5 Ways To Prepare For Supply Chain Shocks
There are five key capabilities that will enhance day to day planning while also making us shock resilient.
The importance of these capabilities is often underestimated when designing S&OP for the “steady state” but their critical importance in helping us to react to shocks is almost always discounted due to the perceived infrequency of ever-increasingly frequent shocks.
Top down planning
Top down planning is essential for rapidly modeling new assumptions as the landscape changes.
Having quickly modeled these new assumptions, executive overrides can be implemented to adjust demand on a cascading basis at the click of a button.
Day to day, top down planning also lends itself to modeling the launch of new products and entry into new markets where macro assumptions are key.
Event management / Scenario planning
After the initial shock and the use of executive overrides in a somewhat blunt manner, we need to begin responding at a more granular level.
This requires the ability to simulate multiple events and scenarios which can be approved at the click of a button.
Day to day, event management and scenarios are also best practice for planning daily requirements such as promotions, pricing, demand shifts, capacity changes, and supply shortfalls.
As we shift to more granular event management and scenario plans, we need a more granular approach to approving changes to the plan. To support rapid response and decision making, adjustments that do not have an impact requiring executive signoff should be approved via local workflows.
Day to day, this moves the S&OP process from being a static cadenced process to a “living” plan, supported by real-time response and empowered decision making.
Insights enable us to effectively transition from executive overrides to more granular scenarios. Insights are gained through the visibility of relevant and timely information.
This is not only critical in a crisis but, day to day, better supply network visibility is critical as the foundation for more agile and resilient supply chains.
Demand sensing and Artificial Intelligence
The challenge with total visibility is in being able to transform mountains of data into information and insights. There is no silver bullet here but strong demand sensing and artificial intelligence where applicable can help to connect S&OP to the pulse of the market in day to day and crisis modes.
Global networks need to be more agile and resilient in the face of more frequent storms. As planning is the backbone of any response, S&OP also needs to be more resilient and agile. This requires augmenting current capabilities.
But it might not just be the day to day and the next storm that we need to prepare for. There are likely to be structural supply chain shifts post-Covid.
We will potentially see network de-risking with trends towards near-shoring and multi-sourcing in the quest for resilience. And there are likely to be many aftershocks including geo-political tensions and supplier bankruptcies.
See our apps in action
If you’re facing demand planning challenges this year, watch our 10 minute Demand Planning application demo to see how Vuealta can help.
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