With rising geopolitical tensions, economic shifts, and rapid tech advancements, managing crises is more important than ever. For example, if a key supplier shuts down tomorrow or new trade restrictions suddenly disrupt your supply chain, you need to know how to adapt.

Using scenario planning that combines granular industry insights with your own data, you can create clear strategies for handling potential disruptions – and even turn those disruptions into strategic advantages.

Scenario planning can help you build resilience and flexibility into your operations, so you can stay on track, resilient, and agile, no matter what happens.

Scenario planning replaces static predictions and instead acts as a toolkit of customized backup plans and contingencies for unexpected situations – helping you build supply chain resilience.

With response procedures in place, you can better manage risks, and make faster, more informed decisions when responding to disruption.

This guide will show you how scenario planning can work as part of your broader strategy planning framework. The following four steps will show you how to apply it to your supply chain, and help you prepare for the future and your next round of RFPs.

The first step of any scenario planning strategy should be to set clear objectives and build the right team. This involves identifying the critical questions facing your supply chain and the outcomes you need to prepare for.

Your team should include representatives from your supply chain, corporate strategy, finance, IT, and HR. Each member will bring unique insights on trends, dependencies, and risks, ensuring the strategies you build are well-rounded and practical.

From that point, you’ll be well-positioned to identify the driving forces affecting your supply chain. We recommend using the PESTEL model to create a complete view of the environment your business operates in, document the potential impacts, and consider solutions.

PESTEL recognizes every factor that impacts global trade and supply chains to help you assess potential risks and prepare the right response. Take a look in the chart below.

The driving forces we’ve covered – from political influences to trade policy changes – can all influence organizations in unpredictable ways, creating critical uncertainties that could impact supply chains. Analyzing the most likely outcomes is essential because they’ll determine how the resulting scenarios and response strategies will play out.

Within the logistics sector, three main critical uncertainties will determine organizations’ responses to market and industry changes: reliability, space, and cost.

Now that you’ve mapped out the driving forces and critical uncertainties your business faces, you can start modeling possible scenarios specific to your business.

This should consider a wide range of potential scenarios that could unfold based on multiple combinations of uncertainties, not just the most likely disruptions. If you narrow your scope too much, you might miss out on some helpful response ideas.

For each scenario, consider what it would mean for the costs, reliability, and space in your supply chain. Make a list of the events that would need to happen for this scenario to play out, and note what’s unlikely to happen – this helps clearly differentiate scenarios.

With a broad-brush look at potential scenarios, you can calculate how likely each one is, and begin focusing on those most probable. This isn’t about prescribing exact probabilities; it’s more about getting your team’s consensus on what could realistically happen.

Also, some scenarios could even happen together, so your probabilities wouldn’t necessarily add up to 100%.

It’s a process that will require accurate and high-quality data – the accuracy of your scenarios will only be as good as the accuracy of your data. But if done correctly, you’ll end up with a robust set of realistic, well-rounded scenarios that’ll help you prepare for whatever comes next.

The Rapid Response Model

The final stage involves creating a response plan you can use to manage any scenario swiftly and effectively.

Flexport’s Rapid Response Model (pictured below) can help you establish both long- and short-term actions tailored to each of your scenarios. The model uses high-quality, well-distributed data to guide your responses, giving you insights on both what’s happening right now and historical trends to spot developments early.

With the right data, you’ll be able to answer questions such as:

1. What happened?
2. What will result from that?
3. And what should we do in response?

From a process perspective, the model ensures everyone in your supply chain has visibility and access to clear, actionable steps. End-to-end integration allows for smooth, robust processes that can adapt to changes without missing a beat.

By combining data and process in this way, the model can empower your team to handle any scenario that comes your way.

In a world where disruptions can strike without warning, scenario planning is a crucial tool to help you prepare for whatever happens.

With the right approach to scenario planning, you can assess your organization’s readiness and rapidly identify the actions you need to protect your future.

The insights you’ll gain aren’t just informative; they’re indispensable for constructing RFPs that reflect true resilience, helping you face a volatile landscape head-on.

The model we’ve outlined is also fully customizable to your own supply chain dynamics, so your teams can make calculations tailored to their specific activities and receive the actions they need to respond. This will become especially crucial during the design stage of your RFPs, where you’ll be able to provide critical metrics on factors such as your preparedness to respond to specific events, your supply chain teams’ data capabilities, and their shipping rate forecasts.

In such a volatile trading environment, investing time in accurate, high-quality, and regular scenario planning can help you ensure you’re prepared for whatever happens, wherever it happens – and ultimately gain a strategic advantage on your competitors.

Prepare your business for the future, today. Contact us to book a scenario planning consultation tailored to your most pressing challenges.

Also, make sure to follow our regular scenario planning webinars, and look out for the upcoming volumes of this scenario planning series.

Ship anywhere. Sell everywhere. Grow faster. Flexport powers your supply chain from factory floor to customer door with visibility, control, unified communication and a team of experts who help you get it done. Freight-forwarding, fulfillment, customs brokerage and order management, all in one platform.