Understandably, dealing with immediate concerns will be your priority. But once you are making progress, start to design a resilient supply chain for the future. Formalize processes and tools created during the crisis, and collaborate with suppliers to reinforce the entire supply ecosystem. Digitalizing supply chain management can improve speed, accuracy and flexibility - helping anticipate risk, achieve greater visibility and coordination across the supply chain, and manage resultant issues. Coming out of the crisis, take a complete look at your supply chain vulnerabilities and the shocks that could continue to expose you.
Let me sum up the core steps that might help you assess pressure points along your supply chain.
1. Develop a baseline and scenarios
Using data you already hold, work out baseline demand, supply and financial forecasting. Identify internal and external data that could enhance your demand and supply forecasts, aligning high-risk areas and informing the scenarios to be simulated. The outputs should be an approach with clear recommendations on what data and signals to include. And concrete high-risk scenarios based on demand shifts or supply disruptions.
2. Simulate scenarios
Stress test the scenarios through end-to-end simulations. Map and model supply and demand forecast scenarios to financial implications, leveraging your business expertise. This helps you understand the implications of demand and supply scenarios, and provides a quick diagnostic of high-risk areas along the supply chain. So you can develop financial modeling and P&L simulations based on these forecasts.
3. Develop a management Cockpit
The Cockpit should link clearly to financial implications and models. Enabling transparent planning, adjusted for risk scenarios, it helps you create a dashboard with a view over your risks and exposures. Fully tailored, it contains a detailed supply chain and financial mid-term forecast per scenario, including cost breakdowns, top line, bottom line and inventory impacts.
4. Implement the Cockpit action plan
This involves determining a clear action plan per scenario. Done correctly, it will give you an overview of your supply chain and financial impact forecasts per scenario. And recommendations to mitigate the risk of no supply, and your financial exposure. This provides a solid basis for a longer-term outlook on your supply chain to ensure lasting risk mitigation.
Read more about these steps and our insights into resolving pressure points to enhance control and performance – in our new white paper.