As mentioned yesterday, the entire Q&A along with PJ’s introduction and commentary on Kinaxis can be found here (free registration required).

PJ: Can the S&OP process be carried out without technology? Does this relate to the aforementioned S&OP maturity model?

TM: This is the perennial debate. Even Microsoft Office Excel is technology, as are the underlying ERP systems from which much of the data to carry out the S&OP process is extracted. Phone or conference calls and e-mail, both of which allow people to communicate more effectively as a group, are also technology. I find the more interesting question to be: “How can we change the process to better accomplish our goals using technology as an enabler?”

The people who ask this question are the ones who achieve greatest process maturity. As I have already stated, if the S&OP process is designed without the available technologies in mind, then it will inevitably be less mature. Much of what we read as S&OP best practices was designed 30 years ago, before the advent of Excel, the PC, or the Internet—the times they are a-changin’.

PJ: Is it possible to have an effective S&OP process that only looks at the aggregate or “volume” level? How important is it to consider the operational and tactical feasibility of the S&OP plan?

TM: It depends, but I would say that the operational and tactical feasibility of the plan needs to be considered, and this is usually carried out at the so-called product mix level. This is especially true in markets that experience rapid introductions of new products, such as in high-tech/electronics, or when a new product introduction (NPI) takes a long time and has high uncertainty, such as in the pharmaceutical industry.

This point is also a good illustration of the point I made above about the planning continuum. The classical definition of the S&OP time horizon is 6−18 months. What happens when you have a nine months’ or less product life cycle? What happens when a large part of the revenue for a product family will come from new products being introduced over the next nine months that require unique parts, due to the introduction of new technologies, and that are in short supply with 14−18 week lead times? Running S&OP for this product family at the ‘volume’ level only is nuts.

PJ: How do you differentiate between executive S&OP and operational S&OP, and what related solutions do you provide for each?

TM: I don’t. The differentiation is spurious. Executives may want to view data at a more aggregate level, but why would they want to view different data? Why wouldn’t executives want to drill into the details of something that intrigues them? Why wouldn’t they want to test the consequences of making a change?

When I meet prospects and customers, I often hear of the Chambers Report, the Lazaridis Report, or whatever other CEO/COO report. These are reports that are inspected on a daily basis. But senior executives not only inspect them, but also want to get quick answers to the financial and operations consequences of changing assumptions or values. Essentially, these executives want to perform ‘what-if’ analysis in real time and to know that the values reported are based upon feasible plans.

Feasibility cannot be evaluated at the aggregate or volume level. Perhaps feasibility can be tested at the volume level in slow moving industries with relatively few NPIs and fairly stable demand. But in high-tech/electronics, feasibility can only be tested at a fairly granular level. With key component lead times of 14−18 weeks, product life cycles of six months or less, and a forecast accuracy of greater than 60 percent difficult to achieve, S&OP has to be performed at both a lower level of granularity and over a short horizon. Of course, executives will want to view results and change data at the more aggregate level, but why does this require a separate data model and separate analytics? This is merely a matter of presentation of the information.

Kinaxis RapidResponse is a single solution that covers multiple time planning horizons and supports planning as a continuum, not as a set of unique and divorced processes supported by islands of information. Scenarios can be created in a fraction of a second, which are then used to make changes at both the ‘volume’ and ‘mix’ levels.

RapidResponse provides alerting capability for early detection of key metrics that are diverging from the planned values. For example, the marketing folks may make a change to the assumption of market share for a product family over the next 6−12 months. Based upon historical or projected mix ratios, the change in market share may lead to a shortage of capacity for one item and excess and obsolete commodities for another item. Clearly, several people need to be alerted that this change to the market share assumptions has been made because of issues that come up at the mix level. As described, RapidResponse alerts users to not only events, but also the consequences of these events.

More importantly, RapidResponse supports the notion of responsibilities, which are used to identify whom in the distributed supply chain should be notified of the consequences and pulled into a new scenario used to propose and evaluate different alternatives for resolving, or at least reducing, the impact in minutes if not seconds. Scenarios can be compared side-by-side in RapidResponse to understand their impact of corporate targets for both financial and operational metrics, such as revenue, margin, inventory levels, customer service, etc.

Stay tuned for the finale tomorrow!

As mentioned yesterday, the entire Q&A along with PJ’s introduction and commentary on Kinaxis can be found here (free registration required).

PJ: How important is a maturity model for S&OP? Do companies have to be at the most advanced stages of S&OP to claim to be doing S&OP?

TM: An S&OP maturity model is important for companies to understand how their process, people, or technology needs to evolve over time to achieve maximum benefits. The maturity model helps them to identify both goals and gaps. Companies do not have to be at the most advanced stages to claim to be doing S&OP, but I do think there is a floor below which it is difficult to make that claim.

PJ: Many analysts are advocating the evolution of S&OP into IBP? Are you a proponent of IBP, per se? Tying the financial plan or measures directly into the process is a key component of IBP—what else distinguishes IBP from S&OP?

TM: I see S&OP and IBP as separate topics. One of the greatest fallacies in the industry is that each planning process is unique and isolated, and that each requires a separate tool with a separate data structure, analytics, and user interface (UI). In reality, planning is a continuum, and each stage should be feeding the next and being informed by the previous.

It is this continuum of planning that I think of as IBP, which should be supported by a single data model and a single set of analytics. The level of aggregation in the time, product, and geography dimensions as well as the time horizon over which the data is viewed will depend on the process being carried out, but at all times, any changes made at the more aggregate levels during S&OP should be immediately visible to anyone working at a more detailed or tactical level. Similarly, any changes made at the more detailed or tactical level should be aggregated up immediately to the S&OP level.

One of the steps in the planning continuum is S&OP (figure 2). So while I empathize with the idea that the inclusion of finance in S&OP magically transforms S&OP into IBP, I think this is too limiting a view of IBP. Why is finance not included in tactical planning too? Why is the tactical demand plan not part of the business planning/budgeting process?

Figure 2. Integrated Business Planning—the Goal

PJ: Organizational thinking is often inherently bound by the dimensions of the “box” it is currently in because people don’t question working assumptions strongly enough. Do you believe “process inertia” is a barrier to advancing S&OP processes?

TM: I do think ‘process inertia’ is a barrier to advancing S&OP processes. I also challenge the idea put forward by many process consultants that S&OP is 75 percent process, 20 percent people, and 5 percent technology. While change management is of course a critical part of any S&OP deployment, the process that is put into place must make use of the latest technologies, particularly the more mature S&OP processes.

But even this statement is false, because if a less mature S&OP process is not designed with the ultimate goal in mind, which requires technology, how will it be executed? Technology will change nothing until we use it for that purpose. Henry Ford captured this very well in his statement ‘If I had asked people what they wanted, they would have said faster horses.’ The automobile, both as a means of transporting the consumer to large retail locations as well and as a means of transporting goods to these large retail locations, has changed the shape of cities dramatically over the past 100 years. Similarly, the Internet is having a dramatic effect on the buying patterns, with some analysts reporting as much as 40 percent of sales by revenue over the last Christmas season being carried out over the Internet.

It is time for planning processes, particularly S&OP, because of its inherent collaborative nature to drive consensus and compromise, as well as to adapt to new technologies. I believe the arrival of the Millennials to the labor market will drive the adoption of more collaborative technologies, particularly concepts from the social networking world, into the corporate world, particularly for S&OP.

Stay tuned for part three tomorrow!

The entire Q&A along with PJ’s introduction and commentary on Kinaxis can be found here (free registration required).

Part One:

PJ: What do you believe is behind the surge of interest and activity around S&OP? What are the anticipated benefits?

TM: The surge of interest in S&OP is due to a combination of market drivers, available skills, and technology maturation. The primary market driver is a combination of mass customization/long tail and globalization of demand due to the recession in western economies and the increasing importance of the so-called BRIC (Brazil, Russia, India, China) countries as demand centers. This has led to a big increase in demand volatility, whereas outsourcing, on the other hand, has led to longer supply lead times and greater supply uncertainty. The combination of these factors means that brand owners are keen to regain control of their extended supply chains. There has been a simultaneous arrival of the Millennials (Generation Y) in the workforce, for whom the Internet and computers are natural tools for resolving competing and conflicting goals in a team-oriented fashion, as exemplified by their extensive use of Facebook and other social networks.

As S&OP is a multi-functional process by its very nature, it lends itself to the multi-enterprise nature of today’s supply chains, particularly in the high-tech/electronics vertical. Software tools are emerging that encourage and support the negotiation, compromise, and consensus building necessary in a multi-function, multi-tier process like S&OP through the use of scenario management and collaboration, including assumption capture. It is the Millennials’ experience with social networks, which are inherently collaborative, and the associated technologies that will drive both the adoption and the need for similar technologies in S&OP.

The most obvious benefit is a more agile and aligned supply chain. How this will translate into hard benefits will depend on the current state of the company and the market in which it operates. In some cases, we are seeing that a good S&OP process is now ‘table stakes,’ required simply to keep up with competition. The benefits are principally those associated with supply chain efficiency—reduced inventory, improved capacity utilization, reduction in excess and obsolescence (E&O). Companies at the head of the pack are using S&OP to improve customer capture and retention through better demand sensing and supply chain agility to provide a profitable response to the market.

PJ: Do you think the definition of S&OP is clear in the marketplace? If not, is that a problem? How do you personally define S&OP?

TM: The definition of S&OP is not clear, but I do not see that as a problem. I see the definition as evolving. S&OP was defined by Dick Ling nearly 30 years ago, and well before the advent of fax machines, PCs, spreadsheets, and the Internet—let alone laptops, iPads, and smartphones. I would be extremely disappointed if our definition of S&OP had not changed over that time. Tom Wallace has commented that an S&OP can be considered a success when there is cross-functional collaboration. I would agree that this is a necessary but insufficient definition of success. However, Tom is absolutely correct to highlight the importance of cross-functional collaboration due to the importance of reaching consensus despite competing goals and measures (figure 1).

In today’s outsourced supply chains, collaboration must include at least the contract manufacturers. But with the ever-shortening product life cycles, how can the engineering/research and development (R&D) departments be excluded from S&OP? With life cycles of cell phones reduced to six months or less, running a monthly S&OP cycle focused on a 6−18 month horizon seems pretty pointless.

Figure 1. S&OP—Balancing Competing Goals

S&OP is the process that translates corporate business objectives, which are largely captured in the business planning or budgeting process, into feasible tactical plans that can be executed at the plant or supply chain level. The time horizon and granularity level at which S&OP is carried out will depend on the industry and market. We have some customers that plan as far as 5 years out, whereas others plan only 18 months out, as their product development horizon does not extend much beyond that.

I do not believe that a ‘one size fits all’ approach when it comes to the S&OP process. Instead, I believe that some characteristics define how well S&OP is being carried out or the level of maturity of the S&OP process. Larry Lapide, research affiliate at MIT Center for Transportation and Logistics, captured these characteristics very well in a three-part series in the Journal of Business Forecasting, the last part of which was published in spring 2005, in which he describes the most mature level of S&OP as having the following:

Event-driven meetings

• scheduled when someone wants to consider a change or when a supply-demand imbalance is detected

Extended processes

• demand and supply plans aligned internally and externally
• external collaboration with most suppliers and customers

Full set of integrated technologies

• an advanced S&OP workbench
• external-facing collaborative software integrated to internal demand-supply planning systems

Part two will be posted tomorrow. Stay tuned!

Tom Wallace in a recent blog titled “Cross-functional collaboration is not a pre-requisite for successful S&OP: it’s a result” states that:

Improved teamwork is a natural by-product of  S&OP. I tell people that if they’ve implemented S&OP and have not seen an improvement in teamwork, they didn’t do it right. It’s that simple. Enhanced teamwork follows successful S&OP just as day follows night.

Of course it isn’t that everyone is a liar as in the Dilbert cartoon, but rather that frequently the objectives and performance measures of individual functions are not aligned, preventing what Tom Wallace calls teamwork. All too often the VP of Operations is measured on asset utilization and the VP of Sales is measured on revenue or margin increase.  These are often in conflict because satisfying the most demand often means doing so ineffectively from an asset utilization perspective, especially inventory.  Conversely, the most efficient asset utilization often does not lead to the most effective demand capture because the tendency is to have long production runs to reduce change-overs, leading to high inventory levels and a product mix that may not match market demand.

But we have to get beyond having meetings at which conflicts are discussed, to a process in which different functions can explore alternative what-if scenarios collaboratively.  They need to have immediate feedback on the effect their decisions have not only on their own metrics, but also on the corporate metrics and other functions’ metrics.  When people can compare what-if scenarios side-by-side and understand the broader consequences of their decisions they will often behave in a less parochial manner.

I recently I presented at the Sales and Operations Planning Summit 2011. My session was on ‘Continuous S&OP for high-tech/ electronics manufacturers.’ We just posted the PPT deck and recording from my presentation. Make sure to check it out!

Video recording: http://www.kinaxis.com/campaign/continous-sop-for-high-tech-electronics/
PPT Deck: http://www.kinaxis.com/downloads/pdf/Kinaxis-Continuous-Collaborative-SOP-2011-01-27.pdf

Here’s an abstract from my session:
Planning has long been segmented into different isolated activities that reflect organizational structures and functional goals, leading to long, ineffective, and inefficient planning cycles. For maximized value, sales and operations planning (S&OP) must be a truly cross-functional activity that can directly and simultaneously address both individual departmental goals and joint corporate objectives. In this session, attendees will learn about the specific technology and process requirements to achieve a continuous and collaborative S&OP capability as it applies to the high tech and electronics manufacturing industry in particular.

Despite being pretty busy next week with two events (I’m also presenting at the Bio-manufacturing Summit 2011 earlier in the week) I will be tweeting so follow me at @Milesahead. And stay tuned to the blog after the event for a round-up of my news and views.

Also, if you’re at the event, please stop by the Kinaxis booth and say hi!

Olympus needed an integrated, global SCM platform to improve its S&OP process, with the specific goals of more efficient new product introductions, as well as tighter alignment of demand and supply overall.  They came to us.  I quote:

“We found that Kinaxis stood alone in terms of the depth and breadth of functionality its solution could offer.”

Wow.  We are humbled.

It’s been a good week for us.  We also just added a new section to our website for executive testimonials and are honored to include some stellar video clips from the CIOs of both Qualcomm and Flextronics. (more clips are coming)  Having a CIO say that RapidResponse is “at the heart” of everything they do…well, it has made our year….and 2011 has just started!

Sure, we can advocate our value… make our case… sing our own praises all we want (and we do!) but at the end of the day, we know that people want to hear it from the customer.  So, let’s do that.

The survey, 2010 Global Survey of Supply Chain Progress, was jointly conducted by CSC, Supply Chain Management Review (SCMR), and Michigan State University, with assistance by the Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine. Twenty industries were represented in this year’s survey, and respondents included representatives from both large and mid-sized companies, with sales ranging from $250 million to over $1 billion.

One of the surprising—at least to me, anyway—findings was that when asked about the overall impact of supply chain initiatives on cost reduction over the past three years, the number of respondents answering “none” or “don’t know/not sure” grew from 13 percent in 2009 to 20 percent this year. And as a follow-up, when asked about the overall impact of supply chain initiatives on increasing revenue over the past three years, the percentage of respondents indicating “none” or “don’t know/not sure” rose from 30 percent in 2009 to 47 percent in 2010.  How should that be interpreted?  Is it actually a lack of impact, or a lack of direct measurement to understand the impact?

I am encouraged by other results (which, to a degree, are counter-intuitive to the stats above). For instance, supply chain management is largely held to be of considerable importance. In fact, 82 percent of the respondents replied that supply chain management is considered to be a core importance for their organization, and when asked how much influence supply chain management has on running the business, 52 percent replied “to a great degree”–while another 35 percent indicated a “moderate degree.” 

Supply chain management also is a logical operation for companies to use to battle the effects of the economy. Indeed, 78 percent of the participants indicated that their firms increased emphasis on supply chain management this year. Additionally, given the growing emphasis on supply chain management, it only stands to reason that S&OP is increasingly valued as well. For instance, 66 percent of the respondents reported a moderate to high degree of impact using S&OP to improve the company’s agility so it can better respond to changes in customer demand.

I believe this will be a trend that will continue for a long time to come.  SCM and S&OP are sure to grow in importance given that increasing levels of outsourcing, globalization of demand, requirements for product innovation and demand volatility combine to have a profound impact on companies’ business performance.  Supply chain is becoming known as the sweet spot for impacting competitive advantage and operational and financial success.

Patrick Bower is Senior Director of Corporate Planning at Combe Incorporated, the makers of Just for Men,  Odor Eaters, other OTC brands.  Prior to this experience, Pat worked as a Practice Manager for Supply Chain Planning at a boutique supply chain consulting company, as a Director of Demand Planning, Strategy and S&OP at Snapple / Cadbury Beverages, and has extensive supply chain supply chain systems background.     Bower frequently write articles on the subjects of demand planning, production planning, S&OP and speaks at conferences on S&OP and demand planning topics.  He is the architect of a patent pending demand planning software tool – known as a demand curve analyzer and has provided strategic supply chain consulting and training to a number of clients including GSK, Bayer, Diageo, Pfizer, Tasty Kake, and American Girl among others.  Pat can be reached at plbowerone@yahoo.com.

Kinaxis: What do you believe is behind the surge of activity around S&OP?  What are the anticipated benefits?
Pat: I believe there are four reasons behind the surge in interest in S&OP. 

• First, I think there is broad based recognition that supply chain tools and siloed optimizations are not living up to the sales pitches and internal expectations.  After all of the efforts to implement state of the art SCM software and one-off process improvements, many organizations’ supply chains are still not fully integrated into the business.  Something is “missing”.
• Second, there has been a professionalization of the supply chain community.  Employers are looking for candidates with APICS & IBF certifications, and continuous learning is becoming as important in the supply chain world as it is in other professions.  S&OP is a key element in  much of that learning and is often positioned as a game changing process – enabling not just better supply chain decisions,  but better business decisions.  It is not a surprise to me to see the recent buzz around S&OP; but it is interesting to see how the buzz has become deafening in a very short time.  Five years ago, I delivered a short ‘best of the best’ S&OP workshop at an IBF conference, and now, entire conferences are being been built around S&OP.  
• Third, the  severe economic downturn coupled with many years of IT investment has companies looking to squeeze more out those investments, hence the increased focus on people and process to get better integration of, and drive more value from, the systems.
• Fourth, and probably most important, the globalization of supply and demand has required companies to look at joint demand and shared resourcing in a different way.  Simply put, as the world has become flatter and the business landscape more competitive, it has led to a more global and complex supply chain.  S&OP is a process that helps create alignment in an otherwise complex environment.

As for the benefit stream from S&OP …. The benefit stream tends to be situational and really depends on a company’s “as-is” state.  However, generally speaking, a relatively mature S&OP process will often have the following hard benefits:  forecasts are almost always more accurate; most companies reduce inventory if only due to the focus on demand planning and inventory metrics;  fill rates often improve with right-sized inventory;  schedule cuts and other forms of supply side volatility decrease with improved demand planning and inventory management.  

There are many softer benefits including a better understanding of the supply and demand balance;  improved communication between organizational silos;  more profit focused decisions, and in the best S&OP implementations – there is a unity in focus – otherwise known as alignment.

Kinaxis: Do you think the definition of S&OP is clear in the marketplace?  If not, is that a problem? How do you define S&OP?
Pat: There is certainly a fair amount of confusion in the market place about S&OP, with different approaches cutting across nearly every aspect of the process definition.  Some experts see S&OP as a detail planning process, while others take a more strategic view.   Most believe S&OP should be a monthly process, while there are folks that suggest S&OP should evolve to a process with a weekly frequency.   There are many small, and not so small, differences in the naming and number of process steps involved in S&OP,  and in the graphical representation of  the process itself.   If one attends a conference on S&OP – you might find presentations with four, five and nine step S&OP models, and graphical representations of the S&OP process that are linear, circular or stacked / layered models.  I am personally partial to the Oliver Wight five step model, but recognize that even that particular process model has limitations and can be insufficient or over kill depending on the needs of the organization.

In the last ten years or so – seemingly every consulting organization, software company, and research analyst has attempted to redefine S&OP in some unique or different way.  Most of these differences are pure marketing.  In many cases, it is differentiation without real difference.  As an example, several years ago I was asked by my then employer to define a “reality-based S&OP” process model.  I argued that by definition S&OP should be reality based.  I simply did not want to create a white paper that would only add more confusion in the market place.  Marketing is not a bad thing – if it creates clarity, drives new thinking or highlights real differences.   However, with much of what I read and observe – I simply do not see much in the way of difference.  My biggest concern is that misguided marketing might create confusion.

I personally think there is a huge void in the S&OP community.  I believe it would be very valuable if all of the “experts” in S&OP came together to form a non-proprietary or “open source” S&OP process model that is available to be shared.   This “open source” S&OP model would come complete with maturity models, graphical representations, metric examples, checklists for implementation and so on.     Imagine a SCOR like model for S&OP.  It would be a living and breathing entity – but also provide some consistency in messaging and process design.   Consulting and software companies can still play within this open-source approach claiming expertise in product categories (like semiconductors, CPG etc), in global integration, systems integration, and in education etc.

My definition of S&OP is pretty simple. 

S&OP is a periodic, forward looking, multi-step process to understand, define and align demand, supply, products, metrics, profitability and strategy.  

The good thing about a simple definition is that it is flexible and open to interpretation.

Kinaxis: How important is a maturity model for S&OP?  Do companies have to be at the most advanced stage of S&OP to claim to be doing S&OP?
Pat: I believe a generalized maturity model can give worthwhile directional guidance to an S&OP diagnostic assessment and/or implementation. If used in context, these maturity models provide guideposts or mile markers during the course of an implementation that tie back to the overall project plan. However, it is important to recognize that these maturity models and the resultant assessments can be flawed. These maturity models often see every problem as having the same set of answers.  I liken it to three different patients going to a doctor with a pain;  one has a pain in the knee, the second has a bothersome back, and the last has an achy hip – yet each time the doctor suggests knee surgery.   Only one patient in three will walk away satisfied.   To the extent a maturity model and assessment are focused on the real problems facing an organization, and not on a rigid process definition – I believe maturity models can be useful tools.

I have been on both sides of four common problems with these process maturity models;

• First, most of these models are incomplete as they do not often assess “technology usage and expertise” – often a constraint in S&OP process implementations.  
• Second, most maturity models do not examine the ability of an organization to absorb or manage change – another obstacle to a successful S&OP implementation.  Clearly, there are some organizations that need to “go slower” than a typical 90-120 day process implementation agenda.  
• The third point I have already alluded to – many of these models assume a cookie cutter “one size fits all” approach where all organizations benefit from similar processes equally—a flawed assumption.  
• Finally, most of these maturity models do not assess the need for a given process element,  i.e.  Do I really need every S&OP process step? Or, what is the level of maturity that is right for my business?

As an example, I worked with a company that introduced only 2-3 new products per year, and had little in the way of production constraints – did this company need a robust product portfolio meeting and a supply and demand balancing tool set?   Of course not.   Would they be less mature from an S&OP perspective if we excluded unnecessary process steps?  In my mind, no.  Some assessment models, would consider this company  very immature on the S&OP maturity continuum.  In a different example, I also worked with a company that had a 15% annual sku innovation turnover, and globally shared production constraints.  Clearly, the second company needed a robust portfolio management and multiple business unit RCCP / Supply and Demand balancing process.  All of this begs the question of whether the S&OP process should look the same at every company.  Would each have the same maturity level if so assessed?

In short, I have found that rigidity in S&OP process construct is not the best approach – so maturity models are, to me, nothing more than helpful guides.

I do not believe you have to be at a high level of maturity to be “doing S&OP”.   S&OP is a journey, not a destination – so you can be doing S&OP structurally (holding meetings etc.), while at the same time be at a relatively immature level from a process efficacy perspective.      As companies change, expand, compress, and change systems and people – the S&OP process will evolve.  Some S&OP processes improve, some regress during these transitions.  I prefer to look at the S&OP process as another business resource  that occasionally needs to be re-visited and re-worked as the needs and structure of the business changes.  Honestly, what business today looks similar to five years ago?

Kinaxis: Many are advocating the evolution of S&OP to Integrated Business Planning?  Are you a proponent of IBP? Tying the financial plan/measures directly into the process is a key component of IBP, what else distinguishes IBP from S&OP?
Pat: I believe S&OP and IBP to be one in the same.  S&OP, properly implemented is integrated business planning – and financial plan integration and measures should always be part of a best practice S&OP process.

I have read a number of articles on IBP, and in most cases these articles appear to be pointing out issues associated with a “lower –tech” form of S&OP (i.e. lack of plan iteration capabilities, dynamic what-ifs, exception management, data integration, system integration etc.)    As a long time proponent and implementer of a higher- tech form of S&OP – IBP is another one of those differentiations without difference to me.

How did we get to this point? For many years, S&OP process consulting firms were telling prospective clients that they did not need any special tools or software (beyond Excel) to implement S&OP.   The reality is that it is next to impossible to “sustain” S&OP without using or integrating SCM or Business Intelligence tools.   You can certainly start with Excel, but it will not be a sustainable platform for S&OP.  I have always disagreed with this low tech approach and always focused my attention on implementing S&OP processes with a high degree of system integration.  Of course, these S&OP implementations took longer, but the underlying system integration led to added discipline and usability.  By integrating technology – it was not a burden for the participants to “do S&OP” and  took away one excuse along the process adoption curve.

Of course, there was a practical reason for these consulting firms to focus on solely a process implementation.  A process only implementation is shorter and thereby cheaper for the client; did not require a diversity of system expertise at the consulting company; the project had fewer points of potential failure, and eventually the client would find their own way to integrate systems.   Process consulting companies got away with this – because no one called them on it.

A best in class S&OP process implementation needs integration of people, process AND technology.

Kinaxis: Organizational thinking is often inherently bound by the dimensions of the “box” it is currently in because people don’t question working assumptions strongly enough. Do you believe “process inertia” is a barrier to advancing S&OP processes?
Pat: While I would not call it process inertia, I agree that many existing S&OP processes are held back from further improvement because the working assumptions underneath most of the plans are often inadequately examined or challenged.    

I often wondered why there was a lack of examination – to me it would seem obvious to put a plan through its paces.  On reflection, I believe that the lack of examination comes from the organization’s culture and/or basic human behavior.   As an example, I have found that the behaviors of “Going along to get along” and “Not wanting to be the negative one” – will often prevent the much needed detailed challenges to S&OP plans.   If you think about it – who wants to tell the President of a company that his operating budget is unrealistic?     Or tell the supply chain VP that the inventory plan is not pragmatic given the fill requirements?   Negative people are not successful in most corporations – I can understand the apprehension to challenge a plan too aggressively.

Unfortunately, and particularly with demand plans, an unchallenged plan is usually biased and unrealistically aspirational.  And as we all know, a poorly crafted demand plan impacts all other downstream planning.   As a consultant, I would often find myself teaching people how to actively challenge a plan without being disagreeable – by actually modeling an ‘active challenge’ inside of the demand planning process.

Of course, the easiest way to challenge a plan without being disagreeable is to bring facts to a discussion.  Trends, shipments, deletions, metrics, POS, etc.  all provide data points that can be used to question a plan.  It is also helpful if participants are able to create a trusting environment where a plan can be actively challenged and such challenge is viewed as a positive.   Trust comes from agreement around the intent of a challenging process, and acceptance that all plans can be challenged.   I believe if one empowers a group to question a plan in detail, without bias or bad intent, and use data, trends, etc. to discuss plans – that you can overcome the process inertia mentioned in the question.

Kinaxis: Can the S&OP process be carried out without technology? Does this relate to the S&OP maturity model?
Pat: As I’ve mentioned before – there are many consulting companies that believe S&OP can be implemented without an investment in SCM technology or worse yet, with Excel as the cornerstone technology.  I strongly disagree.       

To be done well, especially in organizations with any size or complexity, S&OP requires both vertical and horizontal data integration.   Totaling up from the bottom, and aggregating left to right is a data intensive process not easily solved using Excel.  My “best practice” version of  S&OP requires integrated applications. 

As part of any maturity assessment there should be a skills and utility assessment on the current SCM tool base. Often times there are system changes that would greatly enable an S&OP process implementation that are neither expensive to implement nor hard to train to—if the capabilities of the people and the technology are assessed.

Kinaxis: Is it possible to have an effective S&OP process that only looks at the aggregate or “volume” level? How important it is to consider the operational feasibility of the S&OP plan?
Pat: This is an important question. With the improvements in supply chain computing platforms, I believe we are close to a transition point with S&OP.   In my thinking, best practice S&OP should utilize a summary plan built up from rational and feasible lower level plans.    Many people treat S&OP as a top down process – and certainly traditional thinking on S&OP was much more top down and monolithic.   Yet  in common practice, and using best of breed tools,  the ‘hard work’ in demand planning, supply balancing, and portfolio management can easily being rolled up into summary plans and presented to the senior management team for approval.   These rational and feasible rolled up plans (or alternatives of plans) are presented during the Pre-S&OP process for potential escalation to the Executive level meeting – but they are mostly vetted and evaluated prior to presentation.

In my mind, the concept of traditional S&OP aggregation levels has become passé.  First, demand has become fractionalized with products specific to channels, markets, geographies.  It is hard to find a “product family” in the traditional sense.  Second, computing platforms now easily enable slicing and dicing of data so that planning can happen at a “suffix level’ and still be rolled up into any product aggregation that makes sense from a presentation perspective. 

The differences between traditional monthly S&OP planning and day to day supply chain planning are blurring.  It is now easy to plan deep into the horizon using the same modeling tool and constraints used in day to day planning tools.  S&OP ‘applications’ that use the best of breed systems integration, can use same constraints as any other planning horizon – but apply them to future demand buckets – most often looking out 18 months or more beyond the frozen planning horizon for imbalances.

In the “olden” days plans were rolled into product family aggregations for simplistic modeling of the supply and demand balance.    Today, there are planning platforms capable of long range, iterative and dynamic planning.  Thank God for progress.

Kinaxis: If you had to name 3 priorities for a company looking to evolve their S&OP process, what would they be?
Pat:

1. Focus on reality based planning. One of the biggest failure points in S&OP—and  misuse of resources including inventory and capacity – is the lack of reality based plans. 
2. Work the demand data. Leverage as much market, consumer, macroeconomic, POS and other data sources to drive to the best possible estimate of demand – thereby improving all downstream planning.  While this is intuitive to many – it is also lost on many.
3. Integrate, Integrate, Integrate – many S&OP processes fail under the burden of providing data to the process.   Find ways to draw S&OP data simply and easily.  Engage your IT group in supporting S&OP.

Kinaxis: What role does exception management play, or should play, in S&OP?�
Pat: Many of the underlying planning processes within S&OP (such as demand planning) benefit from the use of exception processing to manage through the veritable boatloads of data.  Sorting out the significant from within the pile of trivial when you are dealing with tens of thousands of items can be a challenge.  Exception processing allows S&OP participants to focus attention on the items that are falling outside the bounds, i.e. which forecasted items are biased, have high error, excess inventory, have production attainment issues, and / or have low yields?  The same exception process can apply to resources, i.e.  which production units or cells are over or under loaded, or which warehouse is bursting at the seams?  I believe exception management can also be used to test planning efficacy by answering questions such as: Which new product introduction is behind its intended timeline or volume plan?   Or – where are we to original budget?

S&OP process meetings cannot (and should not) discuss every item – they should discuss items with problems in need of resolution.   Exception management helps determine the challenges in the plan.

Kinaxis: How and where do what-if capabilities fit into the S&OP process?  Is it a priority capability for an effective S&OP process?
Pat: What-if capabilities are incredibly important within the S&OP process. Yet, is it a process requirement?  No. Could what-if capabilities make an S&OP process significantly more effective? Yes.  I think what-if capabilities built around an “organizational” model would help not just the S&OP process, but most planning processes.

I have been in  demand consensus meetings where I heard about an opportunity that Wal-Mart might buy a bunch of product and distribute to each store in the US.   If this happened to you, how would you assess your company’s ability to handle this extra demand?    Or whether or not you could source it domestically?   Would you be able to quickly determine any additional warehouse requirements?    Demand opportunities and supply constraints are everyday occurrences in today’s competitive landscape – and being able to react quickly with credible data is an advantage, whether used for S&OP or not.  These relatively simple examples speak volumes to the need for simulation tools. I have been implementing these tools for 15 years in support of S&OP processes.

Effective “what-if tools” need three elements;

1. they must model the business realistically – offering results that are acceptable and executable – a true simulation of the operational environment;
2. the tool must be flexible – allowing for slicing and dicing, and multiple scenarios at the same time; and finally
3. it must be fast – churning on a problem for hours does not enable what-ifs.  What if’s are rarely managed in a serial fashion – the desire is often to test 3-4 approaches at once.   Speed is important.

Where are these tool best used in the S&OP process?  Everywhere.  New distribution or customer opportunities can be dollarized and bottom lined in demand consensus or Pre-S&OP.   Capacity issues can be modeled and alternative plans and cost assessed in the Supply and Demand balancing process.  Regardless of the scenario, I have always suggested that what-ifs are brought to the Pre-S&OP process, where they are vetted for recommendation to the Executive S&OP meeting.

The article, which ran on Supply Chain Digest’s Website, explained that the rising cost of raw materials and other input costs are a significant and growing concern for corporate financial performance. One reason why, is that it’s increasingly difficult for companies to simply raise their prices as a means to cope with those growing costs.

The real obstacle, however, is that a lack of robust, integrated processes to deal with this price volatility often results in companies leaving profit dollars on the table, said Patricio Ibáñez, an associate principal at McKinsey & Company, in a recent article in Inside Supply Management magazine.

Traditional approaches to raw materials management often leave decisions in the hands of a single function at each step in the value chain, Ibáñez says. For example, product development makes decisions early in the cycle, procurement makes their decisions later, manufacturing decisions come after that, and so on. The net result is a host of problems, especially in a lack of alignment between contracts signed with suppliers and those with customers.

As is often the case with supply chain issues, the key to successfully addressing the situation is to improve cross-functional collaboration. So when contracts come up for renegotiation, for example, collaboration among the finance, procurement and sales functions is particularly critical, Ibáñez says. Additionally, procurement should review supply contracts and, together with experts from finance, propose modifications that will protect the company against raw materials price spikes while simultaneously maximizing gains when prices fall.

That requirement for improving cross-functional collaboration, however, is what reminded me of S&OP processes—and the barriers to their success.

To be sure, technology is a vital component of S&OP. Indeed, given the global nature of today’s supply chains, the ability to overcome both time and geographic barriers necessitates the use of IT. Furthermore, the level of cross-functional and cross-organizational process synchronization, collaboration and frequency that is required to achieve S&OP maturity simply cannot be achieved by simply using Excel spreadsheets.

Technology, however, is really more of an enabler. The real challenge–whether your company is trying to improve procurement capabilities to reduce margin volatility or improve S&OP processes to boost top line revenue–is change management. Lora Cecere, of Altimeter Group wrote a post the other month, where she stated that “The largest problem with S&OP is change management.  Companies that tackle change management FIRST accelerate results.  Their S&OP processes mature 3X faster.”  There is, after all, considerable difference between S&OP and mature S&OP, and advancing toward mature S&OP clearly requires changing mindsets and aligning goals.

The reality is that at many companies, there simply isn’t much collaboration occurring in S&OP meetings. That’s because everyone’s objectives are different. Consider, for instance, that remembering their commissions are built on revenue, sales and marketing want all orders to ship immediately. And manufacturing people, who concentrate on production output, want high inventory levels. At the same time, the finance team, which is interested in maintaining low levels of working capital, is driven to keep inventory levels down. Consequently, collaboration is difficult, at best, because there is no way to reach consensus. It simply isn’t possible when all the players have different personal and departmental goals. Again I turn to a post Lora Cecere wrote, she made the analogy of someone training for a decathlon…

“In a Decathlon, there are ten events.  The winner is judged by total performance, not by a single score in a single event. Because the athlete must do well in the four runs and six field events, he has little opportunity to perfect any one event. A decathlete trying to improve performance in one specific event is likely to deteriorate in another, because the physical demands of the various events are conflicting. His training is necessarily different as he strives to improve all techniques, gain strength without losing speed, and acquire the stamina to perform through a competition that lasts anywhere from 4 to 12 hours per day. In short, he trains to raise performance making trade-offs with the end in mind.”

The goal, which, admittedly, is easier said than done, is to create an overarching set of end-to-end supply chain metrics that align with operating strategy. When there is executive sponsorship, organizational goals are properly aligned and players clearly understand the interdependencies of functions, they can collaboratively work to make the right tradeoffs (such as balancing cost and inventory against service levels) to win the race.

Atul Chandra Pandey is Industry Head – Enterprise Application Integration and Services, for Infosys Technologies.  Atul has more than 14 years of IT experience. He is responsible for sales and engagement for Enterprise Application Integration (EAI) and services such as supply chain, customer care and Master Data Management (MDM) for manufacturing and the banking capital markets industry. He is also involved in program management, process consulting, IT outsourcing, implementation and sustenance services, project management and delivery, and business analysis across leading package and technology services.  On the Infosys Supply Chain Management Blog, Atul blogs on business strategy, solutions-driven sales and engagement, EAI, Business to Business (B2B), Supply Chain Management (SCM), customer care and relationship management.

Kinaxis: What do you believe is behind the surge of activity around S&OP?  What are the anticipated benefits?
Atul: Sales & Operations Planning (S&OP) has been in existence for decades – both as a discipline and a decision-making imperative. Owing to the highly impactful core processes it is concerned with and the business growth it can drive, it is one of the most talked about topics in the supply chain space. Despite it capturing so much attention, there has been wide variance across sectors on the promised potential of S&OP and its realized benefits.

The recent economic downturn has brought to the fore the criticality of leveraging a strong S&OP process for an organizational advantage. While the focus has been to contain cost and ensure survival, I have also observed organizations looking to find new revenue generation opportunities while keeping costs / inventories low.

In my view, some of the other key factors which have either influenced or contributed to the heightened focus on strengthening S&OP are ever-shrinking product lifecycles across industry segments (consider the example of consumer electronics which has become similar to fashion industry with new product launch every quarter), diversifying supplier base and increasing outsourcing leading to increased supply dependence and associated risks. The former poses significant challenges in determining the right demand level whereas the latter factor causes constraints in meeting demand through the supply channel – especially when the same source also supplies a critical component to your competitors.

Another key disruptive force is the exponential rise of social media (sites such as Facebook and Twitter) which has enabled customers to share product experience with ease, thereby significantly influencing pre-purchase behavior. With customer requirements increasing and the loyalty lifecycle shortening, I believe organizations must create predictable and profitable sales and operations plans in the face of amazingly varied demands.

The surge in activities around S&OP is therefore driven by the need to have robust and agile mechanisms to manage and shape volatile demand signals and address increased supply and supplier spread and enhanced financial risks and constraints.

Kinaxis: Do you think the definition of S&OP is clear in the marketplace?  If not, is that a problem? How do you define S&OP?
Atul: While there is an industry-wide convergence on the broad understanding of the term, I think the answer to the question will vary depending on the level of the person to whom you are speaking. The biggest disconnect is in the area and horizon of focus – by this I am referring to the big picture or the mid- to long-term perspective versus daily organizational activities and immediate concerns.

There is an increasing tendency to link S&OP with a continuous review of demand and supply plans on a weekly or daily basis. Such an exercise entails rapid what-ifs at individual product / SKU levels taking into consideration demand, supply and financial constraints (cost, revenue, margin, etc.) to generate new execution plans (allocations, order fulfillment plans, receiving, shipping, etc.). This is not S&OP. Instead, this view deals with ‘perpetual master planning and scheduling’.

Promoting this view as S&OP is a problem since it places too much emphasis on execution and the immediate term and does not provide space to plan for the mid- to long-term. It completely overlooks the directional / strategic planning view which is critical to S&OP.

Imagine a ship in the ocean. While the engine room crew ensures that the ship keeps sailing, it’s the captain who sets the vessel’s direction and course. Similarly, S&OP must primarily focus on setting the direction and tone of the business as an executive-driven process / function. The focus should be on the mid- to long-term horizon (3-15 months for most industries). The aggregate plan (also termed the volume plan – family level) needs to be the driver for the detailed plan (mix – how much, which SKU). Finally, the operations plan must be constrained by financial plans (cost, margin, revenue, and cash flow).

In terms of definition, I tend to agree most with Tom Wallace and Bob Stahl’s view on S&OP. In their book ‘Sales & Operations Planning – The Executive Guide’, S&OP is described as “a set of decision-making processes with three main objectives: 1) To balance demand and supply, 2) To align volume and mix, and 3) To integrate operational plans with financial plans.”

Having said that, the focus on detailed daily / weekly plans is also important and these must link to the executive S&OP for directional changes which drive the next cycle of short-term execution plans, thus closing the feedback loop. S&OP therefore provides the connection between the big picture or the strategic plan and the day-to-day plan and operations.

Kinaxis: How important is a maturity model for S&OP?  Do companies have to be at the most advanced stage of S&OP to claim to be doing S&OP?
Atul: With its ability to enhance performance and competitiveness through effective and agile responses to market demands, S&OP has become an organizational prerequisite. It is nearly impossible to imagine a business without a sales, inventory and financial plan. However, to ensure that your S&OP consistently scores a bulls-eye in fine-tuning customer demand to meet supply resources over an extended time period, it is necessary to formally recognize and institutionalize it as a formal executive-led process. The commitment of senior executives is vital as S&OP is an ongoing journey of aligning strategic business goals and direction with the right operational levers. This works best only if there is a formal organization focus coming from the top. Once established, the S&OP process necessitates establishing process interventions at different levels to drive operational improvements and tighter performance measurements and controls.

It is important to have a maturity model for S&OP. One of the key differentiating factors separating companies which are advanced on S&OP from the ones which are not is the lead time to determine changes to direction and actually making it happen. Companies having advanced S&OP capabilities can detect changes within days (and not weeks) of the monthly S&OP and can steer directional changes in execution plans just as quickly. S&OP maturity is a combination of multiple capabilities – the ability to generate rapid aggregate-level plan, what-ifs at the aggregate level (including financial plans and budgets), integration into operational plans, and workflow management to collaborate with partners for execution.

Kinaxis: Many are advocating the evolution of S&OP to Integrated Business Planning?  Are you a proponent of IBP? Tying the financial plan/measures directly into the process is a key component of IBP, what else distinguishes IBP from S&OP?
Atul: While IBP is a key enabler for S&OP, it cannot be a substitute. This is primarily because of three reasons:

1. Constraint-Oriented Reasoning (COR) – which is the heart of IBP – helps identify appropriate decision levers rapidly by solving a large number of mathematical equations representing varied business aspects. However, the output needs to be comprehensible to senior executives and they may choose to exercise a different set of levers based on their understanding of the competitive priorities of the business.
2. Ownership and control of the operational processes that need to be improved or changed must rest with the people managing the respective functions to close the gaps and loop feedback into next planning cycle.
3. Data quality of inputs for IBP needs to be very high if it is to be effective in making the right recommendations.

Therefore, in my view, IBP cannot be a substitute for an executive-led process such as S&OP. In the latter, people play a critical role – either taking decisions or acting on decisions – at every stage.

However, IBP does have its strong points. It is a great enabler in reducing the business simulation and analysis lead time which can make a discernable difference in the effectiveness of S&OP. I have seen that the typical S&OP process in many organizations takes 2-3 weeks to complete. Getting data is highly time-consuming and a less than optimum amount of time is spent on analysis. With IBP, even with limited analysis time, executives can rapidly simulate multiple business scenarios and understand the ramifications quickly, thus actioning the implementation of changes with more confidence. Another advantage of IBP lies in the ease of communicating the changes to the next level and building consensus on decisions taken at executive level as the impact of high-level decisions on local functions (marketing, finance, production) is visible to all.

Kinaxis: Organizational thinking is often inherently bound by the dimensions of the “box” it is currently in because people don’t question working assumptions strongly enough. Do you believe “process inertia” is a barrier to advancing S&OP processes?
Atul: My answer to this question would be a ‘Yes’ and a ‘No’. While process inertia is indeed a barrier to making advancements in respective individual functions, S&OP is not about managing the functions in silos. The focus and direction needs to be set from the top.

In my view, the biggest impediment to S&OP effectiveness and success stems from a gap in communication between the senior executive level and the levels below. Information on setting and acting on new goals and the reasoning behind changes for better process performance needs to be transmitted smoothly to the lower organizational levels. While people want to change, these required alterations will not happen at lower levels unless the right incentives are in place.

Take Apple for example. It has managed to deliver unimaginable business growth (from $4-5b a few yrs back to ~$30b last year) year on year without significantly ramping up headcount. This means the company has revamped most of the core functions significantly with the same workforce – a scenario that is hard to imagine without senior executive-level drive.

Hence, while process inertia hampers S&OP advancement, the real deciding factor is an organization’s ‘change propensity’ as process inertia is not generated by itself. It has to do with an organization’s culture for embracing change and this starts at the top.

Kinaxis: Can the S&OP process be carried out without technology? Does this relate to the S&OP maturity model?
Atul: It’s like asking “Can we communicate without email or internet?” or “Can we go to Boston from San Francisco without catching a flight or driving a car”. Of course you can reach Boston on foot – but only if you are not faced with a time constraint. If your goal is to reach Boston in a day, a flight is your only option and if you can stretch your time in hand to a week, you can drive.

Technology is a great enabler and offers speed and agility in meeting goals. This is especially true when you need to embrace a lot of change in a short time span. So, while it is possible to carry out business functions without technology, it is naïve to think that an organization can ignore the tremendous power of technology today. Even hard-core lean manufacturing leaders such as Toyota embrace technology to drive business and operational excellence.

In the context of S&OP, technology has a pivotal role to play in several areas. These include cutting down on data acquisition time and connecting facts (sales, operations, finance) to generate high-level business scenarios. Moreover, technology in S&OP helps perform rapid simulations to show executives quickly what the impact of a decision lever (cut cost, reduce capacity, postpone product launch, shorten product family, etc) will be on business goals (profitability, revenue growth, market share, etc.). In turn, this enables the executive push decisions out to the lower levels for execution through workflow-based assignments, enabling decision enforcement through exception management.

Hence, without technology support, implementing actions identified by the executive S&OP level is simply not possible in a short timeframe (and time is a factor which is getting increasingly constrained for most organizations). Given this reality, I believe the role and importance of technology in S&OP will only increase.

Kinaxis: Is it possible to have an effective S&OP process that only looks at the aggregate or “volume” level? How important it is to consider the operational feasibility of the S&OP plan?
Atul: It is not possible since an effective S&OP must be a closed loop process. While executives need to focus on the aggregate / volume level (and not too get bogged down with the details), the actions coming out of the executive S&OP level need to be rationalized at lower levels where the focus is more on execution. The need here is to look at numbers at the mix level (specific SKUs, quantities), weekly / daily level plan and actual numbers. Actions at this level determine how the goals set at the top are realized, which then need to be fed back into the next executive-level S&OP cycle.

The key is to effectively integrate the granular lower-level picture with the one at the higher level. Appropriate aggregation needs to be carried out while passing information up the chain and disaggregation needs to take place while passing information down.

Kinaxis: There is indeed a great deal of cross-functional cooperation and collaboration that is required for managing S&OP – how are companies enabling this, and are they doing it successfully?
Atul: Based on what I have seen so far, this is clearly an area of marked attention and much more needs to be done. While there has been progress in document collaboration – thanks to MS SharePoint – and proliferation of business intelligence dashboards for executives, the actual collaboration is still an E2 (Email, Excel) process. Moreover, a lot more time is spent on merely getting the data as opposed to the time and effort expended on analysis and decision making.

Most organizations have yet to embark on the journey for:

• Workflow-driven S&OP collaboration for data gathering
• System-suggested rules-based simulation during executive cycles, and
• Workflow-driven enforcement of S&OP decisions filtered through daily / weekly exception management at lower levels

From a technology perspective, a combination of rapid analysis and planning tools, collaboration infrastructure and business process management tools with comprehensive workflow and rules capabilities will go a long way in enabling S&OP collaboration.

Kinaxis: If you had to name 3 priorities for a company looking to evolve their S&OP process, what would they be?
Atul: At the top of my list would be:

1. Establish S&OP as a formal organization process with named senior executive responsible for this function
2. Strengthen / improve rapid simulation and analysis capabilities and integration between big picture items and lower level details, and
3. Enhance collaboration infrastructure including workflow- and rules-based management

Kinaxis: What role does exception management play, or should play, in S&OP?�
Atul: Exception management has a key role to play at the executive and lower levels. At the executive level, it helps identify the right level of business parameters by filtering the outliers for a given set of business goals. Once goals are determined at the aggregate level, it is important to focus on achieving these goals at lower levels i.e., allocation plans may be set at the family level, but they must be managed at downstream SKU levels as actual orders are placed. Exception management helps identify the situations where these goals are violated, thus requiring human intervention. It is therefore an enabling mechanism to ensure a tighter feedback loop downstream.

Kinaxis: How and where do what-if capabilities fit into the S&OP process?  Is it a priority capability for an effective S&OP process?
Atul: As described in some of the responses, what-if capability is critical to shortening the lead time on analysis and improves decision-making quality during executive S&OP meetings. It also directly adds to the maturity of the S&OP process as much of the time during the S&OP cycle is spent on data acquisition. There is always so much to analyze and by the time an S&OP meeting is due, the pressure to take decisions quickly is acute. A strong what-if simulation capability not only helps ease this pressure, but also assists in presenting the right levers for optimal business results. What-if simulations are also helpful downstream to analyze potential fluctuations on a daily / short-term basis and take corrective actions to ensure that operations at the lower level are consistent with the higher-level S&OP goals.