Planning vs. Forecasting – Keys to Maintaining Supply Chain Flow

Compliance Alert

The Covid-19 pandemic continues to wreak havoc on the logistics industry, with experts estimating a 30% decline in the global shipping market through May. Supply chains are crawling. Numerous steamship lines have cancelled entire lanes and announced blank sailings. Experts say even more shipping disturbances could happen with very short notice during Q2 2020. There is a possibility that the decline will continue into Q3 2020, and perhaps even longer.

Businesses, from large corporations to individual family operations, are searching for ways to insulate their companies and maximize opportunities in this uncertain time. However, statistics show a frightening 75% of companies are reporting supply chain disruptions. Even more disturbing, an estimated 40% of companies don’t have a backup supply chain plan in place. Without an adaptable supply chain, even the best plans will fail.

New quarantines, limitations, and diversified plans are being announced every day, which makes forecasting industry movement very difficult. Even if the forecasting prediction is slightly off, it can lead to tremendous losses for a company. The greater the forecasting miss, the larger the deficit the company will face.

Today, experts say the best way to protect a company is planning, not forecasting. While forming a plan varies by industry and company, there are some common best practice principles which can help every business succeed:

Protect Your People. It has been said since the beginning of commerce that people are a company’s best asset. This has never before been more evident than in today’s environment. Do everything you can to make sure your employees are protected – get the best PPE available, heed governmental warnings, and sanitize all equipment on a frequent basis.

Assess the Demand of Your Products. What are the products the consumers are saying they want? Set your focus on these offerings and they will generate positive cash flow. Think outside the box and see if there is an opportunity to enhance a product that isn’t in demand. Freeze non-critical costs until the market dictates they are needed and focus on the cash positive products.

Analyze the Current Supply Chain. As different countries impose various restrictions on cargo movement, it is increasingly critical to understand each part of the supply chain. Monitor every leg and stop of the shipping lane for potential pitfalls (e.g. mandatory quarantines, force majeure possibilities, suspension of transit locations). Be aware that the shipping route normally used for your product could be altered or become a blank sailing. The best defense against disruptions is being familiar with and tracking your entire supply chain.

Allow the Supply Chain to Evolve. Many shippers and importers have already begun adapting their process by looking to other origins for sourcing materials and products. Your company should look for alternate materials and products from areas that have not been as affected by the pandemic. Consider multiple LCL shipments or trucking to varying ports to spread out the potential for inventory volume disruption. Locate or relocate on-hand and in-transit critical inventory as close to the major consumer bases as possible.

It is almost a certainty that it will be 2021 before the global shipping community returns to normal operations. Prepare for a post-Covid-19 environment by having a fluid and flexible supply chain. As always, gather as much data and information pertinent to your specific company and create a plan. Taking these steps will help provide stability and maximize cash flow during this unprecedented time.

The global supply chain and logistics experts at TLR are monitoring the turbulent cargo environment. We maintain regular contact with our worldwide partners and carriers to bring you up to the moment information. Please feel free to reach out to us at with any questions you may have regarding creating a plan to protect your people, your product, and supply chain fluidity.

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Heather Kiesel

News & Updates

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