How can large-scale enterprises reshape their operations to outperform in this unpredictable landscape?
A good part of the answer lays in sales & operations planning (S&OP). Moving away from the traditional process that hinges on predictable demand and supply, we work with a methodology that emphasizes the importance of measuring uncertainty and directly integrating it into supply chain planning. By switching focus and weaving a level of volatility into your planning processes, you will be able to address challenges that previously seemed daunting.
This approach in S&OP resonates with a specific project we were recently involved in, where a manufacturing company faced challenges with above proportionate (and unacceptable) levels of stock and with inventory planning. To address this, we delved into historical demand and shipment data stored in spreadsheets. By estimating the standard deviation of weekly demand forecasts and supply lead times, we gauged the level of uncertainty to be incorporated into the plan. We coupled this with tools and techniques to improve forecast accuracy. This led to the introduction of a new inventory planning metric: the target inventory position for each product. By adopting a fresh approach to demand management, production and inventory planning, our client is now better equipped to navigate today’s challenges and prepare for future uncertainties.
How are you addressing operational uncertainties in your organisation?