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Responding to change and the power of S&OP

The world’s changed somewhat in the last 18 months. As opening statements go, that one’s as obvious as proclaiming the sky’s blue or grass is green.

On the latter of those, you might look at the pre-pandemic world as having distinctively greener grass than the one we find around us now. The kind of muddy, festival ‘grass’ where one solitary blade stands alone, in a 10-metre square swamp.

It might sound reductive to say, but every supply chain has been hit hard.

Much like a ‘summer’ festival goer, you’ll have watched some companies brace themselves for the inclement weather.

They bought wellies and a mac and a snazzy see-through poncho.

They looked the oncoming rain dead in the eye and carried on the party anyway. They pivoted their offering or diversified totally and are now reaping the rewards.

Then there were businesses which decided the festival wasn’t worth it. They gave away their tickets, so as to avoid the hefty dry cleaning fees and potential drenching.

And then there were the rest.

Those who didn’t see the forecast. Or even willingly ignored it. Those who wallowed in the mud, not only caking themselves, but those around them.

Those businesses, who at first thought the quagmire was manageable, and not long after found themselves stuck in the middle, with no way out but losing a shoe.

Now you may well find yourself reading this firmly in the latter camp. And that’s not something to be ashamed of. As there wasn’t much of a weather warning for you to batten down the hatches.

But now… you find yourself with returning customers, who have even higher demands than they had in the glistening meadows of our pre-COVID, sound of music existence.

SO… WHAT NOW?

Will the bubble burst?

Will your increasingly demanding client base leave and find a more satisfactory service at your cocksure competitor?

Perhaps.

But here’s a forecast that can prepare you, whatever the weather. And trust me; it’s the only forecast you can always count on.

Expect disruptions

It might sound simplistic, but expecting disruptions is a damn good way to mitigate for them.

Generally speaking, disruptions to business and supply chain models are a pain in the proverbial. But the best businesses not only expect them, they turn them into a competitive advantage.

This is what S&OP is all about.

Taking problems or disruptions and turning them into competitive advantages.

Think about your local boozer. It wasn’t long ago it was constantly packed, four deep at the bar, with staff who looked on the verge of collapse. You’d stand there, knowing your spot in the line up, and offer a resigned “After you mate!” when they inevitably served you out of place.

No longer. To be truthful, I sort of miss it. But perhaps I’m old-fashioned.

Ask most people and they’ll tell you having drinks delivered to your table is easier, less stressful and has made a swift-half generally more pleasant.

But, as you know already by now, not all pubs were created equally.

Some ask you to download an app.

Some make staff come to your table.

Some have pdf menus with delightfully different designated downloads for food and drink. Dreary.

Some have a UX that’ll warrant upgrading the order from a half of Best, to a Pint of wine and whiskey chaser, just to settle your anger.

And some are a breeze. They offer customer loyalty programs and will even deliver food to your doorstep.

And the same can be said about your S&OP process: flexibility has always been essential for success, but they alone may not be sufficient to stop your competition over taking you.

To do that you need a supply chain that outperforms your competition. And that’s not just the customer facing part, but the whole shebang.

  • You need a slick pub website, through a QR code, not a shoddily built app where service is already included.
  • You need thicker tent pegs for the forecasted hurricane at Glasto.
  • You need to think of what the next disruption might be, and plan ahead now.

That might be a shortage of customers or shortage of hops. But contingency planning for all possibilities will safeguard your business.

Splashing mud on competitors

To seamlessly drift back to the festival analogy at the beginning, where I hinted you might be splashing mud on those around you, this isn’t necessarily something to shy away from.

Let’s face it, if you’re headed to the mosh pit, it’s often unavoidable.

And to bring it back to business, often if you don’t, they will.

As an example, approximately ten years ago a tsunami hit a certain part of the world, leaving untold devastation in its wake. Naturally, aside from the horrific cost to life, some companies started to panic about how they might fulfil orders which consisted of parts from that location.

One business, which for legal reasons we’ll call ‘Company A’, decided to buy up all the stock of this particular part.

This made sure they had enough parts to fulfil orders, and restricted their competitors’ ability to fulfil theirs, thus elevating their position. Now, the particular material they bought had a shelf life, but this was something they knew.

And the loss of revenue in wastage was deemed worthwhile, given the guaranteed benefit of fulfilling orders.

Was this an efficient process? No. But it was necessary.

Pre Vs Post COVID

Leading up to the COVID crisis, the themes in Sales & Operations Planning were different.

You had to be streamlined. You wanted a slimmer organisation. Agility was always high up the list. As was operating efficiency. Sadly though, these have become terms bordering on buzzwords.

One thing not on the tip of Supply Chain’s tongue was resilience.

Now? Resilience is one of the most vital terms you can think about.

Put simply, it’s your company’s ability to deal with the shit that comes around the corner.

The inclement weather.

The shortage of parts.

The bloke doing the worm in the middle of the festival swamp.

In the next article, we’ll come on to how you go about doing this. We’ll talk about the importance of ‘what if’ scenarios and digital twin creations. But for now, let me leave you with this…

If Sales & Operation Planning isn’t top of your supply chain priorities in the world today, it’s time it was. But not as a ‘fix all’ solution. It needs to be on top of your S&O execution layer.

COVID may have seemed like a seismic shift in the world, but perhaps it was just the shockwave that will be followed by increasing disruption and chaos?

Maybe it was the cloud on the horizon?

Not the storm or the mud.

And the real question is, if that is the case, how are you going to plan now for the inevitable?

Speak to an expert about your inventory challenges

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Richard Evans

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