Can the S&OP process be done without technology?
The answer to that question has certainly evolved over the years, and while there are still some holdouts, most will now agree that technology is indeed required. Whether its objective should be to support the process or help define the process remains a healthy debate.
Fundamentally, the more complex the organization and the more mature the process, the greater the need for technology. So what technologies are today’s supply chain teams using to support the critical S&OP process? Amazingly, it seems most organizations are running their process with spreadsheets.
It never ceases to surprise me when I hear how many enterprises entrust a mission-critical task to the desktop spreadsheet software Excel®. On the other hand, the fact that so many turn to Excel is proof that despite the plentitude of systems (or perhaps because of it), existing ERP and legacy planning apps are not meeting the requirements for S&OP processes regardless of where that process is positioned on the maturity curve.
Consider the Supply Chain Insights report, Research in Review (Nov 2014), that states:
“Many companies have five to 30 Enterprise Resource Planning systems and two to three supply chain planning systems. In addition, companies will have two to five S&OP processes working independently.”
This demonstrates an enormous level of complexity, from both a process and data perspective.
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Sales and Operations Planning (S&OP) has been around for a long time. It’s been called “old hat” and “the new kid on the block.” Both are true. And despite having been around for decades, S&OP continues to gain momentum and grow in maturity.
Most of us in the supply chain industry have a conceptual and common understanding of what S&OP represents, however the variety of ways in which S&OP is executed demonstrates that it can mean very different things to different organizations.
A typical/traditional Sales and Operations Planning (S&OP) process is primarily:
- Operations led
- Mainly focused on satisfying revenue and margin goals
- Aimed at attempting to meet a forecast for a discrete planning horizon, usually 6-24 months
- Sequential and involves isolated planning activities consolidated at a high level and then pushed up to management for approval, and pushed down to manufacturing for execution
And most experts agree that S&OP has four ingredients:
- People: the cross-functional teams involved
- Process: the way you make decisions and manage meetings
- Information: the data from your demand and supply chain
- Technology: the systems that support planning and decision-making
Not everyone agrees on the correct proportions of these ingredients, but everyone agrees that S&OP needs all four. Knowing exactly what is required for each of these areas, and potentially most importantly, finding the right balance between them is the key to effective and efficient planning cycles that drive maximized value for the enterprise.
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When considering what attributes supply chain leaders are most likely to possess, it’s easy to think first of hard skills—analytical prowess, technology expertise, and operations and economics knowledge quickly come to mind. But while hard skills may land you a job, many times it’s your soft skills that will keep you there—and accelerate your climb up the corporate ladder. So what attributes from both areas are today’s supply chain leaders most likely to possess?
The APICS Supply Chain Council set out to answer this question in its latest industry report entitled “Supply Chain Leadership Report: Many Styles Generate Success.” The findings were generated from multiple sources, including surveys of APICS members, articles, and external research. With the goal to share a professional capabilities blueprint for current and future supply chain leaders, the report explores pivotal features of a successful supply chain leader, including his or her attributes, leadership style and ability to formally and informally influence an array of stakeholders.
With its focused research of supply chain and operations management professionals across multiple industries and management levels, APICS pinpointed these core themes for successful supply chain leadership:
- Applying certainty to uncertain situations affecting others, such as in forecasting or decision making
- Balancing risk and reward in careful analysis using hard and soft skills
- Aligning tactics to strategy in planning and harmony with organizational culture
- Maintaining and improving relationships of supply chain partners
- Satisfying competing priorities and stakeholders on an ongoing basis
Let’s take a closer look at why these skills have undoubtedly earned relevance in today’s supply chain management industry.
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I used to think slavery was, for the most part, a thing of the past. An abhorrent practice that was abolished for very good reason, and a constant reminder that human life has tremendous value and as such should be respected and honored. I used to think there was no way slavery would ever have a place in modern society, that no one would allow such a practice to exist outside the most desolate and desperate places on Earth. I used to have my head buried in the sand.
The sad reality is that slavery, in all its unpleasant forms, exists much closer to home and in much greater numbers than I ever expected. Traces of it can be found virtually everywhere. In the clothes on your back, the shoes on your feet, the food that you eat, and even the computer, tablet or smartphone you’re likely reading this blog on. How? Through the supply chain.
Modern slavery is one of the supply chain industry’s dirty little secrets, but thankfully, governments in the US and UK are attempting to wash it clean, working to put a stop to a problem that should never have been allowed to exist in the first place. Or at least, they’re trying to.
As the Wall Street Journal (WSJ) reports, new rules recently announced by British lawmakers will require companies “to give an annual disclosure detailing efforts to root out slavery and human trafficking in their global supply chains.” The new provision, which is part of the broader Modern Slavery Act enacted in March, will impact more than 12,000 UK companies whose global revenues each total more than 36 million pounds. It’s based on California’s Transparency in Supply Chains Act, which was passed in 2010.
The problem is, both laws only require companies to disclose their use of slave labor, not actually put an end to it. So how is this going to solve the supply chain slavery issue?
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Ready for a bit of a rant? I may not be a Jon Stewart or a Dennis Miller, but I just have to share my thoughts on something. I feel like the supply chain industry is at a roadblock. The concept of managing the value chain end-to-end is pervasive, yet the understanding of what’s fundamentally needed to get there still has a way to go. There is too much talk about data integration and not enough about process integration. The industry talks about capabilities in isolation, yet the value is in the combination of them. Too many speak about bringing functions together when they should be talking about running them as one. We want the whole, but we think we can get there by putting disparate pieces together.
It reminded me of the other day when I ate a whole bunch of chocolate truffles. I’m just sick over it. I was in a candy store and there was this neat row of lovely looking truffles. They looked just right… and the description said all the right things. For sure they would satisfy my sweet tooth! So I went to buy one. The candy clerk told me that for the craving I had, I really needed four or five truffles together. And so I bought the whole bunch… it cost a lot more than I had wanted to spend. I also had to wait for longer than I expected as the clerk struggled to arrange all the truffles in a box that they didn’t really fit in. And then she loosely and awkwardly tied a ribbon around the whole thing… all of that came with an extra charge by the way. But finally, finally, I had my truffles and with great anticipation, I took a bite – YUCK! It was not what I was expecting… it certainly wasn’t what I wanted… and it definitely left a bad taste in my mouth. I went back to the clerk and questioned if there was an error – she insisted that it must be something wrong with my taste buds, and instructed me to try another (though she did offer to custom make more at added cost and time). So I went back and tried the truffles again thinking that as I got accustom to them I would understand and appreciate how the flavors were supposed to work together, but over and over again I had the same sour experience, until finally I said ‘enough is enough’.
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I received a somewhat confusing email a few weeks ago – an invitation, from a colleague, for me to join Yammer. The invitation didn’t provide much information about why I should be joining, so naturally a few questions ran through my head. Why have I been invited? Is this related to a project? Am I supposed to know? Did I miss something at the last team meeting?
I bit and created a Yammer account thinking that these burning questions would be answered…not so much. After poking around the home page, which resembled my Facebook news feed, I went straight to the source – the person who invited me. Turns out my colleague had been invited by someone else, and then invited me to join along with a few other team members. Which got me thinking: should a mere invitation be the driver to adopting a new collaboration tool? While Yammer certainly provides some intriguing features, for me the motivation just isn’t there – at least for the time being.
So what does this have to do with supply chain? Well, collaboration in a supply chain organization is essential to pretty much every role, from the customer service rep, to the demand planner, to the supply chain executive. And those are just the roles within the company. Supply chain organizations operate within global networks of external trading partners that require regular back and forth communication.
Social media aids collaboration within a business environment because it can help build trust and closely connect people from different roles, backgrounds, and locations across the globe. Many companies, in the supply chain space or not, are turning to enterprise social networking tools to influence collaboration and open communication throughout their departments. However, research shows that these tools are not getting as much traction as predicted and employees go back to relying on outdated collaboration methods, such as email, review meetings, and phone calls. One of the main cited causes is lack of business context.
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It seems like everywhere I look I see mention of millennials, that ‘next generation’ who seems to be shaking things up in a big way. From the way companies do business to the products available on store shelves to the rising stars of the executive world, there’s no mistaking the millennial influence. That got me wondering, what kind of sway does this technology-loving, values-driven, need-to-know right now, group have over your supply chain. And do they deserve the power we’ve given them?
I should start by saying that I am in fact a part of this often talked about demographic, which according to Wikipedia is comprised of anyone born from the early 1980s to the early 2000s. I’ll let you guess where in that range I fall.
So why the big fuss about us up-and-comers? Well, according to Forbes, who agrees that 2015 is the Year of the Millennial, there are 80 million millennials in the U.S. alone, and it’s estimated that by 2017 we’ll be spending $200 billion annually. But it’s not just our spending power that has companies taking note. Here are a few facts from a Forbes and Elite Daily report.
- A measly 1% are swayed to trust a brand based on advertising
- 75% believe it’s fairly or very important for a company to give back
- 62% will engage with brands on social media
- 60% are often or always loyal to their regular brands
- 42% are interested in co-creating products with companies
- 87% use between two and three tech devices at least once a day
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What if there were little, to no, limitations to the what-if analysis you could do? What if you could change anything (data, working assumptions, business rules) to explore options and see the impact instantly? What if you could do scenario simulations for any function of your supply chain? What if you didn’t need to make it an IT project to create new scenario parameters? What if I go on and on with these questions… ?
Like many supply chain capabilities discussed in the industry, it is something touted by many, but not all what-if capabilities are created equal. Many advanced supply chain planning systems involve conditions where computing power must be rationed, scenario parameters are limited and collaboration is not built-in. Yet the value of what-if analysis is in the power to put the ability to do scenario simulations in the hands of many.
What-if analysis, in the most optimal condition, would be quick, flexible, extensive, and collaborative. And because it’s fast and easy, the capability would be leveraged fully and often, leading to decision-makers being able to test multiple scenarios projecting the impact of various “what-if” alternatives and evaluating their achievement against relevant operations performance metrics so a team is choosing objectively among a full range of options.
And we would argue that is exactly what happens in RapidResponse. It’s our secret sauce after all – well maybe not so secret given how much we advocate it. The point is that what-if analysis is absolutely foundational to our product and among the most critical capability in delivering on the “Know Sooner, Act Faster” value proposition.
This came through loud and clear in some recent customer interviews, whereby our customers talked about how scenario simulations are being used across business processes (strategic to tactical) to enable new ways to analyze situations and make decisions… fast!
There are several short clips available that I hope you’ll check out, but in the meantime, here is a taste of a few on the topic of what-if.
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