Surviving the initial shock of sudden economic uncertainty and supply chain disruption is one thing. But withstanding longer-lasting effects on consumer expectations, supplier capacity and production safety will bring new challenges to consumer products companies, requiring forward-thinking plans to guide decision-making.
Consumer products brands have experienced their share of disruption. Some are caused by unexpected demand and weather-related disasters, which are beyond anyone’s control. Meanwhile, others are self-inflicted when the supply chain is not positioned to respond quickly to changes in vendor capacity, assortment performance and location-specific spikes in consumer needs.
This current disruption is perhaps the most significant in size, scale and duration event that anyone can remember. As quickly as the pandemic spread across different points of the map, retailers began to see some products flying off the shelves while others remained untouched. And this inventory gap continues to widen until retailers can receive the right assortment.
Brands across every category can persevere through this highly challenging time. But first, they need to address today’s massive disruption as a series of interrelated, smaller ones all happening at the same time – financial, consumer and operational.
The three rules to getting ahead to the next phase
The current financial crisis impacts consumers in various ways. Some categories – such as medical-related items, personal care, packaged foods, dairy and household cleaners – have taken off and grown exponentially. And there are others – including luggage, formal and bridal wear, party supplies and beachwear – that have dramatically declined.
These fluctuations will undoubtedly continue to swing back and forth as government restrictions loosen or tighten depending on their containment success. To take advantage of opportunities and mitigate risks of the post-crisis recovery cycle, brands should prepare their supply chain operation to respond to every shift flexibly, sustainably and quickly.
I know, easier said than done in this uncertain economic climate. But brands can set the foundation they need to deliver on consumer expectations – when, where and how products are required – by adhering to three fundamental rules.
Rule #1: It’s better to receive bad news than be left surprised
Bad news may not be welcomed news, but it’s better than being surprised. Supply chain managers need to know what is happening now, predict where the next disruption will occur, and detect a shift in the current situation. And as the economy approaches closer toward a post-crisis recovery, having this information becomes even more critical.
See also: P&G’s New Normal
In times of uncertainty, the supply chain needs to be in constant communication with internal and external value chain partners. Extending planning processes across suppliers, business networks, executives, finance, sales and marketing helps keep the entire enterprise aligned. Every area collaborates, shares information and executes on plans together as one unified force.
This approach allows sales and marketing to optimize their interactions with consumers and retail customers and funnel new-found intelligence back to the business. The supply chain can then work with suppliers to match market needs with the inventory available, production capabilities and capacity, third-party warehousing setups, and transportation carrier services.
Rule #2: The best information for decision-making is always the newest
The newer the information, the better the outcomes. The reason is simple: working with the latest insights changes how decision-makers look at a situation, leading to precise corrective actions.
In the consumer products industry, time is of the essence, and yesterday’s information can be outdated the next day. Supply chains need to be alerted when things are not happening according to business expectations so that they can respond quickly. Intelligence must be received in real time – immediately after it is generated from a transaction, order, sales request, or an alert from any part of the value chain.
With a standard solution, the supply chain operation can run one enterprise-wide view of the truth and focus on what’s important. Data generated from touchpoints close to the consumer is captured, processed, analyzed and shared immediately. This capability helps detect and notify the business network of potential disruptions, while cause-and-effect analysis and what-if simulations support practical corrective actions and rapid response.
Rule #3: Decisions should be made in advance of results
It’s human nature to make impulse decisions during times of stress, but they are not necessarily the best ideas to act on. Everyone has made a choice when emotions were running high and information was limited. Sooner or later, we look back on what we did with either regret or questions on whether a better outcome could have been achieved.
Decisions based on anticipated results, direction, and impacts will be executed faster and more efficiently than those made in the midst of chaos. Potential next steps should be simulated and compared while new information is being received. So, as the supply chain organization begins to look at the tail end of disruption, it can lay out a scalable plan based on in-the-moment, profound insights and predictive analysis of trends.
Integrated, efficient and ready to act
Sequential planning activities and out-of-date information often hinder the ability to navigate through disruption and place for tomorrow. Plans are always good to have, but they also need to be flexible enough to adapt and change to the evolving disruption pattern and results.
Real-time data brings fact-based insights into demand to manage forecasts, integrate intelligence with processes and key partners, and evaluate planning scenarios for optimal outcomes. They can sense change, understand what empowered customers want, and deliver the right products and services – fast. More importantly, supply chain leaders have the company-wide visibility they need to predict outcomes while safeguarding revenue streams, reaching new markets and developing new business models.
John Buckley is consumer products industry advisor at SAP.