Demand management needs to be responsive
AMR has just posted information on how frequently companies execute their Sales and Operations Planning (S&OP) processes.
AMR has also talked about the fact that to execute this process correctly, companies need to invest in tools that provide rapid scenario analysis and foster collaboration across all of the groups involved. The ability to quickly understand the alignment issues between demand and supply in the context of collaborative scenarios is key to enabling the compromises inherent in this process.
Equally important is the need to ensure that the company is well armed to deal with the exceptions that occur daily and outside of this planning process. With the pace of change accelerating in all dimensions, the ability to respond to the unexpected and ensure continuous alignment between demand and supply is essential. Companies need to seek a profitable demand response in a timely fashion to proactively deal with these events.
July 31st, 2007 at 9:35 am
I’m a bit surprised by the number of S&OP process review meetings, that are longer than monthly reviews.
I would be very interested in hearing how Companies manage that demand and supply balance and decision making, outside of that process.
Norm
July 31st, 2007 at 5:36 pm
Norm - all the research I’ve seen suggests that the S&OP process does average out to be about monthly. As you said, that can create huge issues with maintaining demand and supply balance in the face of constant change outside of this process. My experience is that most companies struggle with this. They lack the tools to empower their staff to deal with the inevitable disconnects between the plan and reality (orders come in that weren’t in the forecast, the supply plan was never actually able to meet the forecast requirements, etc.). This becomes a constant challenge to align demand and supply as it happens and as changes continually occur. Most people are left to try to cope using spreadsheets and lot’s of brute force means. And then the organization itself “institutionalizes” means to be more responsive, but excess capacity, safety stock and expediting are very costly means to try to respond to change.
I’m biased in my view of what is required to address this, of course, because this is exactly what our product does - empower people throughout the organization to deal with this constant change. But, fundamentally, this is about empowering people with the right information and tools to collaboratively respond to these changes quickly and with a direct understanding as to how the proposed actions impact corporate metrics.