Business Resilience Planning: How to Plan for Uncertainty and React With Confidence

“How do we need to set up and operate over the next 12 to 18 months to ensure the business is resilient, whatever volatility and uncertainty comes our way?”

This is the key question facing business leaders more than ever, as they transition out of a currently necessary short-term, crisis-oriented outlook and consider more strategic responses to new operating conditions. The ultimate aspiration for any business problem owner is to be confident that their business and processes are robust and sufficiently insulated from the numerous external sources of volatility outside of their direct control.

Digitalization has never been more important than it is now - from allowing people to work from home effectively, to automating processes to allow for new ways of working on the factory floor, digital innovation is at the heart of many business initiatives, none more so than when making short, medium or long term change decisions to enable and ensure a business’ resilience.

There are a number of digital technologies which can be implemented across an organization to enhance a company’s robustness to deliver to plan despite disruptions and volatility, but  Predictive Digital Twins, powered by business process simulation technology, are becoming an increasingly utilized tool for answering all-important resilience questions, enabling businesses to thrive and not just survive in an uncertain future business landscape.

Let's explore why:

Demand and Capacity Planning is Now More Complex Than Ever

In times of economic and business stability, business planning is not always quite so challenging - you could make reasonable forecasts as to what the demands on your business might be and how you need to set up to respond. However, in these unprecedented times, businesses are now needing to navigate their way out of the pandemic-scarred macro and micro-economic situation and the resulting effects on domestic and international trade policies, supply chain availability and volatility, on top of ongoing government ‘green’ agendas, rapidly changing customer demand, technology-driven business disruptors and new emerging competition. One thing is certain: there are so many new variables and complex correlations to consider, and the pathway to success is harder to navigate than ever.

It can feel like a minefield to evaluate these new challenges and understand how potentially radically different business scenarios would affect your company’s ability to respond, and the penalty of failing to respond is significant. For example, a 30-day disruption caused by supply chain vulnerabilities can lead to 3-5% EBITDA margin gaps,  according to McKinsey. What is out there for decision makers looking to make critical decisions around future business footprint, re-shoring, recruitment & skills requirements, automation innovation & technology investments or new supply chain configurations?

“A digital twin is a digital representation of a real-world entity or system. The implementation of a digital twin is an encapsulated software object or model that mirrors a unique physical object, process, organisation, person or other abstraction.”

- Gartner's definition of a Digital Twin

Predictive Digital Twins make sense of such complexities by providing a virtual business to help you answer both tactical and strategic questions that affect your business’ ability to hit its KPI’s. With a digital model of your business you can ask “what-if” questions, such as:

• Will investment in Industry 4.0 technologies help us improve our responsiveness?
• What are the risks in consolidating production into a smaller footprint?
• Can we successfully move from having a single NDC to having regional ones?
• Should we increase stocks of raw materials or finished goods to mitigate the risk of supply chain disruption?

These complex, interconnected questions aren’t ones an individual engineer, analyst or manager can answer using a simple spreadsheet or ‘current state’ BI dashboard. They are characterized by having a myriad of dynamic variables, complex business processes, multiple disruptions and near-infinite potential interventions or resulting actions. This is where Predictive Digital Twins add huge value.

Predictive Simulation Lets You Test Your Assumptions and Avoid Costly Consequences

We’re seeing lots of businesses draw up best, medium and worst-case scenarios as part of their resilience planning, but that approach only works if assumptions are correct. Applying “what if?” scenarios to dynamic Predictive Digital Twin models of your business processes allows you to stress-test your business’ resilience against multiple internal and external variables. You’re developing a ‘Predictive Twin’ (or, indeed, a “Twin of the Future”) of your business that can simulate numerous candidate business scenarios, producing invaluable foresight to your strategic “what if?” questions via comprehensive KPI analytics .

Right now, as a result of COVID-19 approximately 25% of manufacturers are now  fast-tracking automation programs to address issues associated with staff shortages. A Predictive Digital Twin allows you to experiment with different investment options and resilience plans in a risk-free way – getting it right in a virtual pilot before rolling out the solution in your business – significantly mitigating risks associated with important business decisions. In this way Predictive Twins gives business problem owners the confidence to make critical decisions using trusted, informed facts as to the likely outcome of that course of action.

Predictive Digital Twins are as Close to a Crystal Ball as You Can Get

With a Predictive Digital Twin of your business processes, you can run any scenario and pre-test your business’ ability to respond to the variability, volatility and uncertainty that most organizations are experiencing in these unprecedented times. This engineers out the risk associated with important operational and strategic “what-if?” scenarios and identifies how resilient your business would actually be under any potential future condition.

In short, it arms you with both the insights and foresight required to make confident and future-proofed decisions as to the resilience risks your business currently faces.

Want to know more about how Predictive Simulation and Digital Twins can help support your business resilience planning? Then contact us now by clicking here.

Or view our webinar 'Strategically Planning for the Future: Developing Resilient, Agile Processes Using Predictive Digital Twins' by clicking here.