Posts categorized as 'Sales and operations planning (S&OP)'

Top Four Most Vital S&OP Technology Capabilities

  • by Lori Smith
  • Published

Abstract Image of Business People's Silhouettes in a MeetingIn 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.

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Four Keys to S&OP Effectiveness (continued)

  • by Lori Smith
  • Published

Buiness person reviews S&OP documentsIn my previous blog post, I compared a pilot flying from New York to LA at night without any modern navigation systems or instruments, to supply chain teams trying to effectively manage their organizations without a proper S&OP process. Obviously, the likelihood of either arriving at their intended destination in an effective and timely manner is quite slim.

Successful sales and operations planning provides a navigation system to help determine where you are going, where you have been, when you are off course, and how to get back on course. To be effective, S&OP must:

  • Bring together demand and supply planning (often referred to as East-West integration)
  • Bring together Finance and Operations (North-South integration).
  • Tie volume and mix plans together
  • Facilitate S&OP on-demand, not only on-schedule

I covered the first two bullets in my last post, so let’s discuss the other two here.


Key #3 Tying together volume and mix plans

One of the stumbling blocks of traditional S&OP is that volume-only plans often end up being infeasible when disaggregated to the mix level. The challenge is to translate the aggregate, volume-level plans to a SKU or mix-level operational plan and then test the feasibility of the plans before committing to them. Otherwise, the S&OP plan will lose credibility within the organization.

The second challenge is to keep the plan feasible.

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Four Keys to S&OP Effectiveness

  • by Lori Smith
  • Published

an airplane cockpitIn a previous post, I talked about the ineffectiveness of Excel, ERP, and legacy planning for S&OP. If those aren’t the right tools for the job, what is?

I heard a colleague once give the following analogy: Imagine a pilot flying from New York to Los Angeles at night without any navigation systems or instruments to measure his location, wind speed, or altitude. Instead, every two hours he checks the stars with a sextant, extracts data from the flight recorder about his throttle settings, and draws in the plane’s likely location on a map.

What are the chances of that pilot actually getting to LA? Can he arrive on any predictable timetable? You’ll likely agree his chances are slim to none.

A modern pilot embarks with a general flight plan, but then monitors a continuous readout of key metrics, which he uses to make numerous small course corrections to arrive at the proper destination on schedule.

It’s the same for business. Successful S&OP provides a navigation system to help determine where you are going, where you have been, when you are off course, and how to get back on course.

The four keys to highly effective S&OP are:

  1. East-West integration – bringing together demand and supply planning
  2. North-South integration – bringing together Finance and Operations
  3. Tying together volume and mix plans
  4. S&OP on-demand, not only on-schedule

With this model of S&OP, process execution evolves into operational orchestration, efficiency goals are coupled with measures of effectiveness, and cost control objectives are appropriately balanced with mandates for delivering business performance and value-based outcomes.

In this post, I’ll tackle the first two keys and I’ll follow-up with a second blog post for the latter two.

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Excel, ERP and Legacy Apps, Oh My! What Technology is Supporting Your S&OP Process?

  • by Lori Smith
  • Published

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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Tackling Life’s Big Questions… What is S&OP

  • by Lori Smith
  • Published

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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Sales and Operations Planning (S&OP) in the NOW, is happening NOW!

  • by Matt Benson
  • Published

A woman reviews an S&OP related documentAs I was presenting at the European Supply Chain and Logistics Summit last week, the overriding memory I’ll take away was the number of people that were nodding and pointing at the screen when I talked about how unplanned supply chain events that occur need to be addressed immediately and that they cannot wait to be included as part of a new S&OP cycle.

Traditionally, an S&OP cycle is a process geared towards taking a medium/long-term forecast, balancing with aggregate level resources and generating questions/answers to establish preventative action. Usually it’s seen as a monthly process that follows this cycle:

  1. Collate actual data and perform performance analysis
  2. Start demand planning cycle
  3. Establish supply status
  4. Perform balancing and establish variances
  5. Agree on corrective action and present solutions
  6. Executive decision and commit to the business

However, this process makes several broad assumptions:

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Kinaxis Positioned in the Leaders Quadrant of Gartner’s Magic Quadrant for Sales and Operations Planning Systems of Differentiation

  • by Lori Smith
  • Published

Gartner's Magic Quadrant for Sales and Operations Planning Systems of Differentiation

Gartner recently published their Magic Quadrant for Sales and Operations Planning Systems of Differentiation and we take great pride in the fact that Kinaxis has been placed in the Leaders quadrant and is situated highest on the Ability to Execute axis.

Gartner defines a sales and operations planning (S&OP) System of Differentiation (SOD) as a software solution that supports a Stage 4 or higher-maturity S&OP process. According to the report, Leaders demonstrate “Leaders have a strong vision for their S&OP SOD capabilities. They recognize the role they will need to play in enabling the move toward multienterprise horizontal planning allied with vertical integration that links strategy to operations and execution. They are focused on developing analytics to support end-to-end profitability trade-offs and configurable supply chain design and configuration capability.”1

In this regard, we believe we truly out-execute other vendors in the space. Our proficiency in consistently delivering a quality solution and service to our customers is foundational to our value.

Given the configurability of RapidResponse®, it is an ideal solution to take companies through the various stages of S&OP maturity. Our goal is to both enable quick initial success and help our customers advance their S&OP processes from early stages through to Stage 4 (and beyond) over time by leveraging the full capabilities of our solution.

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Supply Chain Transformation — The Important Element of Information Strategy

  • by Bob Ferrari
  • Published

supply chain transformation involves people, process, technology and informationThe following guest blog commentary is contributed by Bob Ferrari, Founder and Executive Editor of the Supply Chain Matters blog and Managing Director of the Ferrari Consulting and Research Group LLC.

We often context and plan supply chain transformation initiatives under the three-pronged perspectives of People, Process and Technology enablers. I would urge transformation teams to seriously consider a fourth component, that being Information, including the velocity, context and clarity of information. While some may be of the mistaken belief that the element of Information is solely the perspective of IT, it is rather a jointly-owned, cross-functional element of transformation.

Across various industry supply chains, a lot of executive level visionary thought and leadership energy is becoming focused on supply chain transformation efforts, namely moving the needle towards more agile or resilient supply chain response capabilities. The reasons are many and varied. Today’s clock speed of rapid and continuous business change requires that industry supply chains be more agile and able to anticipate changes in customer, product, or fulfillment segment needs, quicker than competitors. The complexity and sheer speed of events occurring across the global supply chain implies an exceptions-based focus, allowing advanced technology to monitor and oversee day-to-day customer focused fulfillment. Having a bold vision to the end-state capabilities required across the value-chain is essential. With the increasing demands of online and omni-channel customer fulfillment, the end-state is often defined as the supply chain being more predictive and exceptions-driven in terms of response.

Many of today’s industry supply chain and sales and operations planning (S&OP) teams however, find themselves drowning in too much data while lacking in important insights. Hence transformation efforts can start on the wrong footing.

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