The Importance of S&OP and Supply Planning in a Post Pandemic World

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Supply chain disruptions have been ever-present since the beginning of 2020 with the global COVID-19 pandemic.  The disruptions that follow the initial COVID-19 lockdown have been idiosyncratic, impacting different industries at different times for various reasons.  The latest includes a microchip shortage that has curbed automotive manufacturing, and capacity constraints in steel production have led to rapidly rising prices.

These events reveal that no one industry or organization is immune to disruptions, and the performance of an organization’s supply chain is critical to overall business success.  Also, it is how well you take care of your supply chain and the vital role it plays within the organization that allows you to survive and succeed stronger than before.  A unique symbiosis between human wisdom and an automated S&OP process is required to take your supply chain planning process to the next step.  So, what does this symbiotic relationship achieve?

S&OP Maturity

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 vital during and following supply chain disruptions.  When tensions are running high, personal agendas, biases, and time pressure can skew the judgment of a single person’s or a siloed team’s decision-making.  The planning process should have various stakeholders involved in the S&OP process to deal with S&OP and supply planning disruptions.  Bringing in members from marketing can create opportunities to introduce demand-shaping activities to deal with excess inventory.  Or involving product development can help planners decided whether to launch new products that could support shifts in consumer demand.

Data Maturity

If you go into disruptions with biased, inaccurate, or poorly segmented data, you will never be able to get ahead of the situation.  Planners cannot typically deal with that many complexities.  Here are some examples of what organizations had faced during the COVID-19, 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 post-pandemic world

Amid disruption, it is easy to see the benefits of leveraging cleaner, more accurate data in the S&OP and supply chain planning process.  The more precise the data integrated into the planning process, the more accurate predictions are.

Planning Systems Maturity

If your organization is factors and leverages substantial amounts of diverse data, you cannot rely on spreadsheets or legacy systems to search through historical data.  These systems are not fit for the complexities of modern businesses, especially during large-scale supply chain disruption.

The benefit of modern S&OP and supply planning solutions is the move toward algorithmic supply chain planning with the automation of critical 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 systems, planners can take advantage of scenario planning to create “what-if” situations for various disruptions in supply and demand.  The systems allow planners to react swiftly if the data suggest a drift toward a scenario and gain a competitive advantage.

Vanguard Predictive Planning™ is a cloud-based, AI-driven supply chain planning platform that enables organizations to achieve breakaway performances through decision-centric, collaborative, and probabilistic planning.  To learn more about Vanguard Predictive Planning™, request a custom demo today.