Competing in an environment of constant change is always a challenge. But when businesses have no idea what will happen next, or when, the sheer scale and risk of operational upheaval escalates – leaving little to no room for error and delay.
Uncertainty may be natural, yet it’s no reason to do nothing until something happens. Dramatic shifts are happening too quickly to reserve strategic planning as a traditionally annual exercise. From minor modifications to profound events, businesses must continuously anticipate risks, disruptions, and opportunities and evaluate how every function, role, interaction, and action can mitigate them, turn them into opportunities for growth and ultimately help to build the resilient enterprise.
Fortunately, businesses are beginning to get the message as they consider the advantages of what-if scenario planning to foresee the possibilities ahead and get comfortable with a level of unpredictability that paralyzes actionable decision-making.
The True Meaning of What-If Scenario Planning
What-if scenario planning recognizes three realities of running sales and operations planning (S&OP): market conditions have already changed, will continue to change, and must always change. By asking “what if” with a disciplined framework of data-driven trending, analysis, and simulation, decision-makers can evaluate strategic and operational alternatives that can challenge the status quo and offer better ways to get business done.
But predicting change is just the beginning. The actual value of what-if scenario planning is the ability to prepare for short-, mid-, and long-term shifts, such as:
- Could entering an adjacent market bring losses that outweigh potential gains?
- What should the company do if emerging challenges require unprecedented operational changes?
- Will changing social awareness, expectations, and values call for new business models, product redesign, or more personalized services?
Technologies that automate and accelerate the entire exercise help ensure forecasting and decision-making are flexible, nuanced, and responsive enough to allow the company to move forward rapidly. More importantly, they open the door to a continuous cycle of integrated business planning (IBP).
A Prime Entry Point for Intelligent, Integrated Business Planning
Digitalizing what-if scenario planning empowers businesses to leverage predictive insights to act strategically, confidently, and courageously. Such an edge can foster a shift in strategy, embolden forward-thinking innovation, or even fulfill unmet customer needs.
When built on a mature, cost-based optimization engine matched with a digital representation of the supply chain , integrated business planning operationalizes what-if intelligence to find the best balance between supply and demand, as well as risk and opportunity. For example, sales organizations can take into account product shelf life and opportunities to sell inventory before the expiration date. Simultaneously, supply chains identify alternative forms of raw materials to define bills of materials that fulfill business requirements better with less risk. Even supply can be pegged geographically to strategically respond to demand across sales channels and within the distribution network.
Technology-enabled what-if scenario planning can provide on-demand forecasts so organizations can optimize their strategies daily, weekly, or monthly. Demand can be prioritized flexibly and aligned with strategic corporate objectives. Supply chain resilience can be evaluated efficiently through real-time simulations and increased visibility throughout the extended enterprise, including external suppliers and distributors. Financial performance can also be assessed and compared against predefined budgets from multiple perspectives at the same time.
From Chosen Scenarios to Live Competitive Advantages
Recent experience with the dynamics and turbulence of uncertainty should compel businesses to rethink how S&OP strategies are created and modified. By tapping into the possibilities of every conceivable scenario, functional and executive decision-makers can discover more resilient, long-term capabilities and bring them to life to better withstand future external shocks.
This is the beauty of what-if scenario planning, whether in times of crisis or calm. With a fresh look at how they operate and respond to change proactively, companies can emerge from any challenge with greater agility, stability, and ingenuity.