As Covid-19 spreads globally we are seeing shifts in demand, supply chain disruption, and changes in consumer spending habits. This has made planning and forecasting extremely difficult – but now more than ever we need to step up and help our organizations navigate these difficult times.
That’s why we asked three leading planning professionals for their advice on how to manage the current disruptions. They are battle-tested veterans who have worked through multiple recessions and crises.
They covered five key topics: collaboration, transparency, agility, continual risk assessment, and predictive analytics.
Participants:
Pat Bower: Director of Demand Planning & Customer Service, Combe Inc.
Andrew Schneider ACPF: Transformation Senior Program Manager, Medtronic
Eric Wilson CPF: Director of Thought Leadership, Institute of Business Forecasting
Collaboration
Pat Bower: “As consumer demand peaks due to panic and pre-buying – and the supply chain has lots of weak links at this time – daily collaborative, cross functional discussions help manage all of the issues with a unified plan. This is triage – not planning per se.”
Andrew Schneider: “Social distancing has never been a problem for some in the demand forecasting profession, the issue is getting those people in other functions to engage more and leveraging this opportunity with virtual collaboration.”
Eric Wilson: “IBF research shows 41% are now holding S&OP meetings once a week or more frequently. This is because active communication and higher levels of forecast accuracy go hand in hand. Especially during these times, it is important to have feedback from other functions more frequently and work towards a consensus forecast. We will be wrong, but it is important to be wrong together and have everyone in the organization operating off of the same assumptions”.
Useful resources on collaboration:
Communication & Transparency
Pat Bower: “Communication has never been more important. The best conversations between supplier and customer should be what is the “minimum” you need (on a weekly basis) so as to not bullwhip the supply chain. This may require that you get into the very uncomfortable position of having all your finished goods run out the door – but pragmatic conversations allow you to be relevant to your suppliers.”
Andrew Schneider “In a pandemic, companies need to address the concerns of internal and external stakeholders. Consider the communications you need to make to your customer base. Not only do they need to hear from you, you need to understand what they are going through so you can incorporate that information into your forecasts and plans.”
Eric Wilson: “It all boils down to the simple fact that with proper communication between stakeholders and external suppliers, more creative ideas can be brought to the table, thus improving forecasts and responses.”
Useful resources on communication and transparency:
How To Present Forecasts Clearly To Stakeholders
Getting Valuable Data From Your Customers To Include In Your Forecasts & Plans
Being Agile & Willing To Pivot
Andrew Schneider: “Really dial up your demand shaping and be a business influencer as well as a business analyst. We may be doing less demand planning and more demand sanitation services – cleaning data, stripping out information from data, as well as analytics. We may be providing different brokered services at the moment that may change and morph.”
Pat Bower: “The focus should be on the most strategic and/or profitable product lines to fulfill. You also need to assess quickly where the marketplace will be after the run on inventory in retail. Consumer behavior will change in the post Covid-19 world as we enter recession. Don’t over or under react but see what the next 2 or 3 weeks has for us maybe before you make large adjustments to your plans. We are still smack dab in the middle of it – we don’t know yet. Take a breath.”
Eric Wilson: “Supply chain disruption is likely so consider back up supply chain alternatives in advance while considering the extent to which supplies could be replaced with those from another supplier or location.”
Useful resources on agile planning:
Demand Planning During A Recession
5 Rules For Adaptive Supply Chain Planning
Continual Risk Assessment
Andrew Schneider: “Classically we do segmentation in a univariant format… having a blended approach is good in normal times… in these times what I would suggest is having risk oriented ABC analysis in addition to ranking where or what items you have that are high risk.”
Eric Wilson: “According to responses to IBF surveys, the majority of customers are reducing their outlook for the next 3 months by 25% to 40%. At the same time staple items and stay at home type items are projected to increase by 15% to 20%.”
Eric Wilson: “Stress testing and scenario planning is critical during these times. Doing what-if scenarios with different demand scenarios and probabilities is key. Consider what you are trying to solve and what variables and drivers impact that, then war room potential options and outcomes.”
Pat Bower: “Times like this help you identify weaknesses in your supply chain. Knowing these weaknesses allows you to identify and manage them. You can manage these weaknesses with dual sourcing, carrying more inventory of raw and pack, on shore supply lines, etcetera.”
Eric Wilson: “Businesses must conduct due diligence in assessing challenges such as crucial suppliers, ability to meet customer demands, IT issues and cash flow problems in order to find solutions to any supply chain problems.”
Useful resources on Risk Management
3 Scenarios to Plan For To Mitigate Supply Chain Risk
Predictive Analytics & Probabilistic Planning
Predictive Analytics & Understanding Your Customer
Eric Wilson: “Understand your customer (who, where, and why). During these times it is essential you better understand your customers, their buying behaviors, and how they react. These are key components of predictive analytics and is important to pivot more towards predictive analytics if you have not done so already.”
Andrew Schneider: “Keep calm and plan on – we are a ways away from being able to change our data streams from the past – what we can do is extend consumption horizons, manage the increases in variability. Just don’t overreact and make sure you understand the data you have before you extrapolate it.”
Eric Wilson: “Right now driving while looking at in the rear view mirror is not going to work. The past no longer looks like what we are going through now or what we’ll see going into the future. We need to start evaluating external data and better understand drivers and your customers using new predictive analytics forecast methods.”
Pat Bower: “This is essential in the “what’s next” part of this mess. What happens after Covid-19? I.e. are your consumers the ones that will suffer most in a bad economy? You can only extrapolate this by looking into all your market research and getting real intimate with your consumer. This may mean you buy into more specific consumer or market research, leverage your direct to consumer to poll your user base, put consumer response cards in your products … knowing your consumer will matter as you re-tool your promotional spend. Maybe you’ll discover you need to shift your marketing spend to consumer from trade or shift to digital marketing.”
Andrew Schneider: “If you look for a silver lining to this, it really is a dry run of automation and predictive analytics. You can look at that with an optimistic lens to go from descriptive analytics and reactionary rear view mirror extrapolation… and really get to the point where you have different input streams and a real handle on predictive analytics.”
Useful Resources On Predictive Analytics & Understanding Consumers
The Impact of Coronavirus on Your Forecasts