Demand planning in a VUCA environment

 Corey New

Corey New ,
Principal at Deep Water Point

“Predictions are usually difficult, especially about the future” – Yogi Berra, New York Yankees Catcher

I am sure many of you remember the "I Love Lucy" episode when Lucy and Ethel are working in the chocolate factory. In addition to being a hilarious episode, it is a microcosm of the challenges in a supply chain. Managing supply chains is difficult without adding the complexities of a pandemic. Forecasting, inventory, pricing and transportation, and many others, remain fundamental drivers in supply chains. Most scholarly textbooks and articles may devote a chapter or paragraph on concepts and drivers in the current uncertain and ambiguous environment. It is like playing the "Beer game" blindfolded, “Little's Law” where time is an infinite variable and “Theory of Constraints” where bottlenecks are like playing a game of “Whack-a-mole”.

For those unfamiliar with the acronym, VUCA, it is "volatile, uncertain, chaotic and ambiguous".

What can we learn from wartime supply chains in Iraq and Afghanistan and apply to the vaccine distribution? In Iraq in 2011, the challenge before my team and many others was how to redeploy over 250,000 pieces of military equipment, containers and supplies from 86 forward operating bases while simultaneously resupplying all supply classes in support of combat operations. I personally learned a valuable lesson that whether we were moving cotton balls, concrete barriers or flu vaccines, the disciplined process to manage requirements, capabilities, priorities and capacity is what creates logistical success in VUCA environments.

Here is a simple question… are priorities needed if capabilities exceed the requirements? Not always obvious, but the answer is no. If a warehouse can fulfill 100 orders in a day and they receive 85 orders, there is no need to prioritize because capacity is greater than demand. Unfortunately, this example is very uncommon. Priorities are necessary and vital in a VUCA environment where requirements exceed capabilities. It seems so simple, but establishing clearly defined priorities of any commodity, mode of transportation and age category or population (as it relates to the vaccine distribution) drives success.

Additional lessons learned included managing separate processes for planned (forecasted) and unplanned requirements. Allocating transportation capacity for unplanned requirements provided flexibility when priorities changed, or unforeseen circumstances arose. We conducted “Distribution Management Boards” similar to the corporate “Sales and Operational Planning” process to ensure stakeholder accountability, functional alignment and situational awareness. We conducted the board every 24 hours resulting in thousands of commercial and military trucks in convoys all over Iraq each day. This is necessary in a VUCA environment as priorities change rapidly and anything longer will ultimately lead to frustration, delays and bottlenecks. With the right organizational structure, technology and process, I believe this can also happen to manage a pandemic at the federal and state levels.

We followed a centralized management and decentralized execution model to ensure enforcement of priorities of movement, supplies or organizations, while relying on those who managed the capacity (trucks, helicopters and aircraft) to execute daily plan. We understood capacity constraints like travel distance, vehicle speeds, material handling equipment and many more. We knew the amount of time down to the minute required to offload nine large “Texas” concrete barriers from a Heavy Equipment Transport Trailer on an Iraqi highway. I recently listened to a State health official describe how many minutes it took for health worker to administer the vaccine. Over the weekend, the new CDC Director shared her frustration with visibility of vaccine doses within the supply

Right now we are relegated to capacity at the point of vaccination as determining the demand. Capacity and demand are synonymous.

We need to think differently. If a supplier of toothpaste can gain instantaneous visibility of demand through point-of-sale technology at checkout, could we use similar supply chain demand planning concepts with vaccine distribution. Leverage 2D Bar Code technology and use a POS methodology when the syringe is administered into someone’s arm. Forecasting demand in a VUCA environment must use proven commercial supply chain concepts, but also must include a formalized process to manage requirements, capabilities, capacity and priorities. This creates flexibility, agility and responsiveness across the supply chain through a centralized management and decentralized execution model.

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