I really enjoy reading content from Lora Cecere, founder of Supply Chain Insights. Like most of us, she was quarantined from Coronavirus at her home in Pennsylvania last month (and probably still is, I assume).
I guess she had a lot of time on her hands to think because last month, she wrote a pretty excellent LinkedIn article on why supply chain leaders should refocus their approach to demand planning now.
Start with Demand
She says that “Inventories, manufacturing plans and supplier purchase orders are all wrong now”. Rather, start with demand. Here’s her logic:
- Demand is anything but normal
- Traditional demand planning models predict demand based on history
- Companies need to develop outside-in models to analyze demand patterns
- The customer order is a weak signal to understand market potential
- Demand patterns have fundamentally changed in all channels
- Supply chain analytics can help
We totally agree.
The rumblings we’ve heard around Blue Ridge point to the indisputable truth that, even after we get back to normalcy(ish), there will be a permanent shift in how consumers buy.
More consumers globally will buy direct from manufacturers. Ecommerce business will continue to roll. The speed and manner in which goods get to customers will force new logistics considerations and related costs.
Too Much, Too Fast for Humans
Humans can’t keep up. We already couldn’t keep up with the complexities of demand planning before the pandemic!
As a wholesaler or distributor, that leaves only one option. Your demand planning teams will need technology breakthroughs like machine learning and neural networks to handle bigger and faster uncertainties in your post-pandemic world.
Spoiler alert: it’s the analytics-minded businesses that will win. We can help.
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