Budget Planning 2021: 9 Supply Chain Things to Know

The booming e-commerce marketplace opens access to new segments of consumers seeking direct delivery on a growing list of staples previously procured through brick-and-mortar channels. Meanwhile, end users seeking personal protective equipment, sanitizers, cleaning supplies and other products required for contagion response will create new revenue streams for organizations nimble enough to shift supply chains and adjust processes to meet fluctuating demand.

Responding in this environment, executives who prioritize supply chain strategy will be best positioned to not only meet and exceed customer expectations, but also control costs that jeopardize bottom line profit.

Looking ahead to the remainder of 2020 here are some looming trends I expect to emerge, as well as recommendations for how a supply chain master can continue to control business performance, even through the disruptions that are bound to happen in 2021.

4 Supply Chain Predictions Influencing 2021 Planning

Looking ahead to the remainder of 2020, ongoing marketplace awareness informs a few predictions that will determine priorities for 2021.

  • The recovery will be a saw tooth, with an upward trend. There will be ups and downs as economic activity re-emerges, particularly in regions that experience fluctuating levels of COVID-19 outbreak and control. Companies have to really protect themselves for that and plan alternative ways to serve their customers and compensate for workforce disruption. As Gartner points out, the path to recovery will be unique for every organization as they respond, recover and renew.

  • Companies that deal in non-essential goods will struggle, and they need to be the most agile. Consumer spending will continue to shift, largely toward e-commerce channels. There’s going to be fluctuating demand for hand sanitizers, cleaning products and personal protective equipment. A lot of companies can maintain workforce in the manufacturing realm by pivoting to secondary products that support pandemic response and recovery. Expect demand spikes, particularly related to the back-to-school and Christmas shopping seasons. Organizations impeded by shipping limitations, will depend on a nimble supply chain to access available shipping channels.
  • Boards and executives will expect robust contingency planning to deal with disruptions. Contingency planning is one of the most critical pieces that informs everything else about how you respond to another likely disruption, whether it be a COVID relapse, an unexpected stop in production or depletion of raw materials.
  • Companies that invest in process and technology during this time will see the best long-term growth. These companies will be in the best position to take advantage of consolidation in their respective industries.

Five Recommendations for 2021 Planning

Organizations creating budget plans for 2021 should consider these recommendations to maintain customer service levels while controlling costs.

  • Treat the 2021 budget as a range and be prepared to adjust as conditions on the ground evolve. In many ways budgeting will be a guessing game, and companies need to put together a plan based on contingencies. When revenue doesn’t meet expectations, have a plan for cost-cutting measures to implement. If earnings swing the other way, identify investments to make. Executive leaders must commit to evolving cost management so that scarce resources and funds consistently flow to the most valuable business outcomes.

  • Leverage supply chain resources to determine corporate impact (cost, service, risk) of plans produced by the other departments (sales, procurement etc.). Experts working in supply chain possess analytical capabilities and a global picture of an organization’s total business. This supports acute awareness of the control levers that affect cost and service. When you put supply chain masters in the role of trusted advisor, they are in the best position to help those executives and leadership boards navigate tumultuous waters.
  • Take a partnership approach with all relationships. The supply chain is dependent on everyone succeeding. Often, by working with an expert supply chain partner you can access end-to-end transparency that facilitates more opportunities across your network. That visibility allows you to be a better partner to your domestic and foreign vendors. With good clear communication around sales information, time-in-shipping data and other key performance indicators, you can help predict when you will need to reorder supplies and track trends that can help drive production guidelines. This supports a workflow that keeps your shelves stocked with the right items, and customers happy with the efficiencies of their orders.
  • Aggressively evaluate the entire supply chain and take an open-minded approach to the long-term structure. Ensure the supply chain strategy aligns with corporate strategy – and leverage analysis and expertise to inform that strategy. This is especially important as e-commerce demands continue to drive increased expectations for flexibility in customers’ end delivery options. You may be getting product shipped out the door – but are you making any money on it?
  • Low water exposes a lot of rocks. Take the opportunity to evaluate internal processes and systems. Balancing resiliency and efficiency, supply chain leaders can secure their networks. A recent Gartner survey revealed that only 21 percent of respondents believe their supply chain is resilient enough to provide “good visibility and the agility to shift sourcing, manufacturing and distribution activities around fairly rapidly.”

A global pandemic changed priorities for many supply chain leaders, elevating the agility of their network alongside the balance of service and cost. As Gartner points out, more than half of its survey respondents expect their supply networks to be “highly resilient” within two to three years. 

Master your 2021 Budget Planning

The first half of 2020 provided painful lessons for many organizations, some of which still face jeopardy. The businesses that quickly adapted to dramatic marketplace changes have often done so through an effective strategy for risk management. 

Future success relies on your ability to assess potential risks that exist in your network and create alternative ways to plan demand response. Contingency planning today, especially in light of network weaknesses revealed in the past six months, will position your business to not only weather the storm but also seize growth opportunities.

While you are in the midst of managing your business, a supply chain master can provide the risk assessment and strategic planning required to establish a flexible responsive network. With that, you will always satisfy customers in the most cost-effective way.

Supply Chain Visibility Needs Determined by Business Objectives

However, in the wake of a global pandemic where both short- and long-term effects are still emerging, there’s limited value in a rear-view look. This is especially true as North America emerges from a stay-at-home state. Organizations need a rear-view look, as well as in-depth awareness of current activity and the financial implications. Add contingency scenarios to requirements for companies pursuing supply chain visibility that can support the emerging “whack-a-mole” recovery where product demand and service requirements vary widely for customers across different geographies, depending on ebbs and increases in COVID-19 infection and business closure.

COVID-19 brought greater attention to the value of end-to-end supply chain visibility. Solutions for achieving that visibility are widely available, but not all solutions are equal. And not all visibility is the same. Your business objectives determine the level of visibility you need to make the best decisions.

What is Supply Chain Visibility?

Supply chain visibility means different things to different people. It covers everything from the physical “Where is my shipment?” to the virtual, like “Which customer/SKU combinations are profitable?” Depending on your role in an organization, you may be more concerned with the operational aspects of visibility or the more strategic. Either way, you need the information you need when you need it.

Beyond physical and virtual visibility separation, there’s the difference between real-time data and real-time access to data. When it comes to data, there is a lot of it, and it is coming from a growing diversity of sources – often separated within your organization by operational and functional silos.

An expanding list of technology-driven solutions offer varying degrees of visibility, and you can gain improved supply chain clarity through internal efforts and external partners. In weighing these options, it is important to consider:

  • Which solution is best for your business objectives?
  • How do you leverage information in business decisions?
  • What investments provides the greatest return?

Supply chain visibility can be complicated. It doesn’t have to be.

Peeling back layers of visibility, you gain an understanding of the information you need to plan and execute your day-to-day activities as well as adjust your strategy; react to changes that impact performance; and enhance your service to partners and customers.

Visibility, Mapping Key Disruption Planning and Continuity

The U.S. Armed Forces are a role model for logistics, and planning is critical to the military’s risk management focus. To quote General Dwight Eisenhower “Plans are useless, but planning is indispensable.” Companies have to be in a continuous planning mode, as we move through the recovery to account for these shifts in demand.

Effective planning, like military leadership during crisis, relies on visibility to a single source of information. When you have to go to multiple places to piece a story together, it takes time, and time can be costly.

Organizations that map their end-to-end supply chain create one foundational information source that can support business operations through disruption. As noted by Dr. Yossi Sheffi, director Massachusetts Institute of Technology Center for Transportation and Logistics, this requires supply chain mapping that goes beyond identifying company suppliers. It requires physical locations of supplier plants and warehouses. “For large and complex enterprise with thousands of suppliers around the globe, mapping is a massive exercise that cannot be done on the fly,” he says.

Likewise, mapping cannot be accomplished without awareness to all activities across your supply chain.

Mastering Supply Chain Visibility

Deep, multi-layered visibility is a fundamental ingredient in elevating your supply chain to its optimal performance. We created Mastering Your Supply Chain: The Layers of Visibility to help you uncover ways that your supply chain information can have a transformational impact on your bottom-line performance and your customer service.

Inside differentiate visibility options in the marketplace to help you identify solutions that best fit your needs. Read it today to learn more about how individualized technology solutions give you visibility to rate savings, optimization opportunities and behavioral changes across the organization that reduce cost.