Refining planning capabilities for Fast-moving consumer goods (FMCG) companies has been a way of life for many years – one of the permanent results of COVID-19 is that the rules of the game have changed. If you used to think your planning capabilities were good enough, now may be the time for you to reassess. Both sides of the Supply and Demand equation have changed:

Demand-side: Uncertainty has always been something which supply chain professionals have had to contend with, the difference now is the intensity of this uncertainty. The word “unforecastable” entered the vocabulary of our Supply Chain Clients at a frequency which we have never experienced before. Who could have predicted the phenomenal peaks in Toilet Paper, Pizza and Paracetamol which were well publicized, but also spikes in less publicized goods such as Bread Machines, Dog Food and Weight Training equipment, and also the decline in Luggage, Bridal Wear and Gym Bags?

Supply-side: As never before we are experiencing disruptions in the Supply-side, whether that be disruption in goods or severe reductions in manpower, this change is turning long-held beliefs and practices upside down.
Combine the problems on the two sides of this equation and you have a new Planning Cycle to master. This is not a temporary situation, so master it fast.

Efficiency has been the goal in Supply Chain Planning for decades with initiatives based around cost reduction, waste, and service level. The essence of mastering the new Planning Cycle tips the balance away from Efficiency and towards Speed, overturning decades of best practice.

This paper will set out the three key elements that will prepare you for the new planning cycle.

When you can’t predict, a good strategy is always to ensure that you prepare yourself to react fast. But how can you achieve this in your Supply Chain? Increasing responsiveness will come down to focusing on 3 P’s:

By adapting to these three key shifts, you will be ready to invest time in developing the necessary breadth of “what if” scenarios. Being able to build multiple simulations from the bottom up will be greatly assisted by:

• Being closer to your supply and retail partners
• Being more integrated with internal teams
• Having better visibility of inventory levels and financial flows

The challenge has moved from working with base case forecasts with constraints, bottom-up simulations covering a larger breadth of factors. Aiming for accuracy is less possible now. Spare no effort in developing your “what if’s” and your simulations, choose the path which reflects your reality today and use the new dynamics and simulations to make the necessary adjustments.

In discussion with a major sporting goods company, before and during the crisis, they were taking actions to improve their responsiveness. Key elements of this were:

• To nearshore their Top Selling items in combination with having significant manufacturing capabilities offshore
• To support their supplier base at the peak of the crisis by honoring every single payment to their suppliers.

The responsiveness which this client has built into their operation has meant that they were able to assure a steady servicing of their clients which directly contributed to a gain in market share. As they gained their market share, the support which they gave their suppliers ensured that as demand rebounded their suppliers were able to prioritize and fulfil all orders.

Empowering your teams to make decisions locally should not be an abdication of responsibility from the centre.
Local teams will be best placed to see their local reality and make necessary adjustments.

They should do so at a pace without concern for the occasional mistake. Making no decision or being too slow in decision making is likely to be more costly than the occasional mistake.

A major client whose business is the export of food products has faced shifting health regulations country by country.

This, in addition to the normal peaks and troughs of commodity pricing, and challenges of demand not being aligned with what nature has supplied.

This client responded by setting a clear Command line that set guidelines on pricing parameters and markets with multidisciplinary inputs from sales, supply, and production executives. The responsiveness, however, was driven from the factories and fulfilment centres that were provided with the autonomy to change production priorities (shift patterns and composition, line scheduling, order prioritization etc.) to navigate profitably through the uncertainty.

To ensure that your teams are empowered to have this improved decision-making capability and freedom to exercise it, the accompanying governance and culture should:

• Strongly reinforce the company values and goals
• Provide clear principles to act as a guide for all local decisions and adjustments to adhere to
• Practice absolute forgiveness for any mistakes made in the pursuit of these goals and principles
• Actively assist and remove roadblocks from the centre which are constraining the local teams
• Promote the importance of collaboration and unity of the team from many different disciplines within the local operation

There are five elements to Mastering the New Planning Cycle, and as we have advocated pragmatism in this article we should offer a pragmatic set of questions to help you assess your readiness for mastering the New Planning Cycle.