A Pandemic is a Terrible Thing to Waste

The recent Covid-19 outbreak has disrupted supply chains all over the world, and in nearly every industry. This has caused significant disruptions in a wide range of products from toilet paper to pharmaceuticals. It has also revealed the limitations of some longstanding supply chain practices. JIT delivery and minimal inventory levels that were designed to increase profitability suddenly became serious constraints as demand exploded. Well-refined planning processes became irrelevant overnight. And now everyone has become aware of the impact of the supply chain practices that for many years have been hidden from public view.

For those of us who work in demand planning, the recent disruption provides planners with the opportunity of a lifetime. Never before has good planning been so critical to business execution and success. Many of us who for years have been harping on the importance of planning now look like heroes. The planners who can identify trends and lead their S&OP teams to make solid assumptions about future business will give their employers a significant competitive advantage.

As a demand planner, here's what I am doing to take advantage of the attention that the Covid-19 disruption has put on planning:

1. Reviewing and analysing the POS trends before and during the period where the pandemic began disrupting business. I'll need to understand how 2020 was different from prior years when I start planning 2021 and beyond. This is especially true for my top 10-20 profitable items.
2. Tracking product shortages during the periods where demand exploded. I'll need to know this in order to adjust our shipment history. In other words, I need to know what we could have shipped, not just what we actually shipped. This also tells me where our supply constraints were during this time.
3. Tracking current POS and shipments to see when the current inflated sales trends begin to decline so I can adjust my future forecasts and avoid over-buying.
4. Encouraging our sales teams to review what they did to respond to the increases and decreases in demand over the last several months. What was effective for your customers, and what hindered their performance? And how could we as a supplier have done a better job of supporting your business?
5. Setting my assumptions for 2021. We know it won't be at all like 2020. So what will it look like? Since we can't know the future with certainty, we need to make and record our assumptions about future business. And then, once 2021 begins, we need to review these every month to see if they are still valid, and adjust the assumptions that are no longer valid or helpful.

The recent pandemic has given us a wonderful opportunity to see where our businesses and processes need to be improved, and what we can do to prepare for similar events in the future. This is especially true in regard to demand planning. And while the next event may not be caused by a virus, we can be sure that there will be disruptions, whether caused by weather, political events or other natural disasters. In the end our plans for these events may amount to very little; but the process of planning for them may save us in the end.