Archive for the ‘Response Management’ Category

Miami Vice, Diapers, SCM World and the Digital Supply Chain

Published April 14th, 2014 by CJ Wehlage 2 Comments

Let me set the scene for you:
It is Sunday, February 23, 2014 at 9:00a.m.  Location: Miami, the Trump National Doral… outside patio. I’m grasping two cups of coffee and wearing all white. I’m sitting with Kevin O’Marah and he has an inquisitive demeanor … do I have your attention?

Now, let’s go back 9 hours. I was north of San Diego celebrating at a local home. The event was the Scholars Circle White Party, to honor the donors of a local public school.  Naturally I wore white shoes, white pants, and a white shirt. I had to leave the event and go straight to the airport to catch my red-eye flight to Miami to attend the SCM World Live conference. I landed at 7am EST – nary a minute of sleep on the plane. I took a cab ride over to the Doral to meet my good friend Kevin O’Marah, Chief Content Office at SCM World (and wondering why I scheduled a 9am and not a 5pm, but that is beside the point).

Kevin and I go way back to our days at AMR Research. I always love catching up with him, sharing stories of supply chain, innovative practices and research concepts.

The first thing Kevin said to me was “you look ready for Miami!” … referring to my all white attire (for all you Millennials, it’s a Sonny Crockett thing…that’s Don Johnson from Miami Vice).

Not only was I ready for Miami and the SCM World Live conference, I was also ready for a very insightful 1+ hour back and forth with Kevin on digital demand and the impacts on supply chain.  I’m sure Kevin was expecting my insights to be on Apple or Bose, where I had worked prior.  However, I was actually captivated by an innovation on digital diapers. Yes, digital diapers.  I had just read a story about diapers that actually tweet you when they are, say, wet or soiled…

There’s a device inside each diaper: a sensor for identifying when the diaper is wet and a blue-tooth to send a tweet.  As a true supply chain practitioner, my main concern was that the cost would be too high for this product. But, when I spent some time thinking about the product and the customer experience, I concluded that the digital diaper cost could not only the same as the regular diaper, it stands a chance to be lower.  As the SCM World report “Demand Management 2020” states, “Value to the customer encompasses the product purchased as well as the complete experience around that purchase (Demand Management 2020, SCM World, Research Report, March 2014).”

Our discussion came back to how a supply chain practitioner can participate in building a “digital” product.  Certainly it takes marketing, engineering, and sales innovation, but also supply chain innovation.

Having worked at Kinaxis for a little over a year, I told Kevin, “one of the main benefits I see our customers achieving is planner productivity”.  Our end-to-end planning with exception based notifications and simulation removes steps from the process and brings significant speed. The result is that planners are more productive.  Or said another way, planners can spend more time on innovation.

The SCM World report states, “It is this translation (across demand and supply), that brings about the ability to evaluate different strategic scenarios (Demand Management 2020, SCM World, Research Report March 2014).”  Our discussion continued along these lines.  In order for supply chains to test innovation, planners need simulation capability to create scenarios.  In essence, test the innovation against operational realities and metrics.  At Kinaxis, our customers do just that. Achieve the benefit of planner productivity and use it to simulate scenarios.  Scenarios improve profit margin, inventory turns, operating costs, value to the customer, new product ramps, revenue growth, capacity, etc.

So, let’s go back to our digital diaper discussion.  How does a customer purchase diapers?  One would likely go to a retail store, buy a box of 100, get home and put 30 in the downstairs bathroom, 30 in the baby’s room, 30 in the travel bag, and the last 10 in the stroller pouch. When the 30 that are downstairs runs out, you steal from the travel bag a few times, and then probably go buy another box of 100.  Never realizing exactly how many you have. You just don’t want to be at Zero   Trust me – I have two young kids…

That’s the customer experience, much more than a spreadsheet of demand numbers for your supply chain planners.  Now, imagine your team using an application to simulate innovative scenarios and gain significant productivity.

Supply chain innovation scenario: Each tweet the diaper sends out can also count the tweets. When you get to 75 tweets, you also get a tweet or email telling you that there are 25 diapers to go, and asking if you would like a new box of 100 shipped direct to your home.  The tweet/email can also suggest other products (such as items in excess) to add to the order, or special price/promotional add-on’s. That data can also go back to the manufacturer, and used for supply chain planning.  As Kevin and I talked, we came to the possibility that the “digital” diaper could actually cost less when looking at the “complete experience around that purchase.”

SCM World And the digital supply chain

The opportunity is in front of us as supply chain practitioners.  Anything can be digital, and digital can change the supply chain significantly.  Kevin and I concluded that current business complexity keeps us so busy firefighting and resolving issues 24/7. As leaders, we need to get to true exception based end-to-end planning, and gain the benefit of planner productivity.  Only then can our supply chain planners take the time to simulate innovative scenarios that bring customer value, revenue growth, and supply chain excellence, even to products like diapers.

 

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Posted in Demand management, Miscellanea, Response Management, Supply chain collaboration


Speed as the true Innovation in Supply Chain

Published December 10th, 2013 by CJ Wehlage 2 Comments

Wow, I am recalling a great three days in Dallas, Texas this past week at the WTG Supply Chain and Logistics North American conference.  I went for a run in sunny 75 degree weather!

Now, I’m back in San Diego and just finished reading a post from a friend who is an American Airline attendant. She came to Dallas the day after I flew out, to do Airbus training.  Her blog described how she was stuck at the airport due to hundreds of canceled flights – freezing weather that went down to 20 degrees!

It looks like I left just at the right time. As the saying goes, “timing is everything…”.  This saying is much like my presentation at the conference: the topic of speed as the true innovation in supply chain. Not just speed to be fast, but velocity, which is speed moving in a specific direction.

That’s what I believe is the next innovation in supply chain. I grabbed some of my old AMR Research Top 25 data, and looked at the results of supply chain processes and tools.  It seemed like in a recession, supply chains focused on reducing costs. Lean was the top challenge.  In recovery periods, supply chains focused on improving efficiencies. Demand forecast accuracy was the top challenge. Supply chains responded in kind with functional lean efforts or functional demand forecasting projects. I love Lora Cecere’s (Supply Chain Insights) chart on “Progress in Inventory Turns and Operating Margin (2000-2012)”.  One of the best pieces of research data I’ve seen in a long while.

This shows pure “functional” focus from every industry.  Very limited “end-to-end” focus.  Consumer electronics shows a good 18% for consecutive improvement in turns and operating margin for two years.  But, for 3 consecutive years… 0%! For four consecutive years…another 0% !   Supply chains have been focusing on a few nodes of the network, and placing functional processes & tools in place to address the challenge.   If you ask a functional question to a bunch of functional systems, you will always get a functional result.   And functional results will never bring consecutive, sustaining improvements.

At Kinaxis, we have the motto: Know Sooner, Act Faster.  That’s the innovation.  Speed with direction.  Stop asking functional questions and ask end-to-end questions.  And that requires significantly faster analytics across the functional nodes.   Better said, significant velocity.  Yes, it does mean pure speed when a supply chain acts.  But, it also means speed in the right direction.  And speed comes from planning ahead, through simulating scenarios in advance of the challenge.  In fact, after reading the past seven years of Top 25 Supply Chain research, the one thing the best on this list do is: What-If planning. It is not a PhD in the corner working for days,but a core facet of their Planning.

I challenged the attendees on “Know Sooner, Act Faster”.  What do you truly “know” about your supply network.  One of the best ways to answer that question is “how much fire fighting do you do ?”.   If you are fire fighting, you are losing.  You haven’t planned ahead.  You are losing profit & margin to accomplish what an effective simulation could have prepared you for.   Tough words, sure, but great supply chain leadership should reward knowing sooner more, fire fighting less.

Then, we talked about “Acting Faster”.   I asked the audience what the first 10 minutes of every CPFR meeting was.  Answer =  Comparing Data!   That’s the best way to determine if you can act fast.  If you are checking which set of numbers each node is using, you will lose speed.  Every node has to be working off the same version of the plan.

The next great innovation in supply chain is Speed.  And, for the best supply chains, it’s quickly becoming table stakes to have your suppliers, distributors, shippers, etc, on the same plan, acting within minutes of a change, and simulating scenarios for end-to-end network turns and operating margin.  Why?  I say because the consumer is using technology to speed up their decision and purchase.  Every industry has seen their consumer build leverage, and demanding personalized attention.  Supply chain networks need to address this attention by knowing a lot sooner and acting a lot faster.

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Posted in Demand management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management, Supply chain risk management


How do you collaborate? A look at supplier collaboration

Published November 21st, 2013 by Nazli Erdogus 9 Comments

I love to get my hands on new devices and applications that can be used in the workplace. With so much access to technology today that allows workers to be in constant contact with colleagues, you would think that collaboration would be easier than ever. But, recently, I read an article arguing that there is increasing demand for more face-to-face communication in organizations. Of course, face time with colleagues is not always possible for businesses for multiple reasons, including time constraints and the high cost of travel.

According to a survey of over 1,000 U.S. employees, conducted by Kelton Global, people were asked how they prefer to collaborate and surprisingly 72% of respondents answered in person, 23% answered online and 5% answered via phone or video conference. In addition, nearly two in five employed Americans feel there is not enough collaboration in their workplace. There definitely seems to be a gap here. So while reading these articles, I said to myself – wait a minute, I know that we can help facilitate better collaboration in the workplace, as least for supply chain professionals!

This research takes me to our annual user conference, Kinexions, which was held a few weeks ago in Scottsdale, Arizona where our customers, partners and prospects got together to hear about recent developments in RapidResponse and our customers shared their stories of successful RapidResponse deployments. We also had something unique at this conference: we were able to show ‘supplier collaboration’ in RapidResponse. This feature enables an efficient and effective process between buyers and suppliers. Using RapidResponse, enterprises have direct supplier interaction with automated B2B data exchanges for a number of different situations.

At our conference, we were eager to present the power of supplier collaboration by adding another element to it.  We showed an integrated demonstration between RapidResponse and the GT Nexus portal. We received positive interest and valuable feedback from industry analysts, customers and prospects telling us how powerful and intuitive this approach is.

The demonstration pointed out a combined solution using the RapidResponse client and GT Nexus portal where suppliers and buyers sense, evaluate, decide and act upon a supply disruption. This integrated solution displays unique capabilities including multi-enterprise visibility, immediate simulations to enact on changes, and coordinated multi-party responses.

The ability to connect with the GT Nexus portal enables the supplier to sense the real-time data across a multi-enterprise level, feed this update to RapidResponse, and let RapidResponse do its magic in re-planning and scenario analysis. The scenario comparison uses a number of business metrics and enables the decision maker to analyze the comparison on financial impacts. Then, it’s time for GT Nexus to be fed back with the analyzed data for action.

This initiative serves a broad interaction between suppliers, buyers and even a possible additional tier of suppliers involved in the supply chain. We know that  letting a supplier have access to RapidResponse to commit to requested dates and quantities is beneficial to improve the flexibility of your supply chain and the profitability of your enterprise. We’re now adding some cream on top of it.

So, what’s next? The big thing is that we are not only collaborating with the supplier, but also letting suppliers to sense changes and the opportunity to make respective changes. With this in mind, we can also say what’s next could be preventing disruptions in your supply chain before they happen. Imagine a world where you can sense the disruption coming by identifying limits through your confidence intervals, looking at important metrics that perform a negative trend, and be able to respond to that as a preventive action. That definitely sounds like the next chapter.

It seems safe to say this integration would definitely bring more than enough collaboration in supply chain platforms to answer the need for more collaboration across different teams, thus enabling companies to do a better job of providing applications that encourage collaboration.

Collaboration is important and we definitely take it seriously.

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Posted in Control tower, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


A response to ‘Is Your Supply Chain Glass Half Full?’

Published November 13th, 2013 by Janice Kakazu 0 Comments

I just recently saw Bill DuBois’ blog post ‘Is Your Supply Chain Glass Half Full?’  It tickled my fancy and a few additional one-liners came to mind:

  • Project manager – I know you want to add cranberry juice to your martini glass, but I’ll need to write a change request for that.
  • Potential customer – I’ll order that drink if I can talk to 3 other customers who’ll tell me how good it is.
  • Supply chain consultant– Tell me about your requirements for filling that glass, and I’ll transform your glass-filling process!
  • Research analysts/Thought leaders – You’re at stage 4 of the maturity curve when you can segment all the glasses by fullness (or emptiness), sense how full each glass is with your eyes closed, and collaborate with the bartender to get a refill in real-time.

Hope you enjoyed that!

Do you have any other supply chain, “is the glass half full” one liners?

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Posted in Control tower, Demand management, General News, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration


The Two Best Supply Chain Metrics…Influence and Power!

Published November 7th, 2013 by CJ Wehlage 0 Comments

Since I’ve joined Kinaxis, I’ve become so intrigued by the parallels I see between Apple and Kinaxis customers.

When I was at Apple, the joy that customers showed when using our products was so inspiring. They were always quick to say how cool something was.  Strangely enough, despite being in the enterprise software business, I’ve witnessed similar reactions from Kinaxis customers. In my 11 months here, customers are ecstatic when they talk about having RapidResponse. While I see the strategic benefits of using RapidResponse, it’s certainly not a consumer must-have gadget, like an iPad.  Yet, watch some of the Kinaxis videos, and see the passionate ways clients are using to explain what RapidResponse means to them.

 

 

 

 

 

During my time here, I’ve been pretty curious about this enthusiasm and have been investigating the why, and now, after our recent Kinexions conference it has become clearer to me. Here’s what I learned when I asked a handful of clients “What do you love about Kinaxis?” The two most common replies were:

  1. “Once RapidResponse went in, it spread like wild-fire.”
  2. “I wish I would have done this years ago.”

So, let’s analyze each statement:
“Once RapidResponse went in, it spread like wild-fire”, to me, means Influence.

Consider first what RapidResponse is: An end-to-end analytics solution, with incredible speed. Speed from in-memory and ONE code.  Now, I’ve been around the supply chain block these past 25 years, and the only “ONE” code I’ve seen is Excel (and we know, using excel has its drawbacks – see past blogs Hey Software Bullies Stop Picking On Excel and  Yet Another Excel Blooper When Will We Learn).

Everything else is functional modules that take time to stitch together.  Oh by the way, the complexity of supply chain nodes (from the companies I led) has increased from ~ 5-10 to ~ 20-25.  So, imagine gathering relevant data from EVERY node of your supply chain, into ONE code, and having incredible speed to perform analysis and collaboration.  To know what’s happening at every node, and respond before others are aware, brings a huge level of influence in the supply chain network.  People see it, and want it… badly! And, I can see why it spread like wild-fire.

“I wish I would have done this years ago”, to me, means Power

In this statement, customers are referring to using RapidResponse today.  And because of that, they are able to know sooner and act faster. For many companies, this has resulted in inventory and costs savings, margin and profit growth and utilization improvements.  The simulation capability has enabled them to use the supply chain operations to create a supply chain strategy and then align the supply chain strategy with the business strategy. So, when their competitors are fire-fighting disruptions (i.e. giving away profit to make revenues), they are simulating trade-offs in advance of competition, customer demand, industry and business plan changes and supply disruptions. The final result is a level of power in their company that they wish they had years ago.

This influence and power remind me of a great quote I once heard…

Information isn’t power…Informative decisions is power!

When Kinaxis clients are using words like ‘every node in the network’ and ‘total cost’, they are speaking about how they use the information to improve end-to-end decisions.  Functional wins are replaced with value driven wins.  This is what Gartner calls Stage 4 – Value Driven Supply Chain. Gartner’s Christian Titze attended Kinexions and wrote the following article entitled, ‘Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record’. In it, he says that: “Some are now decommissioning their other SCP solutions and even moving material requirements planning (MRP) out of their ERP systems. This indicates Stage 3+ IT maturity for planning, whereby a planning SOR is in place and ERP systems are seen solely as transactional SORs. ” – Titze, C., Payne, T.; Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record; Gartner, Inc.; 31 October 2013 .

A value driven, or market driven, or even a demand driven supply chain is Stage 4 in the supply chain journey.  However, many companies are stuck in Stage 3.  Why?  I think it’s because they grew up functionally, are organized functionally, and make functional decisions.  It’s easy to spot.  I like asking the first question… “tell me about your supply chain strategy”.

The typical response is, “we are working to reduce our costs”, “we have a goal of 98.5% on time delivery”, or “we want to improve our inventory turns by 20%”.  Great operational goals, but not a supply chain strategy.  Lora Cecere from Supply Chain Insight’s has stated, “…over 85% of companies are not clear on supply chain strategy,” in her blog Three Lies and a Truth. The answer starts with the business strategy – what is the company’s goal, what is being offered, when and where?  Then, how does the supply chain iterate and evaluate the cost benefit tradeoffs over time?

Most supply chains do the cost benefit tradeoff at the end of the quarter, or after the disruption has occurred.  Masked with the benefit of “made the revenue plan” is the failure of lost profitability.   It’s even worse when supply chain leaders reward the fire-fighters, enabling an organization that sees expediting more positive than preparation.

Call it Stage 4, call it value driven, call it supply chain strategy, the core is to know and respond across the complete supply chain network, and simulate the tradeoffs that enable the business plan.  You can see what the most important step in getting to stage 4 according to the Kinaxis clients…

GET THE END-TO-END DATA!

Using that data with incredible speed, affords you a level of influence and power across your company and supply chain network, and enables a value driven strategy.

 

Posted in Demand management, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Know Sooner. Act Faster. Not just a supply chain software conference theme

Published November 6th, 2013 by John Westerveld 0 Comments

We recently held our user conference, Kinexions, in Scottsdale Arizona. Attendees from around the world gathered to learn, laugh, share and connect. The event was kicked off by an address from Kinaxis CEO, Doug Colbeth. This was followed by an inspiring talk by Sir Ken Robinson discussing finding your passion: how you need to find what you love to do and then you’ll never have to work a day in your life. That was followed by several customer presentations describing how they’ve used RapidResponse to know sooner and act faster. And actually, that was the theme of the show…“Know sooner, act faster”.

If you are a Kinaxis customer, you know what this tagline means. For those who aren’t, this is what we are talking about:

Know sooner: Imagine that you have a supply chain disruption. Your supplier’s line has gone down and they’ve decommitted the next few weeks of orders while they make repairs and get caught up.   Imagine you found this out first thing Monday morning.  With your current ERP system, how long would it take you to understand what that delay would do to your production schedule?  What customer orders would be impacted?  What does this do to your weekly, monthly, quarterly revenue targets?  Maybe the supply delay really only impacts safety stock and minimally impacts actual customer orders. Perhaps the supply delay impacts millions of dollars of revenue.

Not knowing means either lost time working on minor problems (while more significant issues are ignored) or potentially not working a problem that could impact your company financially. Now, what if you had a system that would notify you when something like a supplier line down occurred.  Imagine if you could configure the system to only notify you if this change impacted customer revenue? Further, what if this system could lay out for you what the revenue impact was and the items causing these orders to be late. That is how you know sooner.

Act Faster:  Now imagine that the line down situation described above actually does drive millions of dollars of lost revenue? What would you need to do to recover? Do you find another supplier?  Can you substitute the late component with another equivalent component?  Can you offer customers a higher end product in place of the ones that are short? Or is it better to just accept that the late/lost revenue? Each of the possible resolutions have cost, revenue and customer service implications.

If you are using a traditional ERP system, you will need to pick one approach and go with it because you cannot effectively simulate different options, and even if you could, with the limited reporting capability inherent in today’s ERP systems, you can’t easily see the impact of those options on revenue, margin and customer service.  To act faster, you need to be able to identify those people affected by a change, collaborate with them to simulate the possible resolution options and then compare those resolution options  to see the revenue, margin and customer service impact.

When plans and events create risk/opportunity for you, the speed at which you bring together the right people to collaborate will make or break your operations performance.

It’s not difficult to see that knowing sooner and acting faster is a competitive advantage. Other factors being equal, reacting to changes in your supply chain faster than the competitions means that you will win more business, hold less inventory and earn more profits.

Kinexions-know-soon-act-faster

 

 

 

 

Posted in General News, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Making Connections at Kinexions – Our customers say it all

Published November 4th, 2013 by Trevor Miles @milesahead 0 Comments

We had our annual user conference, Kinexions (pronounced ‘connections’ – isn’t English a strange and fabulous language?) in late October with record attendance and great feedback. The theme of the conference was our tag line ‘Know Sooner. Act Faster.’ Indulge me while I parse out our strap line.

Know Sooner – The ability to detect market changes quickly and determine whether the changes represent risk or opportunity, as well as identifying and alerting the people impacted by the risks or opportunities.

Act Faster – The ability to determine the best course of action quickly through scenario analysis within a team of people, across functions and even organizations, in a structured manner.

In other words our strap line is all about reducing decision latency through purposeful collaboration driven by responsibilities.

As usual it was the great customer testimonials that drive home the benefits of this theme through:

  • Rapid time to value in the initial deployment
  • Rapid innovation on the part of Kinaxis
  • Consistent value delivery over time as they expand into new BUs, geographies, and business processes
  • Mature into a Planning Control Tower – End-to-end supply chain planning process enablement

Of course that is easy for me to say, so I want to focus on external validation of these points.

We had Christian Titze attend our conference for the first time from Austria. In a short summary of the conference Christian states that:

Client companies at the conference demonstrated several ways in which they are adapting and improving their supply chains. These included speeding up time to value from deploying new software, and using embedded analytics and master data management (MDM). In doing so they showed how they were redefining their supply chain planning (SCP) application portfolios to support an adaptable and capable planning system of record (SOR).

Several client companies showed how they were using RapidResponse as a planning SOR. Some are now decommissioning their other SCP solutions and even moving material requirements planning (MRP) out of their ERP systems. This indicates Stage 3+ IT maturity for planning, whereby a planning SOR is in place and ERP systems are seen solely as transactional SORs.

Titze, C., Payne, T.; Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record; Gartner, Inc.; 31 October 2013 .

Unfortunately Ray Wang had some travel issues meaning he could not attend our analyst/influencer session in which we have open kimono discussions with several customers, but Ray has attended our user conference in the past and knows several of our customers. However we were fortunate to have Holger Mueller on a panel which I moderated. Holger has tons of experience in large ERP vendors so it was great to see him endorse the benefits of our technical architecture in a Twitter stream with Ray, which is of course behind all the value delivery.

KinexionsTweetsHolgerRWang


Lora Cecere has been a consistent voice of the customer in the analyst community for well over 10 years now, often putting the software vendors feet to the fire, including ours. She calls this ‘tough love’. As a consequence any positive statements about a vendor need to be cherished, so it is with great joy that I can report that while at our conference, Lora wrote a blog entitled ‘Applause’ in which she states:

In leaving the Kinaxis user meeting this week, I am struck by three things.

First, their recent work on mobility and defining the user experience on a mobile application is very cool.

Second, the flexibility of the Kinaxis solution makes the product hard to message, but the clients that have figured it out, are very happy.  (Some of the happiest….)

Third, the solution is most often deployed in material-intensive supply chains for what-if simulation and visibility. It is a cloud-based solution that scales easily for hundreds of users. It has helped many clients that were too constrained by the inflexibility of the traditional APS platform.

At the conference, Kinexions, I heard many clients speaking freely about the deployment of Kinaxis and the turning off of Oracle and SAP APS solutions.  Many were almost giddy. The ease-of-use of the Kinaxis system was freeing for their teams.

Our Customers
While I wish I could share details of the customer stories shared with the influencers and as keynotes, these days companies are very reluctant to provide public statements of benefit.  What I can say is that during the influencer session we had three customers speak:

•    Flextronics – Customer since Oct 2001
•    Amgen – Customer since Mar 2009
•    NCR – Customer since Jan 2010

The consistent story across all 3 is how they paid for the initial investment in less than a year and how they have expanded their deployment of Kinaxis ever since, often to adjacent functions such as Finance, R&D, and Regulatory/Control. These stories were repeated in the main stage presentations by Cisco, Applied Materials, and First Solar.

What I love about these customer stories is that they give us purpose. Without tangible business benefits software is nothing but a few bits and bytes.

 

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Posted in Control tower, Demand management, Milesahead, Products, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Is your sales and operations process still effective and relevant?

Published September 23rd, 2013 by John Westerveld 2 Comments

sales and operations (S&OP) effective and relevantI saw an interesting article from Dave Jordan at the Supply Chain Blog. In it, Dave points out that many companies will be quick to say that they have a sales and operations process (S&OP), however if you look a bit deeper, you find that they are really just going through the motions. The company that Dave looked at had the following issues;

  • The marketing plan had a 1 month horizon – nowhere near enough visibility
  • The demand planning group was not engaged so the supply planner had to make their best guess as to what the forecast would be
  • As a result, procurement planning was a guess at best
  • There was no flexibility in financial targets so no alternate scenarios considered
  • KPIs were not used to drive improvement
  • No agendas, no minutes, no executive commitment

So, how do you ensure that you don’t slide down into this trap? How do you ensure that your sales and operations process (S&OP) continues to add value – more importantly how do you ensure that your S&OP process adds MORE value over time?

  • Executive Commitment and involvement – An effective sales and operations process (S&OP) sets forward a plan, and then ensures that plan gets executed. If the people attending the S&OP meeting don’t have the authority to make a decision and see that it gets implemented, the likelihood that the plan get executed has now reduced significantly
  • S&OP is used to run the business – In a previous life, I was responsible for preparing our divisional S&OP plans. S&OP was done in Excel, the rest of the company planning happened in the ERP system. It was always a battle to make sure that the S&OP Plan was reflected in the ERP system. At the time, there weren’t any alternatives. Today, you have decision support and planning tools that allow you to do your day-to-day planning and S&OP in the same system. In this way, daily decisions are taken in the context of the S&OP plan.
  • Accurate S&OP data – The decisions you make is only as good as the information you have. If the data is weeks old, inaccurate or has calculation errors. You will make bad decisions. As in the last point, if the data used to drive S&OP is the same data that you use to make your day-to-day decisions, you know it’s going to be current (it’s live data after all) and you know if there were accuracy issues they would show up in your daily activities.
  • Solutions – not just problems. An effective S&OP meeting is not a whining or blaming session. Effective S&OP is all about creating a plan. If there is an issue, make sure you bring forward AT LEAST one solution to the problem.
  • Scenario driven – There is rarely ever a single solution to a problem. Yet how many times have we sat in S&OP meetings where an issue was raised and only one solution was presented? Traditional S&OP tools didn’t allow us to consider multiple solutions, however with today’s scenario based tools and fully integrated data, several possible scenarios can be considered and compared.
  • Run effective meetings and keep meticulous minutes – We’ve all been in the meetings from hell. No agenda, hashing the same issues out without finding consensus and then finally after wasting several hours we go away…only to come to the next meeting to discover that no-one captured the decisions. Effective meetings have;
  • An Agenda – with realistic time guidelines. Remember that effective S&OP meetings need to include the executive team. Make sure that their time is well spent.
  • Defined roles; someone tasked to chair the meeting, someone tasked to keep minutes, and sometimes a timekeeper to make sure the agenda is met. If you are really struggling with effective meetings you can engage a facilitator for a while who will help guide the meeting process.
  • An action log that is followed up each meeting until the action is complete.

How do you ensure that your S&OP process maintains its effectiveness and relevance? Comment back and let us know!

Posted in Demand management, Inventory management, Response Management, Sales and operations planning (S&OP)