Most supply plan failures happen on factory floor - study

LeanDNA has published research finding that 75% of supply plan failures occur at the factory execution stage. It also found that 47% of manufacturers say 10% or more of annual revenue is lost or put at risk as a result.

The study, conducted by Wakefield Research, surveyed 150 senior decision-makers at global discrete manufacturers with at least $250 million in annual revenue across the United States, Canada, Mexico, the United Kingdom, France and Germany.

The results point to a gap between supply planning and what factories can actually execute once production begins. While 74% of respondents said improving forecasting has been a top organisational priority in recent years, 80% said forecasting alone cannot prevent execution failures in live manufacturing environments.

Disruptions after plans are set were common. Some 83% of manufacturers reported supplier changes causing multiple production disruptions each quarter, while 56% said this happens at least monthly. In another sign of how late problems emerge, 72% said they discovered a material shortage only after production delays had already become unavoidable.

Even when issues are identified, manufacturers do not always respond quickly. More than half of respondents, or 51%, said it takes a week or longer to determine corrective action, prolonging the impact on production schedules that often operate on much tighter timeframes.

Tool Limits

The research also highlighted concerns about the systems manufacturers use to manage operations. Nearly three in four respondents, or 73%, said their ERP system can show required materials but cannot prevent execution failures. A larger share, 93%, reported difficulty getting ERP visibility into actual manufacturing execution outcomes.

This suggests a structural problem in how planning tools are used on factory floors. ERP and demand planning systems can define what should be ordered and when, but many manufacturers still struggle to connect those plans with shifting supplier conditions, material constraints and changing production priorities.

The financial consequences extend beyond lost sales. Nearly two-thirds of respondents, or 64%, said they spend 10% or more of their total manufacturing budget reacting to disruptions through premium freight, emergency sourcing and last-minute production changes.

Other cost pressures also appeared in the data. Over the past 12 months, 84% of manufacturers experienced inventory shortages at least twice, while 85% reported multiple disruptions to on-time delivery. More than 80% also said they had excess inventory, suggesting that shortages and overstock can stem from the same mismatch between planning and execution.

The most immediate costs cited were expediting, named by 37%, production delays at 31%, and direct revenue loss at 28%.

Pressure Inside Companies

Beyond the operational and financial effects, the survey suggests the problem is straining internal relationships. Nearly three in four decision-makers, or 74%, said being stuck in reactive mode erodes trust between planning and operations teams, across supplier relationships, and in the supply plan itself.

The issue also appears to be weighing on individual managers. According to the survey, 77% face direct pressure to improve capital flow, and 82% are concerned that continued factory execution failures could cost them their job.

LeanDNA Chief Executive Officer Andy Ellenthal said the findings reflect what the company sees in manufacturing operations.

"Manufacturers have made meaningful investments in demand planning, and those capabilities matter. But this research confirms what we see with our customers every day: the critical failure happens after the plan is set. The gap between what was planned and what the factory can actually execute is where revenue gets lost - and right now, most manufacturers don't have the tools to see it, let alone close it," Ellenthal said.

AI Focus

The survey found strong interest in artificial intelligence as manufacturers look for ways to close that gap. Some 92% of respondents said their leadership has at least some confidence in AI to address the misalignment between demand planning and factory-level execution, including 40% who said they had a lot of confidence or complete confidence.

Four in five respondents, or 80%, said AI is essential rather than optional for reducing execution drag. That suggests manufacturers are looking not just for better forecasting models, but for systems that can monitor readiness and respond as conditions change.

Ellenthal framed that shift as a broader change in how supply planning should be understood inside manufacturing businesses.

"Supply planning is not the output of the demand planning process - it is the first act of execution. The manufacturers who recognize that distinction and invest accordingly will compete differently: with lower inventory, higher delivery reliability, and supply chains that function as a strategic advantage rather than a constant source of firefighting. That is precisely what APEX was built to enable," Ellenthal said.