Planning for Sales and Operations
In supply chain planning, very little can be moved by one person alone. S&OP requires bright, engaged minds to work collectively to meet the needs of the business. Are we using our capacity planning effectively to service the market? What are the levers that could increase sales, and if we use one, can we support it with adequate operations management? How do we improve the mix and position of our inventory? Are we positioning ourselves well for profitability and where are we experiencing margin risk or erosion? Where are my risks and opportunities and how can I be in the best position to address them?
S&OP or Integrated Business Planning (IBP), although known by many names with different flavors, is not new. However, as business conditions have continued to evolve, the challenges in strategic planning are greater. On one hand, the amount of information available to us is far deeper, the computing power is there for the taking, and the awareness that aligning our strategy with operations, which is essentially what is S&OP, keeps us driving for success. On the other hand, we still have difficulty in focusing on the relevant information to drive our S&OP planning decisions, and with the speed of signal, we still have trouble driving well vetted insights in an efficient manner. Finding facts isn’t a problem, knowing what they’re telling us still is. S&OP is the framework to build those skills to the benefit of the entire organization. And perhaps most essential in the beginning, it provides the cadence to help keep the chaos at bay.
What Threatens the Success of S&OP?
There is no silver bullet to improving the quality of a demand plan or forecast in supply chain management, however, we often expect it to happen with the flick of a switch. When the business is challenged, S&OP in supply chain often drifts into a reactive focus and it feels like a review and justification of what’s happened rather than an opportunity to improve and get ahead of the curve. Plans are immediately outdated, and they take far too long to produce. Once agreed to, they aren’t realistic or adopted and the alignment of plan, schedule and execution is gone. The worst enemy of S&OP supply chain is passive attendance, where there is not real critical thinking, conversation, excitement, or proactive problem solving. The stakeholders aren’t getting the information or context that’s valuable to them, and the process lacks the commitment that drives value and real results.
Difficulties of S&OP in Supply Chains
A patchwork of spreadsheets and pPowerPoint slides, hastily put together, gives a glimpse into the future. Unfortunately, this technology infrastructure has the potential to miss important details, and making "what-if" assessments can be time-consuming. This does not promote agility, the ability to seize opportunity, or the quick reaction to shifts in the market.
When there is a lack of executive input in an S&OP process, it tends to become a purely tactical enterprise with minimal strategic importance. Without a robust S&OP strategy, there is a rush to present the monthly results to upper management, a lack of cross-functional cooperation, and everybody relying on outdated data.
When executive decision makers do not become fully involved in the running of the business, it is usually because they feel there is insufficient information to make informed choices. A comprehensive technology system, such as SAP, combined with excellent personnel and efficient business processes will increase the power of the company.
Evolving Your S&OP Journey with Scalable Solutions and Expert Guidance
It’s time to drive real value- and develop a cadence of activities that supports the needs of the business now and as things change- while keeping the cross functional stakeholders aligned and rowing in the same direction. The Integrated Business Planning (IBP) offering from SAP, also known as SAP S&OP, offers a much lower barrier to entry than older APS (Advanced Planning Solutions). Whether the team is ready to up their game in assimilating multiple points of view or new data into the demand planning process, you’re ready to get serious about pulling Product Lifecycle Management (PLM) into the mix, you’d like to get some real revenue reconciliation woven into the process, you’re serious about multi-echelon inventory optimization, or it’s time for optimizing demand and supply matching using what-if scenarios and simulations.
The best part is that it can start very simply and then grow with the maturity and adoption of the people and processes. Reveal loves helping organizations level up their S&OP process and optimize the use of IBP through education and application. Our goal is to get the organization working in harmony to align plans, schedules and actual activities- working with relevant information at relevant ranges. If IBP is a mystery, we can help make it clear and consumable.