Planning for change is like predicting the future
Organizations don’t have the luxury of a crystal ball to tell them what the future will look like. When a significant disruption affects your supply chain plan, the question most executives will ask is, did we see this coming?
What changes would you have made in your planning process 3-months ago, knowing what you know today?
Before we answer that question, let’s identify what role you play in the planning process and who is responsible for what. In supply chain planning, we make changes to the plan daily, based on the latest inputs and business assumptions. We create demand plans, supply plans, and financial plans, just to name a few. Some organizations make the effort of integrating and reconciling their business plans in a process known as Sales & Operations Planning (S&OP)/Integrated Business Planning (IBPx). In these integrated planning processes, each manager, director, and executive have a role to play.
Planning for the change: Let’s consider the categories of events and the impact they make on our supply chain network and financial expectations.
- Known Knowns: These are known events that can be calculated, scheduled, and predicted. Examples include seasonality, new product release, and shutting down resources. Mangers of the functional areas of responsibility plan these events without surprises and utilize automated planning systems to balance out demand, supply, and inventory positions.
- Known Unknowns: Are events that we know are possible, but we just don’t know when these events are going to occur. An example would be placing a data center in Florida. As an executive, you know Florida experiences weather that can cause power outages, but you just don’t know when or which year is going to be more severe. As an executive, you need to mitigate this risk and provide your management team with the tools and guidelines for recovering from these events.
- Unknown Unknowns: We don’t know what’s coming and we don’t know when. COVID-19 is an excellent example of this kind of event. It’s the executive role to react to the changes in your planning process during these types of events. Each manager and director have a role to play in calculating and predicting the scenarios, but the executive must lead the team during these planning challenges.
Having the right planning process and system is the first step in responding to changes. Still, under the most significant challenges, your planning parameters may not be able to calculate the scenarios required of the situation.
Your organization may need the help and expertise of a seasoned partner. AVATA can guide you through adjustments of your existing planning systems and processes or elevate your resources to the demand required of them during extreme challenges to your planning processes.
Learn more about how S&OP/IBPx plus Financials are Better Together in our upcoming webinar or contact us directly for more conversation.
written by Ferguson Neale, Director of Integrated Business Planning, AVATA