The Covid-19 pandemic had brought with itself a great ordeal for the supply chain community. Though the phenomenon caught us unaware, the inherent resilient nature of the supply chain fraternity turned the tide in its favour in no time. This is the POWER of being agile & adaptive and the pandemic has taught us this the hard way. Atul Barve, Director – Integrated Planning (B2C & B2B), Signify India (formerly known as Philips Lighting), through this article, shares his crucial demand planning learnings & experiences gained during the pandemic…
Supply chain professionals across the globe are challenged since Dec 2019 due to unprecedented and completely unpredictable phenomenon called COVID-19. From supply perspective, in Indian electrical & electronics industry, it started in the beginning of 2020 with component shortages due to dependency on suppliers outside India. Many companies struggled to manage continuity due to this unforeseen challenge. The wheels on the shopfloor stopped whirling. Factories went for unplanned closures. Huge backlog of orders got piled up at component suppliers resulting in shortages and stoppages of production for many of the companies for few months. The slowdown of production in semiconductor industry in H1-2020 and then sudden demand surge in electronics goods created huge demand supply gap, which is likely to continue for longer period. While we had concerns in supplies, demand pattern in India has seen huge transformation.
Let us take a closer look at it…
DEMAND SHIFT IN INDIA MARKET
From India Market perspective, the scenario changed from last week of March 2020 with the initiation of complete lockdown. It posed a challenge for all demand planning professionals to change their conventional way of working and adapt new reality. Here is my take on this shift…
Shifting of demand due to temporary change in demographical pattern: huge number of migrant labour going back to their villages shifted some demand of FMCG products from Urban to Rural.
Change in demands of customers: Due to work from home and study from home concepts, many of the bread winning members of home and students were forced to stay at home. It gave a huge boost to industries like Electronics Goods, Furniture, UPS, etc. Even in Lighting Industry, we observed huge spike in demand of specific category of lamps like emergency lamps in rural areas and desk lamps in semi urban areas.
Online sales saw a huge spike whereas Modern retail sales went down.
Due to fear psychology, there was a spike in bulk buying and big pack shopping across the product lines.
What did this demand shift mean for demand planners?
This VUCA scenario threw a great challenge and opportunity for demand planning community, specifically for electronics industry where on one side there were challenges in the back end for supplies and on other side sudden shift in demand. The conventional historic averages, statistical forecasting based on past data or inside out sales plan took a back seat. Demand planners were pushed to look at new parameters. They were pushed to gather more recent data points on ground.
Quick transition from use of historic sales data to futuristic and actionable outlook for demand planning
Shift from demand forecasting from state level to district/zone level
Demand planning based on prediction of possible Covid 19 impact on 741 districts in India
Analyzing trends of lockdown pattern in various market
Shifting demography due to pandemic and hence shift of demand plans accordingly. For ex. Higher sales of low-ticket items in the districts where labour population is migrated for short term duration
Temporary shift of demand fencing (firm demand plan) from months to weeks for factories or supplier to ensure optimum working capital in overall supply chain.
So key is to remain adaptive and agile. This pandemic has taught us a lot… going out of the bookish knowledge or conventional planning methods (which worked well earlier) to inventing and adapting new ways of working.
I am sure nobody wants any further wave to come but if at all it happens, demand planning community is well prepared now to handle these uncertainties.