Senior supply chain professionals are placing a renewed focus on scenario planning in response to a volatile business landscape, but many organizations show signs of “planning fatigue” for all but the most likely scenarios, according to recent research from Board International, a provider of enterprise business analysis software.
That conclusion comes from the “Board 2024 Global Planning Survey,” which in February questioned 1,510 decision-makers across the U.K. (304 respondents), U.S. (302), Germany (302), France (302), and Italy (300). Respondents worked in the finance (631), supply chain (502) or merchandise planning functions (394); across retail (494), manufacturing (498), and CPG (518).
The results showed that 73% of those leaders are taking planning more seriously, naming broad areas of concern around the Ukraine War, cost-of-living crisis, and ongoing supply chain disruptions. More specifically, supply chain professionals are laying plans to cope with a range of key business threats including: cyberattacks (36%), labor shortages (35%), blocking of key supply chain channels (27%), and fluctuating oil prices (34%).
However, despite an emphasis on planning to help navigate those disruptions, many supply chain professionals continue to face challenges planning effectively. The survey revealed signs of “planning fatigue” within many companies, highlighting a 14% decrease in how seriously companies are taking planning compared to last year.
One reason for the trouble is that 77% of supply chain decision makers admit their organization makes planning decisions based on assumptions instead of data-driven scenarios. That pushes many companies to simply scan for potential crises rather than actively prepare for them. For example, Board found that 43% of respondents are discussing rising tensions between China and Taiwan but only 29% are actively scenario planning for an escalation in the region.
That makes it difficult and time-consuming to plan for all but the most likely scenarios, researchers said. In fact, 72% of supply chain professionals usually disregard the most extreme scenarios--known as "black swan events"--when planning, suggesting most companies are leaving themselves open to risk should the unexpected happen.
"Industry leaders face immense pressure to navigate a complex and unpredictable business environment. The need to shift from conversation to action around scenario planning has never been more important,” Jeff Casale, Board’s CEO, said in a release. “But in far too many cases, organizations remain limited by legacy tools that are prone to errors and siloed data -- leaving them vulnerable to costly mistakes and outdated insights. To better compete, they need to be proactive about anticipating disruptive events, modelling calculated scenarios, and aligning strategic, financial, and operational plans.”
