The Importance of S&OP, Especially During a Pandemic
The current COVID-19 pandemic has revealed without a doubt that supply chain performance is critical to overall business success. Yet, it is how well you take care of your supply chain and the critical role it plays within the business that allows you to not only survive but succeed with a stronger business than before. A unique symbiosis between humans and automated planning is what is required to take your supply chain planning process to the next step. What does this symbiotic relationship achieve?
Scenario Planning During COVID-19
On the human side of things, this symbiotic relationship requires collaborative, cross-functional decision-making. Organizations that have achieved this relationship have put processes like sales and operations planning (S&OP) into place.
Having an established S&OP process is key during unprecedented times such as the current pandemic. When tensions are running high, personal agendas, biases, and time pressure can skew the judgment of a single person’s or a team’s decision-making. To deal with the disruptions that arise in a pandemic, you also need to get a wide variety of stakeholders involved in the S&OP process. Bringing in members from marketing can create opportunities to introduce demand-shaping activities to deal with excess inventory. Involving product development can help planners decide whether or not to launch new products that could support customers in a pandemic and also gauge the impact of that demand.
If you go into a crisis with data that is biased, inaccurate, or poorly segmented, you’ll never be able to get ahead of the situation. There would be too many complexities for planners to deal with once the crisis is in full effect. Here are some examples that organizations have been facing during the current COVID-19 pandemic, all of which rely heavily on data hygiene to guide decision-making:
- How to serve consumers that are panic buying and hoarding
- Supply shortages of materials and finished goods
- Minimizing obsolescence and waste resulting from just-in-time supply chains
- Planning for perishable food and goods that need cold transit and storage
- Changes to the distribution and sales channels
- How to plan a return to the “new normal”
In a crisis, you start to see the benefits of leveraging cleaner, more accurate data in the supply chain planning process. The more accurate the data that is integrated into the planning process, the more accurate predictions are.
Planning Systems Maturity
If your organization is going to factor in diverse and big data, then you definitely cannot rely on spreadsheets and old-fashioned, dated, and simplistic methodologies to search through historical data. These systems simply are not fit for the complexities of modern business, especially during a crisis.
The benefit of S&OP is the move toward algorithmic supply chain planning with the automation of key elements of decision-making. Forecasting should be as automated as possible so that planners are free to apply contextual knowledge of the changing circumstances and, in some cases, override and adjust the forecast accordingly.
With automated forecasting, this also allows planners to take advantage of scenario planning to create “what-if” situations for various disruptions in supply and demand. This allows planners to react swiftly if the data starts to suggest a drift toward a scenario already played out and gain a competitive advantage.
Vanguard’s Predictive Planning is a state-of-the-art, market-leading supply chain planning platform that enables clients to achieve breakaway performance through decision-centric, collaborative, unified, and probabilistic planning. To learn more about Vanguard’ Predictive Planning for S&OP, contact us.
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