Demand planning is complex. It is based on historical transactional data, market research, surveys and more. So it’s no surprise many demand forecasting teams are feeling frustrated about where to start planning for the coronavirus recovery with so many unknowns and additional complexities.
How do you plan for going from the unprecedented coronavirus downturn that has caused next to no sales for many, to after the restrictions begin to lift and demand recovers? You can’t use your 2019 data as is, because this would force your models and business to assume the world will return to the new normal immediately.
The challenge in front of your coronavirus recovery team is three-fold:
- Closely track and identify when the recovery is approaching so you can re-hire, re-train and re-engage your supply chain to ensure you can meet demand.
- Once the recovery has commenced, follow data closely to track and estimate the recovery rate to inform a new and growing baseline for the immediate post-COVID-19 period.
- Identify as many incremental demand opportunities as you can for your company to recover as quickly as possible.
When you consider many recovery teams will be doing a lot of this work with their company in survival mode and only a skeleton team, it’s a daunting task. To support your team, here are five simple steps to kickstart demand planning and your recovery preparation.
Demand planning for the novel coronavirus recovery in five steps
Times have changed and demand planning has to also. Typical aspects of demand planning like product history, sales data, and seasonality won’t be enough to accurately conduct this process. Teams have to think about external data and events while planning. Implementing these steps to make your demand forecasting process fit for purpose ensures your demand analysis and planning are robust and flexible enough for the COVID-19 recovery
1. Conduct an updated demand analysis that takes into consideration your new position, as well as cyclical demand and anomalies
Business as usual will return, but the route back to it will be bumpy. Two foundational factors have changed for almost every company: your resource and reserves position (and therefore flexibility and margins), as well as being in entirely uncharted territory for demand planning.
You need to take stock of where your company is today and re-assess core elements you’ve potentially not invested significant energy or team time into assessing in years. The key to this will be deconstructing your historical demand data to understand what drives it.
Decomposing your data and conducting time series modelling will identify the role of each of these major demand drivers:
- The exact impact of cyclical trends such as seasons or weekly patterns
- Marketing campaigns by you or by competitors
- Events such as conferences, school holidays, sports games or severe weather
- Currency fluctuations for businesses with extensive international commerce
By investing the time to decompose your data, you’ll be able to identify anomalies that contribute to both incremental and decremental impact. This means your company can create a more adaptive and proactive recovery strategy. This work will require the investment of team time and potentially new data sources such as PredictHQ, but it will have a transformative impact on your demand forecasting in the recovery and for many years to come. McKinsey recently published a useful guide for chief data officers on utilising new data sources, building secure data ecosystems and using both to inform your stress scenarios.
2. Establish a quantitative baseline and your temporally dynamic changing feature for the coronavirus recovery rate
The demand analysis outlined in the previous step will identify your updated quantitative baseline, as well as the levers you can pull to impact it.
You will now need to factor in your recovery rate. This recovery rate will evolve rapidly, and differently for each industry and market. PredictHQ’s chief data officer Dr. Xuxu Wang explains more about how to formulate your coronavirus recovery rate as a temporally dynamic changing feature in this post.
This will establish your estimated baseline for demand recovery and enable your models to evolve accurately as new information becomes available such as restrictions lifting and sectors in lockdown re-opening.
3. Create data-driven triggers to understand and progress through the recovery phases
This updated demand analysis and baseline will guide your demand planning as the recovery nears. It will inform:
- Workforce optimization: How many staff, of which skill sets and what speed you re-engage, re-hire or train staff to meet demand.
- Supply chain strategies: When you would reach out to suppliers with orders and how swiftly to increase these. This will often include identifying which specific products are likely to be in high demand, so you can build resilience into the supply chain for key SKUs.
- Company investment: Changes to your team at this stage to set your business up for its best possible recovery.
These decisions are all time-based, which is better understood in these chaotic times as recovery progress based. Therefore, identifying triggers such as levels of restrictions or consumer confidence or booking or purchasing rates or stages for your team will bring much needed clarity. This will inform decision making company-wide, and take the stress out of switching gears as your demand begins to grow again.
4. Proactively identify demand opportunities and prepare your strategies to make the most of them
While much of the world has to wait for the restrictions to lift, coronavirus recovery teams need to be proactive about identifying other catalysts of demand beyond the general baseline demand, which will almost certainly be lower in the immediate pandemic aftermath. Hence why this process began with exploring the additional factors that can be harnessed to drive incremental demand for your business.
One clear indicator of demand recovery will be the rescheduling of postponed events as well as the scheduling of new events. These are useful because not only are they demand opportunities for your company, they also represent how communities are responding to restrictions at scale.
Plus, they will cause demand for many industries and are thus an opportunity, but only for prepared companies. For example, event impact on coronavirus recovery demand will include:
- Conferences and expos are likely to face attendee caps, but will recommence. PredictHQ is updating all of our event rankings to ensure our customers understand the reduced volume of attendees and will continue to verify and update events as the coronavirus recovery rate does.
- Key observances that people gather with family and friends for as this will impact food retail and transport, as well as potentially accommodation providers.
- Sports games have always been high impact drivers of people movement. While the sports industry won’t be able to fill their stadiums for a while (we will be publishing a blog post on sports recovery shortly) the impact on food retail, food delivery, transport, consumer packaged goods from people gathering at each other’s homes to watch the game or match has always been sizeable and is likely to grow.
- Community events such as fetes, fun runs and street fairs will have to maintain social distancing rules but will return and provide people with a much needed opportunity to connect and have fun.
5. Prepare your baseline recovery strategy with multiple reviews and opportunity to iterate as needed
No demand planning is complete without revision and assessment. The Coronavirus recovery is going to be an intense period of significant change, so you will need to review your demand forecasting and associated plans much more frequently than you would otherwise.
Establishing cross-functional review teams that can understand, analyze and act on new information will be critical. It may well require a wide range of staff, everyone from your data science teams tasked with forecast modelling, as well as operational staff who can provide feedback from the front line.
Making the most of your demand recovery planning
It’s critical to recognize that different markets will recover at different rates. Countries, states and cities will vary in how swiftly they bounce back, and each industry will have its own recovery rate and challenges.
To tap into the power of events as detailed above, it’s worth investing the time to work with the PredictHQ crew to correlate your historical transactional data with our verified and ranked event data so you can identify which events will drive demand in the recovery and beyond. Get in touch with our team to get access to the event categories and cities you need to understand better.
As restrictions ease and demand recovers, we will begin to share regular updates about the rate of events being rescheduled or new events being organized, as well as some of the highest impact events or clusters of events that are new each week. Make sure you receive these updates by signing up here.