Part 1 | COVID-19 Pandemic Supply Chain Planning: Demand Sensing

The COVID-19 Pandemic event provides an opportunity to examine our lifestyles, assumptions, and norms. In the wake of massive change in our daily lives it’s easy to act on instinct, fear, or doubt. However, as members of humanity, we have the power to adapt ourselves and how we interact towards these changes in our world going forward.  This requires an assessment of ourselves and how to manage the changes coming towards us, even while at the same time a seemingly daily tsunami of changes present themselves.  However, there is no need to panic if we have a method/guidance towards categorizing and assessing the need to change.

These same aspects are true towards thinking about our current global supply chains.  There is no time to second guess and our existing plans may be shot; like entering whitewater on a raft, attempting to stop or slow can be disastrous. So, how does a company develop a method/guidance towards the various aspects that affect your current, near future, and long-term supply chains?  Of course, there is no one size fits all answer. The need to assess current methods of managing the supply chain is the first aspect towards developing a strategy and method to make the necessary changes going forward.  The worst thing an organization can do is to make ad-hoc changes. Those companies will soon find themselves in an ongoing firefighting approach to the management of their supply chain activities.  In today’s environment, an organization must take a measured approach to better understand their product offerings, their customers, and their suppliers.  Wow- it sounds like a deeper reflection of S&OP, IBP, or whatever acronym is currently used to develop, communicate, collaborate, and gain management approval on operational plans.

Even though the current situation is unique, there are some common themes and generalizations about the way products, consumers and suppliers interact during an unstable time. One way or another, a huge change in demand and supply will alter the demand curve. Customers—whether large retailers or OEM parts suppliers—will cut their forecasts, reduce their inventory, and become more pessimistic in their forecasting of the future. Most will not get the timing right, and the result will be fits and starts in ordering patterns.  These points lead to the value your company can provide in this unstable environment and becomes a dominant customer theme for competitive edge.

A deeper dive is required to better understand your customers’ demand and may be the most important aspect for an organization to consider- this is what Gartner has labeled as “Demand Sensing.”  Additionally, a deep dive into your data and a reconsideration of supply chain KPIs may enable more flexible planning processes in the future.

Demand Sensing

How an organization reacts and their commitment towards customers during these trying times is the point that separates you from your competition.  Better understanding your customers’ changing demand patterns is essential to developing supply chain strategy and execution.  Many times, customers are not going to know what changes to anticipate and so organizations may need to develop an evaluation towards the possible changes and allow collaboration between the customer and vendor.  There are various methods to anticipate these changes by looking into the past periods of volatility that an organization has experienced.  One must ask to determine other periods of such change or disruption within the past 10 to 15 years.  Once these time periods are identified, a deep dive into reports, data, and interviews from individuals at the organization regarding these periods of time help to understand what happened and how the organization reacted.  This exercise will deliver the pros and cons of an organization’s reactions during these times of volatility. Also, firms now need to start pulling “unstructured data” from blogs, text messages and web and combining them with historical information to forecast trends in pricing and purchasing. The Internet of Things will generate even more data. Firms will increasingly tap into “the knowledge of crowds.” We’ve seen already how firms using leading edge demand sensing and AI/ML tools adapted more quickly to the COVID-19 impact much faster than their peers.

In a future blog post, we will discuss pandemic self-assessment questions on Demand Shaping and Demand Responding. In the meantime, if your company needs some outside guidance on any of these areas, please reach out to Plantensive today!

We have worked with thousands of clients across a diverse set of industries.
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