 million ERP implementation, both operate on the same fundamentally broken paradigm - create a plan, freeze it in time, execute against it, and then scramble to replan when reality inevitably diverges. This is the static planning penalty, and it’s quietly draining resilience and profitability from supply chains, regardless of how sophisticated their systems appear on paper. The scale of this problem is staggering. It is estimated that globally, $163 billion in supply chain waste occurs annually, with $3 trillion of unproductive capital locked in inefficient supply chains. That’s the cost of static planning tools - whether spreadsheets or sophisticated ERPs - that can’t keep pace with the dynamic reality of modern supply chains. An illusion of control with static planning Jonathan Barrett, CEO of Kallikor, has recently been recognised for his leadership and innovation in the supply chain industry. He was awarded the titles of Most Influential CEO 2025 - Robotics & AI for Supply Chains (UK) & Best AI-Driven Supply Chain Innovation 2025. In this thought leadership article, we learn more from Jonathan as he explores the challenges of static planning. Even among businesses that have made substantial technology investments, concerns are rife about whether they are solving the problem they were meant to fix. A recent DHL survey found that 49% of supply chains have concerns about inadequate technology solutions, while 47% cite outdated systems. The consequences show up in decision latency, misaligned incentives, and a growing chasm between the strategic ambitions in the boardroom and what’s achievable with the existing operating model. When demand patterns shift rapidly, organisations react too slowly because their planning tools require analysts to assess impact, rebuild models, and present options. By the time recommendations reach decision-makers, the variables have already changed again. Static planning creates an illusion of control. ERPs tell you exactly what inventory is in place, where it is, and what’s planned with it. What it can’t tell you is whether those plans still make sense, or what happens when operations and transport need re-optimising because the relationships between different areas remain locked in their original configuration. The system is efficient within its defined limits, but those limits were set based on assumptions that may no longer hold. Many enterprise planning systems also operate within rigid guardrails that were sensible when configured but have since become straitjackets as the business moves and market conditions change. A living model of operations Supply chains need a living model of operations, not a better planning tool. Organisations need a translation layer that converts live data into a continuously updated representation of how their supply chain actually behaves - with all its resources, flows, trade-offs, and constraints. This is where simulation technology fundamentally differs from traditional planning systems. Planning tools try to predict and prescribe. Simulation enables continuous exploration and adaptation. It’s maintenance of a virtual twin of operations that allows decision testing before making them real. Consider what happens when a major port closes unexpectedly. Traditional planning systems require analysts to assess the impact, run multiple scenarios, and present options to leadership. This takes days, sometimes weeks. By the time there’s a recommendation, new variables have changed. A simulation environment lets organisations explore those trade-offs while the crisis is still unfolding, testing dozens of scenarios in hours and identifying which levers move the needle on customer service levels. The modular nature of simulation also reveals trade-offs that remain invisible in traditional systems. The warehouse layout might need reconfiguring rather than the picking strategies, for example. In a simulated environment, multiple configurations can be tested with realistic order profiles, see where bottlenecks emerge, adjust staffing levels dynamically, and quantify the actual throughput difference. It can be done in hours, rather than weeks, and before capital is committed to the wrong solution. Perhaps most importantly, simulation provides foresight rather than hindsight. What if trade tensions reduce transport capacity by 30%? What if a key supplier’s lead times increase? What if demand spikes in one category while dropping in another? Businesses can pressure-test the supply chain against scenarios that haven’t happened yet, identify vulnerabilities before they become crises, and develop response playbooks when there’s time to think clearly rather than in the middle of the emergency. Simulation also solves a governance problem many CEOs wrestle with. When major investment decisions come to the board, they’re typically supported by analysis that only a handful of people truly understand. They are then being asked to sign off on recommendations without clarity on how the numbers were produced. A simulation environment allows leaders to explore the options themselves, see why one approach outperforms another, and understand what they’re optimising for. Decisions become explainable, not just defensible. The cost of standing still The static planning penalty compounds over time. Every delayed decision, every misallocated resource, every missed opportunity to optimise - they add up. Planning infrastructure can’t keep pace with change, so it’s a constant game of catch-up. The world is now too interconnected and too volatile for approaches built on the assumption that planning and executing can happen in neat cycles. What’s needed is a living system that adapts as reality changes - a decision-making environment that treats variability and uncertainty as the baseline, not the exception. This is the difference between reactive crisis management and genuine operational resilience. Contact: Jonathan Barrett Company: Kallikor Ltd Website: https://kallikor.ai/ AI Excellence Fuelling Supply Chain Innovation The static planning penalty: Why your supply chain pays a hidden tax on every decision Jonathan Barrett, CEO, Kallikor
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