Hello. My name is Howard Roddie, UK Services lead with QAD Dynasys. I’m also a keen runner. Today, I want to talk about Scenario planning, also known as “What if” or contingency planning. In order to plan, we need a strategy – Long term. Let me share my Strategy for running.
When I started running, I could have aimed to run a marathon. So, after 6 months I would run a marathon, feel good about it, then most likely stop due to unconsidered scenarios – Injury, fatigue, missing my family.
But I took a different view. Here are my long term goals.
- Year 1 – Run a 10K race
- Year 5 – Run 10K in less than 45 minutes
- 60th Birthday – Run a mile in 7:30
- 80th birthday – get out of bed unaided
By focussing on these goals and planning long term, I have maintained my interest in running despite short and medium-term disruptions – injuries, traveling, weather
The point is, we can’t plan unless we know our goals and have a strategy to reach them. Disruptions are inevitable, but we need to identify them, then plan to deal with them.
Do your planners and schedulers know the goals of your business and the strategy adopted to reach them?
At the strategic level, we plan to use the things we can control to deal with the things we can’t.
We can control our capacity to produce, our marketing, our product evolution… but we can’t control Brexit or climate change. At this level, we would test our normal plan against 2 alternative but extreme scenarios, typically one pessimistic and one optimistic. If we can cope with these, then we can weather most storms.
At Davos in 2018, Canada’s PM, Justin Trudeau said:
“The pace of change has never been this fast, yet it will never be this slow again.”
Australian wildfire, Brexit, Iran/USA troubles… Who knows what will happen in the tactical horizon – 80 days from now.
If we don’t plan “what if?” scenarios we will fail. Planning is all about seizing our opportunities whilst minimizing risk. The only way to survive is to succeed.
Tactically, we can consider many things – Alternative demand scenarios, Supply issues, and procurement opportunities, expanding lead times for fresh product imports. There is a tendency to plan for every possibility, creating many scenarios. At the end, we need to come up with one plan for our business. Tactical planning works best when using a low number of scenarios, but with many factors. If we can do the extremes, our plans will most likely survive anything in between.
Operationally we have to deal with forecast error – Promotions and exports… Maybe additional demand caused by competitors’ failure to plan?
We need to cope with our issues too – unexpected shutdowns, strikes, component shortages. At the operational level, we are using the things under our control to deliver the plan that deals with the things we once thought were out of our control.
This is how I plan to get out of bed unaided on my 80th birthday.