Top Technologies To Optimize Supply Chain Sales And Operations Planning?
- S&OP – Why it is critical for modern supply chains?
- How S&OP is done
- Current Models & Technologies driving S&OP
- New Models for S&OP
- New Technologies for S&OP
- How to get started on Your Transformation of S&OP
S&OP – Why it is critical for modern supply chains?
Some of the benefits of effective sales and operations planning process include:
- Increased customer service levels
- Improved profitability
- Higher product revenues
- Lower inventories and obsolescence
- Reduced lead times
- Quicker responsiveness
- Top-down management control
- Predictable operating performance for shareholders
In addition, an S&OP process should also help to answer the following basic questions:
- How does projected demand compare to projected supply?
- What are the projected resource requirements to meet both service and cost targets?
- What actions are required to ensure the appropriate levels of resources are available when needed?
Translating Benefits to Real Business Value
Typical Improvement | Business Impact |
Reduce inventory | Reduce inventory carrying costs and improved cash flow |
Reduce time to market for new products | Increase revenue by staying ahead of the competition |
Increase capacity and throughput | Reduce operating costs and increased productivity |
Higher product quality | Reduce cost of goods sold |
Reduce lead times | Reduce expediting costs and inventory while increasing sales |
Better customer service | Increase sales and customer satisfaction |
How S&OP is done
While the sales and operations planning process can differ greatly among organizations, there tend to be certain major steps that virtually all planners follow. The ones below were developed by Thomas Wallace and Robert Stahl, co-authors of the definitive guide, Sales & Operations Planning.
- Data Gathering/Management: Collect information on past sales, analyse trends, and report forecasts. Run Pareto analysis to assign forecast parameters (i.e., item vs. group). Manage new items and discontinue old items.
- Demand Planning: Validate forecasts, understand sources of demand, account for variability, and revise customer service policies; layer on promotion plans, onetime events, and new product and customer launches.
- Supply Planning: Assess the ability to meet demand by reviewing available capacity, inventory, and scheduling required operations. Set inventory targets and plan supply by level loading and/or demand chase.
- Plan Reconciliation (Pre S&OP): Match supply and demand plans with financial considerations.
- Finalize and Release the S&OP: Finalize the plan and release it to implementation.
4 keys to unlocking next-generation S&OP
Although it’s important to get the details of each phase just right, there’s more to it than just moving step to step. Let’s explore four keys to unlocking next-generation S&OP.
Don’t put garbage in (or you’ll get garbage out)
You’ll have a hard time making wise decisions based on corrupt or outdated data. It’s nearly impossible to make accurate, well-informed decisions without real-time, accurate data at your fingertips. S&OP decisions have an affect across many parts of the business, so you don’t want to make them based on a cornerstone of sketchy data. Try this three-step approach to data due diligence first:
- Find out what data is available
- Discover where it lives
- Determine who owns it
Once you’ve worked through these steps, focus on getting that data into presentable dashboards and let it lead to you to discover what data may be missing. With clean data going in, you can have confidence in your decisions knowing the cornerstone is trustworthy.
Be wise with your S&OP metrics
Sometimes, organizations have too many metrics or they’re inconsistently defined. It’s easy to get buried in debates on the meaning of data or sit through torturous meetings that are only report-outs sans insight. To break free of this unproductive environment, start by defining your levels of metrics. For example, some metrics should live on executive dashboards (high-level forecasts), others belong in an end-to-end view of the supply chain (detailed supply and demand forecasts) and others describe functions (such as sourcing, manufacturing, or logistics). Next, seek alignment among the levels and work toward driving action and improvement through that alignment. Metrics don’t have to be a pile of dry numbers—they have a story to tell!
Find a champion
The supply chain leader of the future isn’t a lone ranger. It’s someone who understands the importance of cross-functional collaboration and that collaboration is essential to next-generation S&OP. To keep your S&OP process moving smoothly, find an internal champion who can play “stakeholder herder” with patience and a base of knowledge that inspires credibility as they work with all the departments involved.
Ask “what-if” for value-based decisions
Traditional supply chain planning is designed to make volume-based decisions (inventory levels, days of supply, on-time delivery, turns, etc.). Imagine running “what-if” scenarios with up-to-date financial data connected, to make value-based decisions that are best for the company’s bottom-line. Adding this level of ownership and sophistication to S&OP elevates the significance of the process and improves the overall effectiveness of the supply chain.
The bottom line
With Ana plan, sales and operations planning (S&OP) is unified across all relevant business units into one cloud-based, connected platform. When plans and data from sales performance management, financial planning and analysis, product, marketing planning, and supply chain work in sync, executives can make better-informed decisions that maximize profitability.