Developing better Business Scenarios quicker.
Many companies are struggling to cope with the newly developed market they are confronted with since the rise of Covid-19 and governmental regulations that have kicked in.
This ESCIMCO-insight will give you a possibility to deal with the new volatile reality businesses are confronted with.
Now government regulations are slowly weening off and at a different pace in various parts of the world, companies are confronted with a completely different landscape to do business in. Their supply chain ecosystems have tremendously reshaped: customers, competitors and suppliers have disappeared, customers’ requirements have changed in volume and volatility, suppliers have rationed supply in an attempt to satisfy their customers, regulations have made doing business difficult, if not different. Shortly put businesses live in a new reality that continues to change its shape over years to come. This is an uncertainty that business leaders need to embrace if they want their businesses to survive long term. Hence only the ones that are most adaptable to this change actually will survive.
Business that have adopted a Sales & Operations Planning process[i]), and are executing this in a disciplined way, are in a good shape to survive the crisis, and come out ahead of the remaining competition. They will be the ones that will know how to deal with the new reality that continues to reshape and adjust in a way that gives them a chance to survive.
The various functions within such a company know what has changed and what is happening in their reshaped business ecosystem. With a proper demand planning (or better yet: demand shaping) these companies are in close contact with their customers and know how their demand is likely to change. They are also in close contact with their suppliers so that they know when and where a bottleneck is to be expected. This allows them for example to continue to provide reliable lead times to their customers, or to adjust their resources based on near future needs.
Customers and competitors however also live in this same volatile new reality. Which means that demand forecasting has virtually become impossible: the stable base demand has become completely changed its nature and now is volatile. As a result companies are forced to think in scenarios and decide which scenario to follow until new information has become available. In which case new scenarios need to be developed and decided upon.
When confronted with a situation that threatens 50% of the world’s population Dr. Strange in Marvel’s ‘The Infinity War’ generates and scans in a couple of seconds 14+ million scenarios how to deal with the situaton at hand, and what the consequences for the future of our world will be. In only one of these scenarios he sees that the world can survive, and thus he acts accordingly.
Companies are similarly confronted with a threatening situation of a volatile business environment. Generating scenarios and identifiying which one to follow has become a critical part of the Sales & Operations Planning process, and gives companies the opportunity to shape their own future given the circumstances they operate in.
Creating business scenarios is not easy and requires proper representation of the various functions within the company. Each of these functions bring in relevant information from their area of expertise. The information is then combined into probable scenarios from which the most likely one is chosen and serves as the basis for the course of action. On regular interval in the Sales & Operations Planning process the assumptions of this scenario have to be reviewed. If any of these have assumptions have changed, the process of generating and selecting scenarios based on the latest available information has to be repeated.
Generating scenarios can take a long time. There is however a process available with which you can generate very probable scenarios in very short time. This process is called ‘Lateral Thinking’ [ii]) and was developed by Edward d’Bono. Our general way of dealing with an problem is that someone voices a solution, and all the others in the room start to test that solution to see if this holds up. If the solution can stand the test put onto it, or the one that expressed the solution has enough leverage within the room the solution will ‘survive’.
‘Lateral Thinking’ is a complete different way of dealing with a problem. It actually motivates everyone in the room to think along the same line of a solution and further develop that solution. Once line of that solution can not be further developed, everyone in the room moves on to think along the next line of that solution. Research has shown that working together in ‘Lateral Thinking’ actually give you quicker and better solutions. The same holds true for developing scenarios in the current volatile business world.
The business world has become very volatile and business leaders depend on taking the right decisions to allow their businesses to survive. As part of the Sales & Operations Planning process the thinking-process ‘Lateral Thinking’ should be applied to generate better scenarios in a shorter period of time. This allows more time to select the scenario to move forward with, until the scenario-assumptions have changed and the process starts over again.
[i]The Sales & Operations Planning process safeguards that business plans and the execution thereof throughout a company are aligned to execute the business strategy, assuring that unnecessary activities and resources are kept to a minimum, while continuously adapting to a changing environment.