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In June 2020 we hosted a panel discussion focused on answering your questions on how to remain agile and innovative throughout the pandemic and beyond. In case you missed the live session, we have taken a selection of questions and answers centred around helping businesses manage when a crisis strikes.
How do you run an Integrated Business Planning (IBP) process when forecasting is just guesswork due to COVID-19?
We may not have a crystal ball to predict the future, but every business typically has some view of customer and consumer demand and where this is heading. In terms of consumer demand, we can use assumptions. These assumptions can include what is driving the numbers, why do we think it currently takes ‘x’ amount of time, what could happen in the future to potentially increase this timing? Then you need to think about the bigger picture - what do these assumptions mean for the business? The key here is achieving cross functional consensus about these assumptions to drive the IBP initiative, continuing to work from one plan and one set of numbers.
It is also crucial to stay true to the purpose of demand and supply planning. Don’t get dragged down into the weeds. Although it is very tempting in these difficult times to focus on the short-term here and now, it is vital that you continue to look at the mid to long term as part of the IBP horizon.
What is the role of scenario planning in the crisis and how often should scenarios be challenged?
Scenario planning in a mature organisation is a fundamental piece of IBP. It is the process you should use for creating the scenarios, identifying probable future situations, and monitoring and improving your responses. Our clients use scenario planning to identify an event and think through scenarios to determine whether this will be quick recovery or not. Businesses should identify potential critical events ahead of time to pre-approve responses should these events ever happen in the future.
Earlier we mentioned assumptions. Scenarios are all underpinned by assumptions and businesses should segment them. For example what can we assume may happen politically, economically, and environmentally, and how will this affect us? Are you thinking about the impact of future new technology? How could it change the way you manufacture your products and how quickly would you be able to respond to changes such as new legislation?
As for how often scenarios should be challenged, IBP should be monitoring your assumptions so that whenever an assumption changes, you can revisit the scenario. It is important to note that assumptions must be assigned to an owner to ensure clear accountability.
How do we create a change culture that is suitable for these rapidly changing times?
Right now, people are more exposed to change than ever before. To create a successful and sustainable change culture, there are three key ingredients.
1. Trust. Leaders must create an environment of trust which allows people to voice their concerns and even make mistakes without fearing the implications. As we all know, you learn from the mistakes you make.
2. Communication. It really is a gamechanger in helping people to articulate their worries and not feel alone. For many organisations, the new ‘normal’ will require a new leadership style to support people through change.
3. Process. Make sure you stick to it. This means acknowledging decision making rights. Nothing is more irritating than when crisis mode hits and your boss takes over your role. Remain confident that the process is working and ensure you have the right environment to encourage people to talk about it openly.
How will the new ‘normal’ impact the future of manufacturing?
One of the key impact areas for manufacturing will be inventory. During the pandemic, many organisations found they had the wrong amount of inventory at the wrong place in the supply chain and have since suffered the consequences. Looking ahead, the focus won’t necessarily just be on reducing inventory, but ensuring it is in the right place in the supply chain to be able to effectively respond to change. Business leaders should ensure discussions take place around inventory that has been carried for the contingency of black swan events such as the coronavirus pandemic.
There will also be a need for greater agility in manufacturing. Businesses will need to respond to change at a faster pace. For example, a change in demand or in the product portfolio. Making the right decisions early will be a key requirement for every manufacturing organisation in the future. This is where scenario planning and assumptions are crucial.
Perhaps more important than both inventory and agility is the heightened need to ensure continuity of supply in manufacturing. The pandemic has heightened the need to ensure your supply chain is robust, allowing you to move your products to where you need them cost effectively. Reliability has always been essential in the world of manufacturing and customers and consumers will expect an increased level of dependency post-pandemic.
For more advice and insights catch up on the full recorded session on our YouTube channel.