The COVID – 19 scenarios have impacted supply chains of many sectors. It started off showing its impact on some areas of Food sectors, however we are fortunate enough that it did not impact the agriculture supply chains. Though, there are scenarios where bumper harvest are shuffled due shortage of labor, for example in India. Some scenarios farmers are required to sells their produce at a cheaper price, not to forget the scenario of false news on impact of virus on meat etc. Even in USA, there are been reports of disruption of meat supply chains. Even many countries are taking measures to minimize the impact of situation on the agriculture produce and people hunger. As quoted by FAO scarcity is not an issues in case of COVID -19, and countries need to adopt making the crops transported to the places where it is needed the most.
Some of the recommendations to counter the current situation include emergency food assistance programs to people with lower wages or those who earn each day to live. Especially in country like India where there is nearly 90% of labor from informal sector it is important that proper food assistance programs are available. Even Governments across the world are organizing assistance programs to people by providing money to sustain the current scenario. There are even cases of people voluntarily distributing groceries for people to survive. However, one of the important solution is to give farmers access to sell their produce. There are scenarios where when a farmer directly came to yard for selling his produce could sell in 3 hours directly to end customers.
Proper collection facilities needed to be established and like Aarogya Setu, (Similar to the app developed by Google & Apple), governments or private companies should invest in creating apps for supporting farmers. Using the apps farmers / consumers can identify where collection centers are available. Farmers can also identify selling locations without travelling far. Not only they are encouraged for selling their products, farmers should also be put under safety net and assessment of each farmers health status needed to be checked via a dedicated apps which can give a clear view of their health conditions. To overcomes the impact of labor availability on perishable goods proper precautions needed to take so as avoid loss to farmers.
Now coming to the companies operating with agriculture and allied products which as reported above have been impacted, it is important that they are effectively managed. When Covid – 19 disrupted the supply chains around the world, it started off impacting the Operational planning processes and eventually disrupting the entire company tactical capabilities. Given these conditions, there are many companies who are thinking of realigning their planning processes by working on their planning horizons and their sourcing capabilities. However, many companies do not operate on an integrated single planning process, rather they operate in a very isolated manner and their main target is to sustain their operations to meet the revenue generation. There are many ways by which companies can achieve their revenue targets by working on different survival strategies. Some of the survival strategies include tracking their expenditures, securing investments, identification of alternate sourcing or realigning their product portfolios or tolling or subcontracting etc.
There are many Planning tools available to manage the supply chains in an industry and can be implemented to meet the requirements. There are many IBP projects which run multi years owning to integration requirements or customer specific business gaps or master data alignment etc. However, given a clean slate companies can start implementing out of the box business models with best practices content. Companies can check the IBP functionalities and assess the gaps and evaluate the potential future path. Bringing Business Planning in to an integrated platform helps achieve reductions in inventory, increasing revenue, forecast capabilities etc., which can be referred from many value proposition reports published by SAP and its partner companies. Now the question is for many companies SAP IBP is a new term and getting into the solutioning might take some time.
Before I can talk on what needs to be done when companies are new to IBP, let me elaborate the full spectrum of SAP IBP. It can be segregated into different modules like i. IBP for Demand which basically used to carry out statistical forecasting and Demand sensing and it also allows to carry out demand review by means of inputs from external sources and consensus demand plan ii. IBP for Inventory is used for multiechleon Inventory optimization iii. IBP response and supply is used for Constrained and unconstrained supply planning and order rescheduling activities iv. Sales and Operations for overall strategic and Tactical decision processes, which do not have any dedicated engine but consists of overall functionalities along with SAP JAM capabilities. It also has abilities to link to Supplier commit with SAP Ariba. There are many good literatures available which can detail out each feature in details and can refer SAP Best practices content on the topic. Besides these modules SAP delivers out of the box planning models, master data, hierarchy levels, key figures and calculations requires for each business process. The default planning area or unified planning areas liked SAP 4, SAP 6 as the names given for each process specific planning area, they can be copied and adopted as per customer specific changes.
To begin implementing IBP, create required Organizational Structure necessary for reporting, identify roles and responsibilities. Align internally on the required decisions points like currency, sales prices, cost-profit calculation. Create necessary data as required by connecting to various SAP or Non-SAP systems. For initial proof of concept it is recommended to use Excel based data inputs to that scenario can be easily created and can invest time in analyzing the processes and procedures instead of spending time on integration requirements and data cleansing or data aggregation mechanism. Once the basic data is inside the system along with organizational data, start exploring the system for basic questions like what is anticipated growth in coming months? Can we extend to new region what would be the impact of such changes? Carry out detailed scenarios for demand analysis be it revenue projections, carrying out what if scenarios, asses the costs on the supply chain by cost parameters for Non delivery cost, Late delivery cost, External procurement cost etc. for your optimizer analysis. To begin with it is easier to see for complete E2E capabilities but it is always recommended to check in initial POC any sample scenario especially the Demand Management.
To conclude the impact virus in the current scenario is an opportunity to realign ourselves and come out prepared to meet such challenges in future without major impact. Hardly anyone of current generation have seen impact of this scale impacting countries and people around the world. Adopting to current scenario will help not only securing the current generation but also build resilience to our operations to sustain years to come.