The ongoing pandemic has made business activities unpredictable in many ways. Not only does it expose a lack of response in the ability of the current Supply Chains to manage unpredictable changes but also uncertainty in supply and demand. The future of the Supply chain is at risk.
Companies are looking for ways to improve and ameliorate their logistic networks and their response to chocks. Many like BakerMackenzie, argued that planning for resiliency is the key to recovery.
What is resilient planning?
Resilient Planning is a concept popularized by Gartner back in 2017. It implies developing mid-and long-term plans while taking the necessary steps to adjust and respond effectively to sudden changes and uncertainty in the market. Also, it ensures that these plans are resilient enough to allow the success of one’s objectives.
Why is it crucial?
We are living in an increasingly volatile world…
In his paper “Unravelling the Complexity of Supply Chain Volatility Management,” Benjamin Nitsche highlighted the different dimensions and sources responsible for volatility in supply chain management.
It appears that volatility can be organizational (inaccurate forecasting, misleading ordering process…), vertical ( long lead times, for instance), behavioral ( it could be erratic behaviors of customers), or market related (competition, seasonality…). No matter where it sources, disruptions can occur from anywhere and in many different ways.
The market, in its nature, is unpredictable. Hence, events like the sanitary crisis highlighted the lack of resiliency of our Supply Chains. The downfall started almost two years ago and, we are not at all close to recovery. Could we survive another crisis like the previous one? What lessons should we learn from this if it were to be reproduced?
… with an obsolete approach to demand forecasting
There are various lessons to take from this pandemic: flexibility, resilience, adaptability, and availability…
This implies better management of the demand and its needs. Also, the most common use to understand demand is outdated.
Material Requirements Planning ( MRP ) is still used by many suppliers. It is a deterministic model for place inventories and replenishments. MRP fixes “extra” stock in the Supply Chain: safety stock to cope with uncertainty. The volatility of demand and supply is not mitigated but propagated along the chain because of the fixed nature of safety stocks. MRP has reached its limits. It leads to weakened supply chains that could break down at the slightest disruption.
Planning leaders need to develop agility and combine it with adapted technologies to ensure availability to meet market expectations in real-time. Resilient planning will allow them to achieve it.
The benefits of resilient planning
The benefits observed after embracing resilient planning are A rationalization of the entire operations, leveraged analytics, and real-time insights that enable you to react quickly and prevent crises, prosperity despite disruptions and a decrease in costs…
These are just a few of the numerous advantages your business could profit from this strategic decision.
Tips for more resilient supply chain planning
If you are starting to be seduced by the concept and wonder how to reach these goals, Gartner came along with some recommendations: Change the planning paradigm from deterministic to resilient, use AI for better predictions, Leverage cloud platforms for hyper-scalability, etc.
Keys to the kingdom
Due to the world’s current situation and the rapid unpredictability of things, companies looking for ways to avoid loss and master uncertainty should build a strong resilient plan when it comes to their supply chain.
By combining advanced machine learning algorithms and statistics, Flowlity provides a whole new approach that can mitigate volatility and produce more stable plans. Our solution is detailed in this white paper. Let’s work together and be proactive regarding your strategic resilience planning >.