Table of Content
How Sales And Operations Will Change In The Future With New Technologies
● How is S&OP done today?
Senior management leads the S&OP which is executed on a monthly basis. It is an iterative process in which results from one planning cycle are compared with the next to provide management with trend information from across the business. Participants evaluate time-phased projections for supply and demand to ensure that the tactical plans in all business functions and geographies align and support the company’s strategy. With traditional “silo-based” companies, sales, manufacturing, and financial functions often compete against each other. Without a consolidated plan, small problems can quickly grow into much larger issues. These can be quickly identified and proactively addressed through S&OP reports and other measures.
●Challenges and opportunities
Challenges
- Wearing too many hats – A typical S&OP has a range of responsibilities which include overseeing sales performance analysis, developing a sales incentive program, managing sales force automation and CRM etc. The wide range of tasks can become taxing for S&OP team.
- Keeping up with evolving technology – With the continuous changing CRM, marketing automation and predictive marketing analytics tools makes it difficult to keep up with revaluating strategies to stay ahead of the game.
- Juggling ad-hoc requests – Huge part of S&OP involves supporting and managing the sales force and corresponding tools, when requests are going to arise it is impossible to plan out S&OP.
- Adjusting to the shift in customer interaction – Consumers have access to more information about a product than ever before. With blog content, videos, tutorials, reviews, and free trials all being thrown into the lap of a potential buyer before they even speak to a sales representative, it can be difficult to find a reason to get them on the phone.
- Reaching larger, long-term company goals while keeping up with immediate sales needs – New lead gathering strategies outlined by executives combined with input from the full sales team, can be overwhelming. Unless there is a clear, continued understanding between executives, marketing, and sales on how to identify high-value prospects for sales reps, the sales funnel will flood with uninterested leads and general inquiries.
Opportunities
- Get more insight into financial data – S&OP processes provide a necessary backbone for these goals and help companies integrate data streams for better financial forecasting. For example, the right supply chain resource-planning tool can help companies pull data from their sales departments, channel partners, ERP systems, internet-of-things sensors, and vendor platforms to fuel analytic reviews.
- Increase growth by predicting demand – A structured S&OP process avoids issues like relying on expensive expedites to meet unexpected demand, delays in shipments etc. and provides a system for demand sensing based around specific business goals.
- Lower costs through transportation management – The most efficient transportation channels can be seen right from OEM part delivery to warehousing to last-mile distribution by the company with the right visibility platform behind them.
- Master inventory planning – S&OP process helps a business to understand inventory optimization by establishing a framework that companies can use to consolidate goods into optimized shipments (reducing import/export fees), mode-shifting transportation to the most cost-effective vendors, and generally reducing inventory levels as low as possible.
- Better touch point visibility – Process visibility which is a broader goal is looked at in supply chain management. A true control tower approach which the companies want to acquire, need a platform that outlines the supply chain from end-to-end and provides performance data on every touch point.
- Visualization – S&OP is seen as having a growing relationship with organizational network analysis, a structured way of visualizing how information and decisions flow in an organization.
- Integration of processes and workflow – Process integration is a holistic approach to process design which emphasizes the unity of the process and considers the interactions between different unit operations from the outset, rather than optimizing them separately.
Workflow integration is the process of connecting your applications, typically via their application programming interfaces. Once connected, data can move freely between the apps, allowing your team to access the information they need to manage their day-to-day work.
- Collaboration both internal and external – This lack of collaboration increases time, distance and complexity, frustrating the organization as it struggles to manage demand it can’t predict with supply it doesn’t control. It also leads to a chain of assumptions, forcing leaders to make decisions based on information they don’t trust.
- Mobility – When a broader base is formed for the S&OP activities, the need for mobile availability for information becomes greater. S&OP platforms increasingly need to provide visibility and user interaction to a variety of devices. This allows the user community to always be “plugged in,” and provides inputs and feedback in a timelier manner.
● Complexity caused due to expansion of S&OP
- Poor demand planning input – As demand planning is the first step of the S&OP process, it is effectively the foundation. If the demand plan is way off the mark then so too will be the supply plan. If both plans are wrong, then the business will make the wrong decisions. This will mean that the S&OP process has failed in its primary objective.
- Complexity – Such process flows may well be ‘comprehensive’, but the reality is that they’re often incomprehensible to stakeholders. The consequence of this is that individuals, with the best intentions, start to apply their own rules and this can result in confusion and poor compliance.
- Lack of S&OP ‘Education – New employees coming to the company, or transferring from other positions, may not fully understand the S&OP process, or potentially even the objectives for S&OP. This lack of ongoing training risks reduced engagement and consequently the integrity of the process itself.
- Not making decisions – Insisting on multiple cycles of deep-dive analysis until you can be certain of the decision to make wastes time, resource, and disengages stakeholders. People start to see the S&OP meetings as simply a ‘show and tell’, and consequently, the value of the process is diluted.
- Business acquisitions and divestments – The overriding issue will have been that the S&OP process did not have enough priority and stakeholders did not get enough value to warrant the challenges of expanding or contracting the process. In other words, if the process cannot adapt then it probably wasn’t working in the first place. The risk in many businesses is that S&OP happens, all the inputs are provided and all the meetings occur, but it is simply seen as another set of meetings and another set of reports to review.
● Challenges or barriers caused due to expansion and how to overcome it
- Omni-channel experience management – Today, a quality Omni channel experience is something that every company needs regardless of who they’re serving. This applies to your supply chain as much as anything else, and it’s by no means a quick fix. Omni channel means immediacy; it means delivering the exact experience customers want across numerous channels. Generally, Omni channel efficiencies for S&OP involve adjusting logistic operations, fulfillment processes, inventory management, and general supply chain visibility. These functions must be coordinated across all channels—brick-and-mortar, ecommerce, and mobile—while maintaining consistency. This is no easy feat without some type of visibility solution to hold things together and connect inventory, shipping, and distribution channels across all assets.
- Sourcing the right talent – Global nature of modern supply chains hasn’t quite carried over to talent acquisition. It’s becoming common for companies to outsource supply chain functions through consultants who have specific competencies. Long -term S&OP efficiency relies on consistency and familiarity with each supply chain’s specific flows. Companies should prioritize recruiting and partnering strategies that bring qualified talent into the pipeline early. Backed by this foundation, it’s easy to scale talent up or down through outsourced consultants as needed.
- Coordinated supply chain visibility – Supply chains used to be (relatively) small, simple things managed by one or two providers. Better visibility was either a medium or high priority for improvement. Modern supply chain resource planning solutions include visibility platforms that aggregate data from every vendor system to create a 360° view of supply chain performance.
- Understanding system scalability – Supply chain operators a poor who have a poor understanding of what it means to “scale” their supply chains up. Some work under the assumption that bigger is better; that growing the supply chain is the same thing as improving it. Clearly, there’s disconnect here.
● Checklist for successful S&OP of the future
- Innovation and strategy review – Introducing new products is a key aspect of the innovation and strategy review. NPI (New Product Introduction) planning when done well can impact the well-being of the company in a positive way.
- Demand review – To plan to meet demand, you must know what current demand is and how it can change over time, the art and science of the forecast.
- Supply review – Once the demand plan is finalized, the supply team needs to determine how they can meet the demand plan. Two elements are key in determining how to profitably satisfy the demand plan. They are: 1. Inventory Optimization – How much inventory is currently available and where is it in the supply chain? 2. Production and/or Procurement Optimization – Do we have the production or purchasing capability to meet the demand plan?
- Financial Integration – This is the most critical of all the pre-S&OP processes. While the demand and supply teams have kept the company’s overall objectives in mind, in many businesses some bias creeps into the process. The financial review step removes that bias. It is at this time that all constituents agree on the final demand and supply plan and what alternative plans will be presented during the executive S&OP review.
- Executive Business review – The ultimate objective of the S&OP process is to leave the meeting with an operational plan that best achieves the company’s objectives within known constraints. The deliverable from the executive business review is a list of actions that implement the decisions and plans agreed upon. Besides reviewing best case and alternative demand and supply scenarios, it is imperative that executives assess risks to their supply chain. Risks include: • Quality issues • Supplier failure • Demand spikes • Demand disruptions • Obsolescence • Strikes – internal and with external suppliers.
● Conclusion
- A single application with deep data – Successful S&OP must be fed by solid and complete information from across the extended supply chain and supported by robust advanced planning analytics. Only when you have that all in one place can you achieve broad and deep visibility, fast and accurate analysis, and effective and continuous alignment. From one system, you should be able to:
- Integrate data from every division, location, department, product family, legacy system, and supply chain partner
- Administer both demand and supply planning
- Centralize, track, and test assumptions of the plan
- View data at multiple hierarchies at any time to support the specific analysis you need to do
- Make changes at the volume level that will automatically ripple down to the mix level, and vice versa
- Translate between units, dollars, and other units of measure
- Evaluate different scenarios simultaneously, and against multiple operational and financial metrics
- Quick, comprehensive “what if” scenarios – Any enterprise with mature S&OP is continuously searching for better results. This means balancing factors like go-to-market strategies, new product launches, sustainability, and all kinds of risks. It means trading off KPIs between different teams, divisions, or business partners to find the best overall win-win. It means trying to peer into the future by asking, “What if we did this? What if we tried that?” A “what-if” capability is perhaps the single most vital key to effective S&OP. To help find the answers, “what-if” scenarios must be easy and quick to run, must accept data from many sources, and must support collaboration across the enterprise and the extended supply chain.
- Collaboration and consensus-building – People working together is the bedrock that supports everything else in S&OP. This is an area where S&OP excellence can be won or lost. Collaboration is clearly about people and process. But technology has a key role to play in promoting collaboration. The role of technology in collaboration goes well beyond simply sharing data. S&OP technology must also help to:
- Capture assumptions, inputs, and opinions of stakeholders in a meaningful, organized fashion
- Identify and proactively bring together teams of people who are widely dispersed (and may not even know each other) for both planned and spontaneous interactions
- Enable stakeholders to share and evaluate scenarios in an interactive way
- Document and track any commitments made and actions taken
- Continuous monitoring of KPIs – However, a mature S&OP system is capable of generating a graphical dashboard showing the KPIs of most interest: sales, profits, ROI, inventory turns, customer satisfaction, and so on. This kind of dashboard makes it far faster and easier to understand the current state of affairs, spot trends, and notice developing issues. S&OP dashboards should be role-based, so that they show the data that matters most to the person looking at them and should include the ability to drill drown as desired, going from high level summaries to the smallest of executional details without ever leaving the system. Data in the dashboards should be used to actively monitor the S&OP plan. You’ll be immediately alerted to deviations that put the plan at risk, understand the financial and operation impact of those events, evaluate proposed scenarios against each other, and respond quickly with the most profitable (or least costly) action.