The COVID-19 pandemic has created many uncertainties around supply and demand, forcing many organizations to rethink their planning processes.
Supply chain planning plays a critical role in managing the current and future supply and demand challenges facing organizations both during the COVID-19 pandemic and after. An agile planning process must, at least temporarily, replace the traditional cadence of the S&OP process to enable faster, more reliable decisions. Meanwhile, if too much focus is on short-term responding, then there is a risk for longer-term recovery.
Failure to create a long-term plan could cause another shock into organizations’ supply chains. Supply chain planners need to validate assumptions and develop scenarios around the boundaries of how much risk and cost they are willing to tolerate as they anticipate their recovery.
Taking Advantage of Supply Chain Planning to aid in COVID-19 recovery
Organizations need to implement change fast when demand and supply surge or plummet. Demand and supply situations can change fast, sometimes many times a day, and lengthy decisions on actions to rebalance demand and supply often cannot wait. To enable an agile planning process, organizations need to focus on what people can do now and how technology can help.
Modern supply chain planning technologies are important enablers to introduce more agility into supply chain planning processes. Modern cloud-based technology, such as Vanguard Predictive Planning™, enables supply chain planners to use capabilities like advanced analytics, artificial intelligence, and scenario planning, as well as collaboration features to speed up decision-making processes.
An assumption-based recovery plan related to increases or decreases in demand should be evaluated to determine if they are related to panic buying, which may not be repeated, or restrictions that may last longer. If there is a massive increase in online traffic for an industry, this might lead to the assumption that, as long as these restrictions last, higher traffic online is to be expected. This assumption then leads to preparations and scenarios for how planning and logistics are going to be impacted. The growth in working from home may also lead to the demand for new essentials, such as office supplies. This creates an assumption for future growth through the expansion of product portfolios.
Once assumptions are validated, supply chain planners should develop scenarios related to best and worst cases for demand. Asking questions like, “If demand rose more than 300%, what does that mean for the supply chain?” and “If sales undersold by 50% for longer than expected, what impact may that have?” When creating these scenarios, supply chain planners need to be realistic about demand and how it may increase or decrease.
Supply chain planners also need to consider when restrictions begin to lift and develop scenarios accordingly. For example, consumers may be more health-conscious after COVID-19. What do those changes in consumer behavior mean for demand in different industries? Which changes impact how the supply chain is managed? Scenarios should lead to plans on actions to take, such as how much safety stock is necessary.
To respond and recover from the COVID-19 crisis, supply chain planners need to create an agile planning process to balance demand and supply better. Using the right technology can help supply chain planners anticipate and set deadlines for making decisions. To discuss our technology with one of our supply chain experts, please contact us here.