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Re-aligning demand plans to reflect reality: The importance of demand assumptions in the coronavirus crisis
22 April 2020
By Debbie Bowen-Heaton, Oliver Wight Partner
The last few weeks have drastically reinforced to me and my clients, the need to truly understand the demand patterns of not only our customers but also our customers’ customers. Whilst some businesses have completely flatlined, others have found themselves overwhelmed by a surge in demand (often purely as a result of consumers panic buying). This has put into sharp focus, the absolute necessity for businesses to be able to predict when this type of peak in demand is likely to happen and to have the dynamic mechanisms in place to enable the organisation to make quick, responsive and effective decisions as a consequence.
Those clients of mine who are riding the current storm effectively, all have a strong daily or weekly demand monitoring process in place, allowing them to capture actual demand as it occurs and then compare this to expectations and typical levels of demand variation. But alongside this, they also have the eyes and ears on the ground - ‘demand sensing tools’ to understand the root-cause of changes in demand patterns, and an efficient means of communicating business intelligence changes as they occur. In challenging times like these, sales, marketing, demand planning and demand execution leads should all be tasked with updating assumptions, as well as the demand plan, at least on a weekly, and ideally daily, basis. Failing to do this means losing all control over the business.
Last week, for example, I was working with an organisation which provides essential equipment to health services around the world. As a result of COVID-19 it has experienced a significant rise in demand for many of its products. It was clear that although the company had demand planning capability, the process was inadequate in terms of monitoring and managing the short-term demand. Consequently, it found itself operating in crisis mode. It was even at risk of sending products to low priority customers instead of those healthcare providers who desperately need its products for patients suffering with Coronavirus.
We also recognised that the team had not allocated sufficient dedicated resource to manage the short term, including updating the assumptions or the demand plan on a weekly basis. Decision-making rights and market / customer priorities were not clear and yet this is essential information to help the company decide which customers to prioritise when there is a shortage.
It only took a few hours but after some review and development of process, role descriptions, prioritisation mapping, and alignment on where decisions should be made, the team felt much more confident they would be able to manage the business effectively going forward and prioritise the right customers during the Coronavirus crisis.
How has your business been impacted by COVID-19? Do you have clear mechanisms in place to monitor and manage short term demand?