The coronavirus outbreak has been a constantly changing and rapidly evolving disruption for supply chains. Supply chain planners realize the importance of getting ahead of the pandemic’s disruptions, as opposed to just reacting. What-if scenarios have been proven to be an extremely beneficial tool, especially with the recent outbreak of the coronavirus, enabling planners to run simulations based on demand forecasts and constrained modeling.
What-if scenarios enable supply chain leaders to visualize and analyze how events will unfold and allow them to make pre-emptive decisions to position their organization for the best possible outcome. Asking questions such as “what if,” “how severe,” “how long,” and “how can we respond” allows planners to identify both risks and opportunities associated with disruptive events that may hinder the production process. Within modern manufacturing, what-if scenarios are a must, and here’s why.
Multi-Echelon Inventory Optimization (MEIO)
What-if scenarios enable planners to accurately predict how hypothetical situations can impact production and the movement of supplies through the supply chain. This adds value to every aspect of the value chain.
- Demand Planning – What-if scenarios can be beneficial in both short and long-term planning. Being able to incorporate multiple scenarios instantly enables planners to visualize strategies for any type of disruption within the production process. Ultimately, this pinpoints cost-saving methods that can be put in place to combat disruptions.
- Multi-Echelon Inventory Optimization – Planners have the ability to effectively manage inventory through production using what-if scenarios. These types of scenarios provide a visual representation of what needs to take place to ensure production is maintaining approved fulfillment rates or not enough, which causes stockouts.
There are three main scenarios supply chain planners should consider so an organization is prepared for disruptions from the current coronavirus outbreak.
- Short-term – A quick recovery with an economic impact associated with decreased customer confidence and some job losses.
- Mid-term – A prolonged recovery with significant economic impact due to mass job losses. Supply chains are challenged to return to normal operations.
- Long-term – A secondary crisis occurs and supply chains have a significant impact from lack of learning and action to improve resiliency. This secondary crisis could either be an expansion of the current disruption into new markets, or a secondary disruption in markets that have already been affected by the current disruption.
These are just a few what-if scenarios that could be applied to map a recovery path. Supply chain planners can apply these what-ifs scenarios to determine where to act and increase their effort in response to each scenario. It is important to keep in mind that different scenarios may be relevant to different markets and products.
Whether planning for today or for the next outbreak, all plans deal with the uncertainty of the future. While it is a good idea to use industry best practices in the overall planning process, it is just as important to embrace the uncertainty and incorporate it into the plan. Being able to incorporate and evaluate multiple scenarios instantaneously is what makes what-if scenario planning the best way to plan for uncertainty.
Vanguard Predictive Planning™ offers complete support for unlimited what-if scenarios that can be saved and shared. With support for millions of SKUs, Vanguard users can instantly forecast for any number of products. Additionally, non-forecast owners can propose forecast changes for any scenario. Vanguard’s in-memory data enables lightning-fast calculations so users have no downtime. What-if scenario planning has become a must for manufacturers globally, and not just in these unprecedented times.
Making Sense of the Complex in Supply Chain Planning