Wondering What Could Happen Next… The Importance of Supply Chain ‘What If?’ Scenario Planning in a World of Uncertainty
by Jari Kaukiainen on August 18th, 2020
Why Scenario Planning Tools come in handy?
The ‘What If’ Scenario Planning capability protects your business from known and unknown risks that may emerge at any time. These can range from unexpected growth or collapse in demand to sudden political or economic changes. The current politico-economic environment provides some immediate examples, COVID-19 Impact and Brexit as two, and the 2020 US Presidential elections as another.
These events can appear abstract and remote, almost improbable risks. However, without the ability to model multiple demand-supply scenarios where these and less abstract risks to your supply chain exist, your business will lack the flexibility to balance demand and supply in unpredictable trading conditions. This inflexibility impacts on inventory levels, on financial planning, on production scheduling and ultimately bottom-line profitability.
There are tools available to help in dynamically solving scenario planning problems. These tools provide results to better inform and guide the business with respect to the above and create the plans necessary for production and inventory planning. It is not necessary to rely on manual processes supported by Excel alone.
The other major component to understand is that it is crucial to fluently transform the selected scenario into a format which communicates the scenario plan to the various stakeholders in the business in the way that is relevant to their business responsibility.
After all, it is sales, production, procurement, and transportation planning who usually take the released scenario (plan) and execute the plan to achieve the expected outcome. Where the scenario planning is typically tactical and/or strategic activity, most real-life situations have execution level fluctuations and unexpected variations in the expected outcome. These fluctuations and variations also require to be dealt with in a controlled way that minimises the impact on the business and provides a measurable value of the deviation from the plan.
In case you want to know more about how I-Plan solves supply network optimisation problems based on overall profitability, especially for flat-sheet processes, like Tissue, Nonwovens, Pulp and Paper or plastic films to list a few, I would be happy to tell you more.