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Planning Integrated by Scenarios: What it is and How It Helps Cope with the Impact of COVID-19

Facing the new realities generated by COVID-19, unknown and not possible to prevent, has required, on the part of the executive levels, a practically immediate reaction and response to lead their teams in making decisions and promoting the direction of their business in these troubled waters. It is a priority to effectively mitigate risks and also take advantage of the opportunities that these circumstances can offer, mainly those who are in certain segments such as Health, Protection and Food.

This has had an impact on the industries by requiring strong business leadership, rather than traditional executive leadership.

Effectively managing the supply chain requires that each business-link of it be comprehensively managed, that collaboration conditions are quickly identified and accepted at each node and that win-win relationships are created from executive levels to ensure synchrony of changes, savings, value generation and speed throughout the chain, in response to the rapidity in which new expectations from markets and consumers have been emerging.

Strengthening the competencies of the management teams, supported by their tactical teams, to manage their businesses through scenario planning has been one of those new demands, now considered a necessary condition to navigate these new waters.

What is ISP

It is necessary to understand scenario planning as an integral part of the strategy generation processes, the IBP (Integrated Business Planning) management process and the short and medium-term tactical processes. Consequently, its name is “Integrated Scenario Planning“, ISP (Integrated Scenario Planning), whose main characteristics are:

  • “Provide a structured framework for organizations to think ahead and manage change”
  • Answer the question “What if …?” and enable senior leadership to consider what future events are likely and important, what the impact would be, and how they might respond to or benefit from the possible situation
  • Identify alternative scenarios with clear assumptions, simulations, roles and responsibilities and with defined trigger points to develop and implement agile responses
  • Provide executives with credible information in real time to facilitate decision-making in short times of uncertainty or in longer planning horizons.

As a process, the ISP must be established in the organization, formalizing its objectives, inputs, managers & roles, sources of information, frequencies of review and monitoring and the deliverables, which will be the action plans decided as a result of the analysis of the scenarios proposed to the direction.

ISP works at two levels: planning and implementation. In the first, one or more scenarios are identified, analyzed and outlined as a response to mitigate risks, leverage opportunities, and define action plans. In the second, the mitigation and / or leverage plan is approved, execution is monitored and results are controlled, to also ensure a learning curve.

ISP, integrally leverages the planning and Integrated management of each business-link in the chain. The integrated management of the chain, now increasingly strengthened in each of its links with the incorporation of integrated planning by scenarios, ISP, ensures effective Integrated control of operations.

ISP Contributions to the Comprehensive Control of Business Operations

Traditionally, a meaning has been assigned to the control of Operations as well as to the control of the execution of Operations of the production and distribution of products. The current meaning, now with a comprehensive scope, provides a holistic – systemic vision and understanding, which links and integrates to the strategic & executive IBP process all the tactical activities of the business, that is, those related to: a) planning; b) programming; c) execution & control. These extend both to the field of Demand (commercial and marketing processes) and to the field of supply or “Supply”.

In the monthly cycle of the management process, (IBP) in its Executive Business Review stage, reviews, questions and approves, in executive consensus, a single company plan, which contains the strategy, decisions and guidelines of senior management .

The single plan, thus revised and approved, is communicated to the entire organization; it constitutes the authorization and is the “trigger” of all the actions or “Operations” of the planning, the consequent programming and its execution & control, both in the Demand (planning, execution & control of the Sale), as well as in the “Supply” (planning, execution & control of Production, Purchase and Distribution).

From this perspective, Operations control acquires an integral scope to the entire business, being now more strengthened with the greater competition for Integrated Planning by Scenarios, ISP, that business leaders are focused and defined to develop in their organizations.

The current practice of excellence implies, therefore, that responsibility for the operations of a business begins at the executive level, which is the one that gives the guidelines and the one that sets the strategy; and it continues at the tactical level, in which it is ensured that these guidelines and strategy are integrated into the plans that will become detailed programs, to then be executed and controlled at the Operational level.

 

Alberto Fonseca

Principal Consultant,  Oliver Wight Latam