2014: Do You Know VUCA?
When I started arguing with companies about the relevance of Demand Driven tactics eleven years ago, I had to explain the volatile business environment at some length.
“Today’s environment is increasingly volatile, uncertain, complex, and ambiguous, so we need to develop supply chain agility and resilience. It is illusory to think you can address the challenges facing your company by focusing on improving forecast accuracy. The environment is less and less predictable, so you need to develop agility in your operations.”
This speech was politely received. Some agreed intellectually, and a few embarked on the Demand Driven tactics adventure, but the majority continued to work on forecast accuracy and reinforced S&OP process discipline.
2022: The VUCA We Know, Thank You, But How Do We Go About It?
Brexit, Covid, two US presidential elections, a blockade of the Suez Canal, and a war in Ukraine later, when with a company we broached the subject of the volatile business environment, we came across as open-door busters.
“Of course, we know we’re in an unstable environment, and that we need to develop our supply chain resilience and supply chain agility.”
There was no longer any need for convincing on this front; we now had to convince people that Demand Driven tactics and Intuiflow software provided practical and effective solutions for developing and equipping this agility.
2025: The Era of Extreme VUCA?
The beginning of 2025 is shaping up to be a very uncertain and probably chaotic time for business. Whereas the volatile business environment of recent years took place in a more or less codified business environment governed by rules, it seems that the rules could be shattered overnight.
Customs tariff or not? How much? When? Energy transition and sustainable development: pass or fail? Which regulatory bodies and laws still apply? What geo-political developments will there be on the five continents in the coming months?
It seems that with this acceleration of change and uncertainty, we’re entering an era of extreme VUCA. If some believe that predictive analytics in supply chain will provide the solution to adapting supply chains to this turbulence, good luck to them!
The Role of Supply Chain Leaders in Navigating Extreme VUCA
Supply chain leaders must adopt a more dynamic approach to operations planning S&OP. The ability to quickly adjust strategies in response to market fluctuations is crucial. Organizations that rely on outdated forecasting methods and rigid planning cycles will struggle to keep up. Instead, leveraging real-time data and predictive maintenance strategies can help mitigate risks and improve decision-making.
By implementing advanced supply chain predictive analytics, companies can enhance their ability to predict future demand and adapt to sudden changes. Chain managers must work closely with cross-functional teams to ensure seamless integration of demand forecasting techniques into sales and operations planning. This collaborative approach allows businesses to maintain optimal inventory levels and improve overall inventory management.
The Importance of Real-Time Visibility
In today’s volatile business landscape, real-time visibility into supply chain operations is no longer a luxury—it is a necessity. Companies that lack real-time data access risk falling behind competitors who can make informed decisions instantaneously. With technology-driven solutions like Intuiflow, businesses can gain better insights into supply chain trends, improving their ability to respond to disruptions effectively.
Real-time visibility also supports financial planning by ensuring accurate tracking of resources and expenditures. Organizations can optimize costs and allocate budgets efficiently, reducing financial strain caused by unexpected market shifts.
Prediction Models: A Game-Changer for Supply Chain Resilience
Prediction models powered by artificial intelligence and machine learning are transforming supply chain management. These tools help in predicting future demand fluctuations, identifying potential bottlenecks, and optimizing logistics networks. By integrating chain predictive analytics into business operations, companies can proactively address challenges rather than reacting to disruptions after they occur.
Advanced prediction models can also enhance customer demands management by ensuring that inventory levels are maintained efficiently. Businesses can avoid stockouts or excess inventory, leading to improved customer satisfaction and operational efficiency.
Enhancing Cross-Functional Collaboration
One of the key aspects of a resilient supply chain is effective cross-functional collaboration. Supply chain leaders must work closely with finance, sales, marketing, and operations teams to align business strategies with market realities. This alignment ensures that decision-making processes are not siloed but instead benefit from diverse perspectives and expertise.
Cross-functional integration also strengthens the effectiveness of sales and operations planning. Companies that embrace collaborative planning processes are better equipped to adapt to shifting market conditions and customer demands.
How Can Intuiflow Help You?
There is no magic; Intuiflow software will not help you avoid customs duties or the drastic changes in demand plans, lead times, or costs inherent to market events.
Where Intuiflow software can, for example, help you navigate these turbulences:
- Limit overreliance on forecast accuracy – When everything is unpredictable, this is not the issue. Demand Driven tactics have proven effective for this, as illustrated in our recent article on DDMRP Buffer and Forecast Reliability.
- Continuously adjust the supply flow to changes in demand – You cannot afford to wait for the next planning cycle to adjust. End-to-end visibility and supply chain agility are essential to ensure real-time alignment.
- Ensure continuous S&OP for rapid decision-making – A rigid S&OP process will not work in extreme volatile business environments.
- Reconfigure the supply chain when necessary – Facilitating the evolution of the operating model when new alternative flows are required.
Are You Ready?
More than ever, supply chain management needs to be constantly adapted, as much as possible in real time, to changes in actual demand and flows.
If your supply chain management methods are based on a rigid ERP system, a heavy reliance on forecast accuracy, an S&OP process that takes weeks, manual data reconciliation, and Excel at every level, you may not be in the best position to cope with this extreme VUCA.
If you’ve deployed Demand Driven tactics and digitized your management with Intuiflow software, you’re undoubtedly better prepared, but it’s not a foregone conclusion either – hang on to the railing, it’s likely to be a bumpy ride…
