It’s Coming, So Get Ready: Demand Planning During An Economic Recession

As the Federal Reserve vacillates between tightening and loosening monetary policy, signals from economists suggest that we are approaching the end of the current economic cycle and that a recession is likely approaching. When the slowdown will happen remains unclear, but a recession is a meaningful event for most organizations, which necessitates that we, as demand planning and S&OP leaders, prepare for the inevitable impact on our businesses. Recessionary times can lead to many changes in consumer behavior such as shifting to different and lower grade products, inventory contractions, as well as lower retailer and consumer acceptance of new products. This article hopes to present practical ways to prepare before a recession starts, including ways to identify what specific economic indicators affect which products, using predictive analytics and econometric data to correlate your demand curve with different severities of economic downturn, and digging into your own company’s data to understand how your portfolio fared in previous downturns.