‘Everybody has a plan until they get punched in the mouth’ – Mike Tyson
Plans are easy to come up with. The challenge is ensuring that they are good ones – able to withstand tests of turbulence and unexpected shocks.
There are lots of signs to keep an eye out for as symptoms of larger issues with planning.
These include availability issues, excess inventory and slow rates of sale in new products.
As the economy recovers, the marketplace adapts to the changing shape of retail and consumer behaviour continues to evolve, a degree of uncertainty is unavoidable. Staying competitive will require being able to deliver on time and fulfil service levels no matter what happens.
Planning ahead – what-if?
Using ‘what-if’ scenario planning capabilities to model the impact of potential disruptions is a powerful way to ensure your end-to-end S&OP process is fit for purpose. This planning can only take place with access to full data and the insight it delivers, but with all the information, impacts can be modelled, and scenarios can be planned for, with alternatives considered dependent on outcome.
Being able to simulate the impact of lead-time disruption, safety stock changes and alterations to other service or stock level variables creates insight and allows for the creation of guiding policies.
Putting effective rules and policies in place leads to better use of automation where appropriate. Removing all the simple, repetitive, and mundane activities which can instead be handled by technology, frees up your team to apply their specifically human capabilities – judgement, creativity, and innovation – to the issues that truly require them.
Requirements for effective scenario planning
To maximise the potential benefits of scenario planning, you need the following:
- An accurate view of the business, as it stands now, not an outdated snapshot from the start of the month.
- The relevant data and baseline information to create a status quo forecast – what does the future look like if you do nothing?
- The functionality to be able to model ‘what-if’ events in your forecast: spreadsheets aren’t powerful enough to deliver.
- Calculation efficiency and robustness. Scenario plans are only valuable if your team haven’t spent days on end gathering and manipulating data in spreadsheets to create them.
- Ease of reporting to make the output easy to digest across the wider business. Other functions need to be able to fully understand the plans to buy into the approaches they recommend.
Done correctly, ‘what-if’ analysis provides a valuable tool to enable effective proactive measures in the face of disruption. To learn more about how the AGR software can equip you to minimise the cost of uncertainty – get in touch today and discover just how much of a competitive advantage it could give you.