[vc_row][vc_column width=”2/3″][vc_custom_heading text=”Future Direction of Sales & Operations Planning” use_theme_fonts=”yes”][stm_post_details][vc_column_text]
Conference in New Orleans on Future of Sales and Operations Planning:
I attended a conference by Avercast in New Orleans this week. The focus was on future of S&OP. In discussion with Dick Ling, who is considered the father of S&OP, what emerged was that organizations have to move beyond the one number consensus forecast to a range bound forecast with scenarios.
The Present of Sales & Operations Planning:
So what this means is that till now the purpose of S&OP meetings was to bring everybody together and hold them accountable to a single number, which was called the consensus forecast. In the execution phase, the organization would try its best to stick to this number as they would be measured against this.
However, this would not make them agile or flexible as demand varies. Suppose there would be a fluctuation of demand, either side of the consensus forecast, it would result in either excess inventory or stock outs.
The Future of Sales and Operations Planning:
The future of S&OP would be to move beyond the single number consensus forecast to a consensus forecast range. This has to be supplemented with scenarios. These scenarios should focus on the best case – similar to consensus forecast and then worst-case scenarios at the extreme end of the ranges. The strategies should then address these scenarios.
This would then mean the supply chain has to move away from the single number supply chain planning. Most supply chain planning systems are still driven by the single number forecast, which drives the replenishment. The future direction for these systems would be to identify buffer inventory, and then plan to replenish those buffers based on the forecast range.
Dick Ling coined the term Demand Driven S&OP to describe the process. Yes, these are certainly interesting times for supply chains.[/vc_column_text][stm_post_bottom][stm_post_about_author][stm_post_comments][/vc_column][vc_column width=”1/3″][stm_sidebar sidebar=”2252″][/vc_column][/vc_row]
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