In last week’s blog, we discussed how the pandemic event provides an opportunity to self-assess how supply chain has enabled or hampered flexibility in responding to rapidly changing demand. We began by discussing demand sensing, the ability to synthesize multiple sources of data (structured or not) not gain an understanding of daily moving demand signals.
We continue with some questions to ask as you consider Demand Sensing, but also Demand Shaping and Responding. The reality is that by capitalizing on the present disruption we can gain an opportunity to know our customer better, and to plan products and assortments that better align to the customer’s needs. Even more, we see that that dynamic scenario planning and flexibility across all planning functions supersede the historical reliance on linear, cost-optimized supply chains.
Here are some questions you can ask regarding Demand Sensing:
Demand Sensing Questions:
- Can you see end consumer buying in real or near real time?
- Are your customer’s buying patterns being impacted?
- Where is demand up and where is it down?
- Are these changes demographic, physical region, or other based?
In parallel to reviewing customers’ demand, the need to align product/service offerings to meet the changing demands of customers form the base of “Demand Shaping.” This is the determination of what the market needs of the current, near term, and long-term product offerings are. This is an opportunity to make necessary changes to streamline and offer a more robust set of products/services for the future of your organization. Obviously, the better one understands the current and future customer base and their needs is necessary to anticipate and align a product portfolio. Opening better communication channels between product development and your customers that drive the top 80% of your business is essential. Remember being everything to everyone may not be the best strategy during these changing times, trying to service too many products/services with inconsistent supply can be the point that brings a competitor into the customers view. Some questions to consider regarding Demand Shaping include:
Demand Shaping Questions:
- Do capacities exist to respond to new market needs in product, location, or services?
- Can you rapidly enter new or expand within existing distribution channels?
- How frequently have you performed product portfolio analysis, ACD/XYZ reviews?
- Are your organization’s KPI’s aligned to enable flexibility across multiple scenarios?
Once customers’ demand patterns are understood and the ability to anticipate the changes in patterns has been enabled along with streamlining your product/service offerings, Demand Shaping and the capability to review and understand your firm’s flexibility and capacity to meet these needs are vital to “Demand Responding.” A firm’s ability to enable as much flexibility in changing Demand Responding capabilities could be critical during the short term and near-term changes in today’s environment. This is an internal look into how a firm goes about optimizing inventory assortment and planning, replenishment planning, your supplier management, and logistics capabilities that will empower Customer Service and Sales teams to deliver value added products/services to your customers.
Of course, the elements of executing the demand sensing, shaping, and responding tasks are important to review and fine tune, and the need to establish better communication and coordinated planning is paramount. If your firm has not started a Sales and Operations Planning or Integrated Business Planning processes, now is the time to begin to bring your firm together and to communicate and plan across the various departmental silos. If your firm already has a S&OP or IBP process in place, it is time to take a deeper look into where the process is effective and any current problems in executing the process in the best manner to deliver value to customers in the volatile and changing environment. Planning processes that are supported by integrated data sets enable faster decision making. If a monthly S&OP process takes four weeks to create, it’s already last month’s plan by the time it’s actionable. Some questions to ask about Responding may be:
Demand Responding Questions:
- Do you have a dynamic demand response process in place to react to demand changes with product or service quickly?
- Can you position existing inventory/capacity to meet most immediate need?
- How does your organization protect capacities to enable rapid response when markets begin to normalize?
- Can your organization utilize existing capacities to support market areas that are not impacted by social distancing and temporary business closures?
- Do you have the ability to analyze data to segment the supply chain across products, channels, and locations to respond in-time to post-COVID opening?
- How will you align your future planning metrics and KPIs to responsivity and flexibility going forward
These are really the tip of the iceberg in terms of where to look and what to ask. For a broader assessment and discussion, please reach out to your Plantensive engagement manager or inquire here to be connected with our team of professional supply chain planning optimization professionals.