Rapid insights enable agile decisions

An organisation’s supply chain can be a source of vulnerability to resilience, depending on its effectiveness in monitoring the various risks, planning for various scenarios or options, implementing mitigation strategies, and establishing business continuity plans.

Leaders may focus on quick responses during a crisis but may also have to consider building longer-term resilience. However, many of those strategies are expensive, such as diversifying the supplier base, or increasing stock holdings.

One technique that leaders may consider is building several what-if scenarios that can be tested quickly, then prioritising and mitigating the part of the supply chain that are at highest risk or are failing most often. Remain in close contact with suppliers and other providers to ensure continuity of production.

For some organisations, sourcing materials may be a challenge, so they will need to consider diversifying risk by finding new sources of raw materials, nearshoring, or even “dual-sourcing.” For others, it could be large increases in commodity prices, cargo capacity challenges or product-line closures. Regardless of the challenges being faced, organisations need to optimise resilience.

In a business that manages the supply chain and inventory decisions, the planning process might happen weekly. Although, in top resilient organisations globally, planning and execution decisions are made in near real-time based on the data and insight that resides in a platform, such as Anaplan.

To achieve long-term structural resilience , however, organisations should consider measures such as constructing a “digital twin” of the most critical parts of the supply chain, creating and testing what-if scenarios, and ring-fencing a small part of the supply team to focus on building long-term resilience instead of day-to-day supply chain issues.

Regular scenario planning for organisational agility

Recent global disruptions have accelerated the need for proactive resilience, presenting CFOs with a unique opportunity to align with their long-term business partnering goals.

Agile organisations tend to have people plan more frequently, put more of their plans into action and leverage planning technology more effectively. These organisations are more prepared for threats and opportunities, from a position of strength.

Scenario planning helps organisations better understand the present, consider what might change in the future, and explore what those changes could mean for the business.

CFOs and planning leaders have a role to play in reinventing the workforce, creating a knowledgeable, agile, collaborative, and empowered team to lead the organisation. Additionally, re-evaluating systems and processes enables CFOs to set the vision of moving to a business partnering finance function with a strategically driven approach to planning.

For scenario planning to be useful, it needs to be as complete and detailed as possible, continuously updated with the latest data, and most importantly, refreshed throughout with the impact of the strategies being considered.

Additionally, data analytics such as predictive modelling allows organisations to understand the root causes behind problems and predict future outcomes. Organisations should fully embrace analytics and machine learning to detect both abnormalities and opportunities.

Business leaders can experiment with the impact of external events, such as a supply chain interruption, and of internal changes, such as a new product launch to drive revenue or efficiency to lower costs. When a variable in the scenario is changed, the areas impacted by that change are updated instantly so all plans and forecasts are continuously up to date.

The team will need to test multiple futures, brainstorming multiple “what-if” outcomes for what may occur during a defined timeframe. By having interlinked scenarios that are calculated off the base of multiple factors, leaders can see the financial impact of two or more events happening at the same time, as well as understand the impact on revenue and/or costs.

They will then need to monitor events as they unfold to continually reassess the organisation’s strategic direction and assess which of the probable outcomes are most likely.

“Organisations must recognise that when so many things are changing so rapidly, they need to invest in people and systems that will help make sense of that change and respond to it. Organisations need data and analytics.” Gareth Herschel, Research Vice President, Gartner

Outdated systems do not support organisational agility

The pressure of responding to today’s challenges has exposed the limitations of outdated, ineffective planning and forecasting systems. Organisations can no longer afford to work from data they mistrust, or that takes weeks validating to make a business-critical decision.

Being able to crunch large volumes of external and internal data in a modelling environment, eliminates manual spreadsheet links and errors, resulting in improved accuracy. To be most effective, it should be performed in real-time, collaboratively, and in an integrated manner across different levels of the organisation.

Top performing organisations are adopting automated processes that enable faster innovation and execution, while keeping costs down. The organisation should consider investing in or upgrading existing tools and connecting platforms to ensure accuracy of forecasts and projections without compromising efficiency.

By investing in the digital infrastructure, organisations will have increased accessibility and flexibility to be able to build out alternative scenarios. Organisations can also use insights to set thresholds and alerts if forecasts are outside of ranges.

“Organisations have no shortage of data. What they need is insight,” Gareth Herschel, Gartner Research Director. Insights from analytics software that help decision-makers adapt their business strategies based on real information.

For further information, including best practice tips, download our guide