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Capacity planning: 7 guiding principles to forecasting resilience

This blog post has been contributed by John Lawrence, VP Global Consulting, SGK.

The COVID-19 outbreak has created a significant shift in consumer behaviour that will impact CPGs, health organisations, and retailers in the coming months. Consumers have stockpiled what they believe to be necessities whilst considerably reducing consumption of what they see as nonessential items.

The fragility of forecasting demand and by extension capacity planning to manage peaks and troughs that are out of cycle with annual trends have already become a focus for brand managers and marketing content agencies globally.

As we move out of activating business continuity plans and strengthening our marketing resiliency through collaboration capabilities, it is incumbent on all organisations to fall back into “business as usual” to manage future capacity as soon as possible.

Brands shouldn’t wait for issues to develop or the market to point in a clear direction before making plans and taking action. Instead, follow a forecasting action plan and behaviours that define scenarios, monitor customers, and plan for marketing content volume adjustments.

How is your long-term forecasting strategy changing in the current environment? Are you prepared for unconventional consumer demand and the potential for peaks that may come at a later stage as new product innovations and promotions are reprioritized?

And most importantly, what must we do today to support the uncertainty?

  • Transparency & engagement: Stay close to your marketing supply chain and agency partners and create transparency. Regular forecasts between brands and agencies are important to ensure appropriate capacity to support the work. There is a clear relationship between forecasting and capacity to deliver that is amplified in this scenario.

    Looking back is always a useful guide, but don’t overlook the possibility that past demand may not be relevant to future-demand predictions. It needs a constant filter. Even the best forecasting requires an agility percentage ratio. On this front, we see a variation from brands with clear sight of demand and others with limited to no sight at all of their demand forecasts (low versus high ratio variation). Agility will be required by all but can only be applied with shared and proactive engagement.
  • Time horizons: Assess realistic final-customer demands. Foreseeing customer wants, their most acute needs, and behaviours will be extremely challenging in a constantly evolving environment. Levels of certainty regarding forecasting can only be estimated; however, even this visibility will support delivery. For example, we see global CPG brands we work with providing percentage levels of certainty against forecast based on an agreed time horizon—the closer to the required deliverable, the higher the percentage of certainty.

    Variation can be a +/- percentage, per the agreed-upon agility ratio defined by each brand, business unit, and agency your mutual statement of work (SOW) and service level agreement (SLA). These ratios define theoretical best, worst, and moderate percentage scenarios that could play out during an agreed period from the perspective of marketing content creation. Your industry, brand, and channel turnaround requirements place emphasis on how regular your forecasting updates should be.
  • Consumer focus: Adjust channel and brand focus by scaling up for categories in high demand and slow down for categories seeing or anticipating a temporary decline. Accelerate production of SKUs and formats required for channels and products facing surging demand.

    The use of prioritization and capacity tools will be required. This is common to any production planning environment and particularly noticeable as most brands focus on their hero and basic ranges instead of new product development or more niche ranges at this time.
  • Availability of agency partners: For agency partners, make your account managers available for real-time, spontaneous client conversations. During any crisis, human beings expect and need a new level of closeness and more frequent communication. Collaboration during unexpected demand fluctuations is a critical behaviour, and account teams form a vital bridge between brand and agencies to achieve mutual goals.

    Work closely to overcome challenges and pain points, offering creative solutions to an unconventional scenario—this is a great time to innovate within your working relationships. Manage your promises by setting realistic expectations about service levels, delivery dates, and team availability for physical engagements, such as project kick off meetings, press checks, photo shoots, and so on.
  • Use your network: If you need spare capacity, use your broader regional and global outsourcing capability to manage the spike (where possible). Optimising delivery begins with ensuring employee safety. This includes sourcing and engaging with your organisation’s crisis-communication teams to communicate clearly with employees about infection-risk concerns and options for remote and home working where possible. We are at different stages as countries and regions, offering the opportunity to move work around your networks accordingly.
  • Sustain and learn: As the situation returns to normal, maintain the above behaviours as they are best practices that should be adopted regardless of situation. Processes and tools created during this crisis-management period should be codified into formal behaviours. Over time, stronger supplier collaboration can likewise reinforce the entire marketing ecosystem for greater resilience.

Ultimately, the creation of marketing content follows the principles of any manufacturing or production process. Every process we have is a result of another process—we are part of a chain. With increased visibility comes the ability to support and manage requirements whether through scaling or managed intake and delivery processes wherever you may operate in that chain.

Closed offices, closed studios, disrupted supply chains, greater demands through adapted working environments are the real-life experiences of marketing agency teams globally today. This is likely to be a reality for the next 3 to 6 months as mandated country restrictions are tightened in some areas and relaxed in others.

Agencies that have implemented these new ways of working will remain ready to adapt further and share capacity across regions as the situation changes. On a personal and team note, we are thankful to our own SGK leadership and operational teams for making such an amazing transition ourselves.

CPGs, health organisations, and retailers are playing a critical role in supporting their consumers and society as a whole through this pandemic. Managing marketing ecosystems and content paths are a tactical must in achieving those objectives, connecting your brand benefits and values to your consumers when they need it most. Brand marketing and agency teams sit centre stage in how customers perceive your brand during this critical time. This swiftly evolving situation requires transparency and shared solutions.

As Alan Jope, CEO of Unilever has said:

“While it is difficult for even the most ardent optimist to stay positive, there are some signs that we are beginning to mobilize at the speed and scale to lift ourselves out of this crisis as quickly as possible.”

The pace of recovery from COVID-19—and, consequently, the patterns in consumer demand—will vary across countries and categories. However, as Alan Jope highlights, we are mobilized and lifting ourselves out of this crisis.

Whether a peak that pushes requirement beyond capacity or a trough at the most unexpected time, it is clear that forecasting and capacity management will be critical to successful relaunch activity and marketing operational delivery moving forward.

Stay safe.

About John Lawrence: John brings 17+ years of experience in brand marketing--both agency and brand side. Operating as a consultant for global, regional and national organizations, he provides Continuous Improvement (CI) projects from consultancy through to implementation across channels. As a member of the SGK Consulting Team, John has strategically led initiatives for some of the world’s most prominent brand owners to increase their speed-to-market, reduce costs in the marketing supply chain and better utilize their internal and external resources.

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