During the coronavirus pandemic, concerns about the impact on supply chain Planning and business continuity have raised many companies. The Gartner Supply Chain Planning Summit, held last November 2019, highlighted the importance of companies realigning business goals in turbulent times, anticipating and preparing for an uncertain future. Research from Gartner presented at the summit showed that companies that ran through possible scenarios with the help of supply chain planning were able to increase their profits more quickly after the financial crisis.
The coronavirus proves to us that the real world rarely follows the rules. To stay competitive, you have to be prepared for anything. Companies that can react quickly and efficiently to possible disruptions ensure a higher degree of stability in the supply chain in our networked, global world and do not have to post any major losses in the long term.
Fix Disruption In Supply Chain Planning
Macro events like the coronavirus pandemic trigger fluctuations in demand that affect every link in the global supply chain – from sourcing raw materials to setting safety stocks to planning logistics and promotions. As a rule, companies react in times of supply chain interruptions with expensive selective measures to maintain service levels. Examples of this are part-load and air freight deliveries as well as costly intralogistics.
With AI-controlled digital supply chain planning, service levels can be achieved even under changing conditions. It is more important than ever to leverage this optimization to ensure the service levels customers expect in times like these.
Here are four examples of how digital supply chain planning tools can help manage unforeseen developments in the supply chain:
- Demand Modelling To Fine-Tune Demand Forecasts: disruptions typically require redefinition and reconfiguration of the supply chain network to determine the correct allocation of flows and stocks. Probability forecasting and machine learning machines can compute multiple demand variables to automatically produce a reliable demand forecast in an uncertain, volatile environment. This enables alternative flows and networks to be modelled and guarantees compliance with service guidelines.
- Dynamic, Multi-Level Routing Tools: If entire channels are no longer available, it is important to understand whether, for example, the deliveries expected from China or Italy need to be rerouted or obtained from other countries. A system that can move order calendars, restrictions, and schedules will help keep important goods available where they are needed.
- Automated And Optimized Fair Share Allocation: If only 60 percent of the demand can be met when there is a scarcity, it is important to determine the best way of allocating these resources through optimization and automation. A good example of this is toilet paper. This allocation can be based on customer business’s relative volume or past performance in different markets.
- Exception Management: The entire supply chain may seem like a single exception in a crisis. Nevertheless, companies should prioritize and put human emotions aside as possible. An exception-driven system that focuses on priorities is far more efficient than the costly reactive process many companies use to respond to crises.
Supply Chain Planning: Adapt To Changing Market Behavior
Being prepared for anything means companies can automatically and quickly translate any hypothetical future scenario into a series of timely and appropriate decisions. Many of our customers use digital supply chain planning to adapt faster and better to the changed market behavior caused by the coronavirus.
For example, a US manufacturing company sources parts from several Chinese and Italian suppliers. During the currently limited supply, the manufacturer works closely with these suppliers to understand how their supply offerings might change, balance the current inventory position within the manufacturer and distribution network, and model possible drops in demand in the US and Europe.
The Corona crisis may have ushered in the economic downturn that we knew would appear on the horizon at some point. As with the financial crisis, companies now have to react quickly and prepare for all possible scenarios. Digital supply chain planning helps cushion the impact on the supply chain and supports business continuity.