John Brown - Coca Cola

How often have you heard these words during a meeting in your office? “Say what?  Forecast for an unplanned event?  Isn’t that like buying flood insurance in Phoenix?

Regardless of whether or not we choose to plan for them, catastrophes happen. However planning ahead can mean the difference between success and failure when these situations arise.  Let’s look at the recent earthquake in Japan.  Should we forecast for earthquakes?  In Japan earthquakes are a daily occurrence so the answer should be yes.  Is it necessary to forecast for a 9.0 earthquake?  Maybe not, but it happened.  Follow the earthquake with a tsunami? This is definitely a possibility seeing how Japan has so many coastal regions.  Now we need to forecast a third contingent event, i.e. the damage to the Fukushima nuclear reactors and then identify and plan for the global impacts, especially in the electronics and automotive industries? OK, now this is getting ridiculous.

All of the above events happened and they will happen again. The event will probably not be an earthquake and most likely will not happen in Japan. But somewhere, sometime, you can be sure that we will experience another significant disruption to our supply chains.  Take for example, what just happened at the Shell oil refinery on the island of Pulau Bukom near Singapore. This is the company’s largest refinery, which just experienced a major fire and as a result has to be shut down as of 03-Oct.  What will the impact be?  Only time will tell.

So what message is here?  Simply put:  We must know and understand our value chains.  Where the dependencies and what are are the weak points.  What would we do if we lost manufacturing at site “X”, lost supply from supplier “Y”, or were suddenly unable to use shipping route “Z.”?  What if a pandemic broke out in the country where we have our greatest revenue base?  Each company and each value chain has unique characteristics.

We cannot afford to think only in terms of getting products made and delivered either.  We must think about the effects that risk events will have on the demand for our products.  As many have seen, when the economy tanks (also considered to be a risk event), the demand for durable goods declines and  purchasing discretionary items becomes delayed because consumers hunker down for the economic winter, and hope it doesn’t last too long.

I look forward to sharing my experience as the keynote speaker and meeting all of you at the upcoming Supply Chain Planning and Forecasting: Best Practices Conference in San Francisco. As far as Risk Management is concerned, don’t expect a simple answer because unfortunately there isn’t one.  You will, however, learn how to build a framework that can make you more prepared for the unknown – and plan for it.

John J. Brown, PE
Director, Risk Management, Supply Chain Development
The Coca-Cola Company

Hear John’s Keynote Presentation at:

Luis Carlos Rojas - CPF, IBF Speaker, GOODYEAR & Anish Jain, IBF

I recently returned from Mexico City from our Spanish based Supply Chain Forecasting & Planning Conference: Latin American Experiences, produced together with Corporate Resources Management – Mexico City and IBF – New York USA.

As the IBF continues to deliver more International programs, it is clear that many of the challenges we face in the United States are the same challenges that are being faced in other countries, including companies from Mexico.  Of course, they too are dealing with a declining economy, maintaining proper inventory levels, ensuring product is available for their customers when they want it, and abiding by the rules that large retailers, including Walmart Mexico, dictate to their suppliers.

I have to say, it was a bit embarrassing that I had to keep saying to folks, “No Hablo Espanol” (I don’t speak Spanish) at the conference.  However, my newly made friends at the conference were extremely forgiving, which was “mucho” appreciated.  Therefore, although, the sessions were in Spanish, based on my conversations in English with attendees, here are a few takeaway’s:

• A person from the makers of Tecate Beer mentioned that they are just exploring CPFR relationships with one of their customers, but it continues to be slow to develop. However, it helps to share information and business plans when your retail customers are partially owned by your own company.

• Attendees from Coca-Cola Mexico certainly recognize the value of Sales & Operations Planning (S&OP) and how it can bring significant benefits in terms of profitability, long-term visibility of the business, and competitive success.  However, they can’t seem to find the magic pill to get everyone to buy-in and change their behaviors to support the process…stick to the plan?  Folks, does this not sound familiar?

• Revlon Mexico leverages the demand data from Revlon USA 6 months after launch in the States.  Although, different cultures have different dynamics, it provides Mexico something to go on during consensus forecasting and inventory planning discussions.

• Another, “surprise, surprise” common in the States is many companies that are trying to get their S&OP processes off the ground, continue to struggle with having the right data at the meeting.  Again, no different from many companies in the States.

Anish Jain, IBF & Jesus Campos, CEO, Corporate Resources Management

Furthermore, although the sample of attendees at the conference did not represent Mexico on a broader level, I was impressed with how hungry they are for knowledge to implement or improve their demand planning, forecasting, and supply chain planning processes to stay ahead of the competition. And you also have to thank their bosses/ senior management for recognizing the value of such an event.  As I said in my opening speech (which was translated to Spanish) it is the best companies that continue to invest in their people in terms of professional development, training, conferences, certification, and programs that provide access to learn how others are handling the business in this never seen before, fast changing market place.

Please share your experiences, that will surely encourage others to share theirs in an effort to help us all grow! Your comments and input on the challenges you’re currently facing in demand planning, forecasting, S&OP, and supply chain management are sincerely welcome.

Anish Jain
Managing Director
Institute of Business Forecasting & Planning – IBF
New York USA