Top Four Most Vital S&OP Technology Capabilities

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In a previous post, I discussed the sometimes surprising technology choices some organizations are making to manage their S&OP process. Now I’d like to take a look at the Top 4 technology capabilities you need in order to achieve a successful sales and operations planning process:

#1: A single application with deep data

We know that 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

Managing S&OP from a single application enables companies to better balance tradeoffs and most effectively align volume and mix, as well as Operations and Finance.

#2: Quick, comprehensive “what-if” scenarios

In today’s fast-changing economy, business success can depend on finding effective answers to typical questions like these:

  • What if sales of the new product are slower than we expect?
  • What if we run a promotion to clear out inventory of the older model?
  • What if a supplier goes bankrupt?

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. If it’s not fast and easy, it won’t happen.

#3: 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. Have you noticed how hard it can be to get people to work together, even in the same company? It’s even harder to share information, opinions and decisions with a supply chain partner...especially a complete stranger from a different culture on the other side of the world. Yet this is a common reality in today’s outsourced and off-shored supply chains. 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

#4: Continuous monitoring of KPIs

The S&OP data provided to executives today often suffers from many defects, including:

  • Little connection to current reality
  • No way to explore multiple scenarios
  • No way to evaluate how decisions affect KPIs
  • Difficult to spot trends

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.

 
S&OP in the 21st CenturyAs the S&OP process continues to evolve and mature, a different interpretation and expectation for S&OP is emerging that entails better, broader goals. This recently published eBook elaborates on the evolving horizontal S&OP process capabilities that are required in order to achieve a transformation. Download your own copy here.

Additional Resources

  • S&OP frequently asked questions

Discussions

Vincent Wang
- December 28, 2016 at 11:29pm
Dear Ms. Smith,

Thank you so much for your article.

Regarding what-if scenarios/technologies/Logic setting, could you please share more, like case study, data source, or data logic?
I would like to learn what is the elements and how it impact the financial data.

Regards and thanks,
Vincent
Melissa Clow
- January 06, 2017 at 3:12pm
Hi Vincent, thanks for your comment. You can learn more about our what-if scenarios in our customer case study videos. Check them out here: http://www.kinaxis.com/en/resources/supply-chain-resource-center/customer-perspectives/. Please let me know if you have additional questions and I'll be happy to help. Thanks!

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