In an incredibly dynamic supply chain world, planning generally and forecasting specifically is a tough task.
Gartner analyst Stan Aronow recently ruminated on this topic in a blog post, noting that “There are so many factors that can make us wrong in any time horizon.”
Aronow observes that many supply chain organizations are perpetually chasing their commercial partners to engage and improve the demand forecast. They’re also managing disappointment from those partners when supply doesn’t line up, often due to causes outside the company’s four walls.
Planner skill sets can also be an issue.
“Supply chain planners are often very skilled at mathematics and operational minutiae, but they typically haven’t mastered the storytelling skills required to make business cases for earlier, higher-quality engagement and for making strategic capacity investments to support future demand,” Aronow observes.
That has led some companies to put less emphasis on planning and more on adaptability.
Aronow cites one CSCO who concluded it was better to spend less time guessing about what comes next and more on the ability for their supply chain to pivot quickly.
“This approach can work,” Aronow says, “but only after the CFO and business leaders agree to invest in additional and flexible sources of supply. In the spirit of not letting a good crisis go to waste, a silver lining to this year’s uncertain trade environment is that it has at least unlocked new sourcing options.”
Unfortunately, uncertainty about where tariff rates will ultimately fall has also put some companies in a near-term holding pattern for investments. More complex, capital-intensive industries need to place their bets years in advance.
Aronow addresses the issue of how some companies are able to place large bets while the “wheel is still spinning?”
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As a member of the executive team, the CSCO needs to align supply chain decisions and behaviors to corporate North Star goals and strategies, independent of day-to-day changes in the operating environment, according to Aronow.
He adds that another common theme that surfaces when discussing “unlocks” for decision uncertainty is meeting multiple business objectives with the same investment.
“These outcomes often support improved customer responsiveness, supply resilience and the ability to hit corporate sustainability goals,” Aronow notes.
Advice for the CSCO out of all of this?
Aronow says to start by investing in organizational storytelling skills. Use them to align plans with your company’s longer-term North Star strategies and frame investments in the context of addressing multiple business objectives.
And, he concludes, “while not the primary focus of this exploration, continuing to build collaborative relationships with up- and downstream partners is always a winning play.”
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