Dealing with uncertainty in your sales & operations process
As the pandemic has made clear, uncertainty is part of the daunting reality facing businesses today. By making uncertainty tangible, LOP.ai can help businesses to plan in an unpredictable world.
A matrics of possibility
We can’t predict the future, but we still need to make rational decisions about how best to prepare. World-class companies are realizing that they need some uncertainty-related metrics to help them to define the best possible course of action. In markets like consumer goods or pharmaceuticals, it is imperative that you can follow demand, whatever is happening in your upstream or downstream supply chain. But balancing risk, probability and cost is no easy task, particularly as business projects and risk projections grow more complex. How can we plan for something that may not happen?
All too often, organizations still ignore the uncertainty factor, treating projections as certainties and thereby leaving themselves vulnerable to surprises. This is because every well-understood element of uncertainty gives rise to a myriad of possible scenarios that are very difficult to conceptualize. It is almost impossible for the human brain to quantify these uncertainties, their probabilities and effects.
Many managers resort to instinct or ‘rule-of-thumb’ thinking in their S&OP. The result can be unnecessarily high ‘just-in-case’ costs, or a reckless lack of flexibility. When the risk-mitigation investment is too high, it takes a toll on profits; while too little investment can cause projects to fail in the face of unforeseen events.
Making informed decisions
LOP.ai and PwC’s new whitepaper outlines how artificial intelligence can enable optimal S&OP by calculating highly complex risk, probability and outcome scenarios. The paper divides uncertainty into four categories, and examines how each one can, or cannot, be addressed.