Demand Consensus During Crisis – What Does It Mean For Demand Planning To Put On a Firefighter hat?
All stakeholders are under pressure and double-booked to understand the impact of COVID-19 on their demand planning. Everyone is on their toes and trying to prepare multiple what-if scenarios for rest of the year. For next few months, demand consensus meeting attendance may get thinner than usual unless you present analytics backed by different simulations.
Before you put together a presentation for your next consensus meeting – What are some key things you should be aware of?
1.What does your demand curve look like? Has your business sharply spiked because of the panic buying? How much of it is natural customer demand and how much of it is from pantry loading?
Uplift in DemandIt is not a secret for P&G that people are sitting on a year’s worth of paper inventory right now, and it is likely that they will continue to see the spike for next few weeks, but after that, there may be a lull for such demand.
Everyone wants to be clean and sanitary; Clorox and other related products will also see an uplift in demand for the rest of the year. It would not surprise me if this becomes their new normal.
Demand ShocksDo you have direct or indirect customers in the hospitality and tourism industry? You may be in for a shock because the impact may last longer than usual! Remember the 2008 era? People were not ready to spend on vacations until 2011. The tourism industry came up with dynamic advertisements and sales promotions.
2. Everyone wants to know about the next week, month and quarter and forecast numbers for these buckets.
3. Where can you be crisp? It is tough to be heard over a conference call; start with the firefighting items and discuss the stakeholder’s immediate priorities.
4. Track the demand on a daily basis and analyze it’s impact. Keep the necessary stakeholders in the loop.
5. Events Calendar:
-It is clear now that lock-downs can last beyond Easter. You may want to focus on the events that drive your business and how your customers will react to the same.
-Something as simple as possible hot dog sales on the July 4th weekend in NYC is going to be different this time
-Back to School: Should we anticipate closures for the rest of the school year? If yes, we may want think of a shorter summer break or an early start for the next school year, this can shift the demand in prior months compared to last year. Some states may resume schools after 4-6 weeks, if this happens, would you see a mini jump for back to school items?
-In any given year, which other events impact your business? Are you ready with multiple what-if scenarios for those?
6. Supply Chain Managers are fighting many battles with limited resources and they would appreciate clean and comprehensible communication from Demand Planning. Keep them informed but also protect them from daily demand shocks.
7. Finance would be keen on understanding the deviation from the budget and how you are simulating the best and worst case scenarios that may or may not swerve the budget.
8. How hard is the impact on your capacity? Analyze the difference between constrained and unconstrained forecast. How far from normal is it? How much of the constrained forecast would be a lost customer demand?
9. Is there a capacity shift from new product introductions to the current daily firefighting? – Do you think Apple would launch a new iPhone this year.
10. Sense over sensation- Yes, the overall market tone is down, but what is the impact of the media and news and what does it mean for your industry? We have been publishing the possibility of a peak on our Forecasting blog – http://www.forecastingblog.com/?p=1492.
11. Statistical Forecast is your best friend if used befittingly.
What should Demand Planning avoid?
Metrics may not be of a great concern for the next couple months and forecast inaccuracies may not come as a surprise to you, but instead of spending a good length of your time on accuracy columns, spend it on the demand tracking.
Talk less about history. (Last year or the last season would be of little help!) If you know a veteran who has dealt with this during the SARS epidemic or the 2008 recession, they can help you assess the impact!
Don’t stick to the regular structured monthly meetings. Modify the meeting agenda to revisit your demand planning statements.
Humans have learned through history to stay fit. Document these learnings for future use!
1.Where did you tweak capacity to satisfy the current market needs?
2. Have you changed your returns and exchange policy to accommodate more flexibility.
3. Were your existing safety stock policies helpful?
4. Is this a black swan event? Or will this be short-lived?