Demand Plan Recovery after the Black Swan has been saved
Demand Plan Recovery after the Black Swan
Questions to consider by a demand planner after Covid-19
Covid-19 recently disrupted the consumer goods and retail landscapes, causing many disruptions for product demand and supply. For logistics practitioners, reconstructing demand and supply plans is a challenging task, impacted by a variety of internal and external factors. Many of these factors cannot be directly controlled.
In this article we explore factors to be taken into account when setting up post-crises demand and supply plans in retail and consumer goods, and how companies can benefit from the set up digital twins to become better prepared and more resilient in the future when faced with such large-scaled disruptions.
Demand reconstruction will likely be impacted by a broad number of external factors like adapted consumer behaviour and loyalty, seasonality of goods, perishability of the goods and demand elasticity of the category of goods. These shifts in demand are important to take into account, however can be difficult to capture. Internally however, a company can in part steer consumer and retailer behaviour slightly through certain marketing and sales techniques.
Supply will be heavily distorted due to erratic demand, making it difficult to return to a stable supply scenario. Strategic production choices will need to be made to take into account the impact on inventory and cash. Additionally, fair stock allocation amongst customers, joint forecasting and careful analysis of supply system parameters are topics to consider.
Since simulation of demand and supply plan reconstructions and the impact of certain decisions on company-wide KPIs can be time-consuming and difficult to execute, digital twins that are a mirror of the company, are a nice way to be able to experiment with various scenarios. In high-tech industries they are frequently used and adoption in the consumer goods industry is slowly starting. The main advantage is that they can be used to reveal supply chain weaknesses and to drive optimizations to make a company’s supply chain more resilient.