Natural or unnatural: the science of planning for any disruption
June 5, 2019
From hurricanes and floods, to earthquakes and tsunamis, the world is experiencing a rapidly increasing number of adverse weather events. The Tohaku earthquake, tsunami and Thailand floods in 2011 are a prime example of how an apparently localised event can bring global supply chains, and ultimately the entire organization, to their knees.
But it’s not just natural disasters that supply chains have to contend with – businesses also face a plethora of unnatural disruptive forces, from political uncertainty and new regulations, to evolving technologies and a growing cyber-threat landscape.
Planning can be the silver bullet in responding to natural and unnatural threats. It sounds simple, we all do it, sometimes without even thinking about it. But there are a number of building blocks involved, which many businesses often forget about: integrated technology, common data, shared processes, and cross-team collaboration. These form the foundation on which a successful planning strategy is built.
When organizations get this right and achieve true connectivity across the business, the potential benefits are endless. But we need to move beyond traditional approaches in order to plan more effectively for today’s challenges.
Working on a consensus
The most common planning process in industry today, and the one recommended by many leading experts, is the consensus process. Groups, such as demand, sales and marketing teams are kept siloed and create their own plans before they are unified to create one final, or consensus, plan.
The problem with this approach is that it often leads to diluted accountability for the final result because, by definition, no single role, department or business unit can be held 100% accountable for the final plan. The process is also inefficient: by generating three plans that ultimately input into only one, businesses are effectively disregarding 75% of the output from each business units’ provisional proposals. What’s more, the process is slow to respond because, in order to accurately model the impact of unexpected events, you have to rerun it from start to finish.
Collaborating on planning
More and more businesses are beginning to realise that keeping the organization and its supply chain siloed simply isn’t going to work. Companies need to collaborate across teams and connect every part of the business, from finance and sales, to marketing and the supply chain, because when something changes in one area, it will ripple across the business, and you have to be able to respond at speed.
Collaborative planning helps to solve the problems presented by a consensus strategy by allowing different functions to own different inputs to just one plan. A truly joined up approach.
For example, with a collaborative strategy, one team may input a baseline forecast, followed by a team who input an organic growth uplift, and finally another team who make an input for a promotion. This means that there is only one plan, yet three teams have collaborated to achieve it. As a result, all three teams can be fully accountable for the accuracy of their individual inputs and assumptions because we can individually measure each of their contributions to the plan.
In addition to a 75% reduction in workload and increased response times, a hidden benefit of collaborative planning is that the process is particularly well suited to event-based inputs, which are truly the planning panacea.
Moving beyond traditional budgets: letting events drive the process
Traditionally, when organizations create multiple plans as part of the consensus process, they do so in a budget type format – something that is often remarkably similar to a household budget. But there are many common complaints with entering forecasts (and budgets) in this format. To name a few: there are a lot of input cells to review, there’s sparsity in the plan, granularity is lost, it’s not easy to change or move events and there isn’t a lot of context.
But if we break the plan down into the events that it is built on, rather than entering and analysing hundreds and thousands of cells of information, organizations can just record the key events that generate the output.
In addition to building out a story from the headlines of the overall plan, event-driven planning has additional benefits including workload reduction, the ability to quickly iterate plans just by changing any assumption, increased responsiveness, and the ability to assess scenarios and different options in real-time. In this way, you can create a living plan.
Ultimately, organizations and supply chains that take a collaborative, event driven approach to planning can not only reduce their teams’ workloads, but equally increase the impact of the work they are doing and the efficiency at which it can be done. And that planning has never been more vital to the wider business as unexpected natural and unnatural disasters are thrown at companies from every direction. Planning isn’t about making life harder; it’s about working together to make it easier. Whether businesses decide to exploit the change or avoid it, the key is to be prepared for whatever comes their way.