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Ruth Abbott, senior business consultant with John Galt Solutions, discusses the evolution of scenario planning, and how it’s being “supercharged” today by technology.
Scenario planning gives companies an “element of control” in a world of constant change, complexity and disruption, Abbott says. It entails the creation of multiple possible situations, and “pulling different levers” to understand the impact of particular decisions on the end-to-end supply chain.
Elements fed into the model might include current topical events such as tariffs, war and the closure of major transportation routes. Planners can also drill down into more local events, such as changes in promotions and production lead times, and the sudden receipt of a big customer order. By testing out various options in a virtual manner, businesses get the “confidence to take the next step.”
The COVID-19 pandemic motivated companies to move away from traditional spreadsheet-based planning toward the adoption of “more mature solutions,” Abbott says. Modern-day scenario planning brings together all functions of the organization, including supply and demand planning, finance, marketing and procurement. And, access to timelier, more realistic data makes possible smarter and faster decisions across the supply chain.
Artificial intelligence and machine learning are key drivers of today’s scenario planning tools, capable of analyzing huge amounts of data. But even as they “supercharge” planning, they should be approached with care, Abbott says. Companies should clearly understand the problem they’re trying to solve, before jumping into the technology.
Scenario planning is a team effort that allows planners to strike the right balance between sometimes contradictory objectives, such as cost optimization versus sustainability. “It gives people the ability to have really useful conversations from across business,” Abbott says. “It’s about bringing people together to understand outcomes.”
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