The road to collaborative sales and operations planning (S&OP) can be a winding one, but those of us lucky enough to learn from the experiences of others often can get a preview of the factors we should really consider.
In a recent E2open webcast (registration required), Lisa Aleman, director of S&OP at Radisys, and Chuck Fries, vice president of material operations at Avnet Technology Solutions, Americas, talked about the challenges and opportunities for effective S&OP and how an integrated approach to the planning process led to tangible benefits and profitable customer order processing.
Though the challenges the companies face are different, some common themes arose from the discussion:
- Changing — and accelerating — customer expectations and how they impact operations and processes
- The increased complexity of today's high-tech supply chain
- The need to sync supply and demand elements to respond effectively to customers
- The importance of visibility and access to data
- The ability to service your customer commits profitability
- Improving inputs to S&OP, with better information on customer requests and commits as a starting point
For anyone in the industry, it's obvious that business complexity is exploding within the supply chain. Globalization and the promise of outsourced manufacturing and distribution have vastly increased complexity, leading to information fragmentation and overload. Customer demand is volatile. Product life cycles have become shorter, and product variation has created mind-numbing supply conditionality, making forecasting and planning more of an art than a science.
S&OP teams are constantly being challenged by the universal problems of time, distance, and complexity. Extended organizations must rely on interdependent, periodic processes with varying frequency. For too many, these processes are managed serially, further exacerbating the supply chain bullwhip effect. Worse yet, demand and supply organizations typically speak different languages and operate independently. This broad mix of information systems and spreadsheets inevitably creates data silos that don't talk to each other. In fact, such a lack of integration only increases time, distance, and complexity. It also leads to a chain of uncertain assumptions, forcing leaders to make decisions based on information they don't trust.
Building successful S&OP
How does an organization stay competitive when confronted with this potent mix of time, distance, and complexity? What's truly needed is a seamless, end-to-end process that can help teams integrate, plan, align, and execute stakeholder resources to maximize their efficiency over multiple planning horizons.
At E2open, we believe there are four must-have steps for achieving this seamless approach and ensuring future S&OP success.
- Integrate: Brand owners need a collaborative platform for integrating people and their data in participating organizations within the enterprise. This collaborative platform must also extend beyond the enterprise, enabling the integration and synchronization of trading partners' data.
- Plan: Brand owners need network planning and response tools, fueled with fresh, synchronized data. This enables demand-driven supply optimization with the ability to match granular demand with granular (often constrained) supply and capacity.
- Align: Once the S&OP team agrees upon the plan, the collaborative platform must enable feasibility testing by suppliers, distributors, and customers. Resulting recommendations for modifications to the plan can then be considered and confirmed by the S&OP team.
- Execute: Once the S&OP stakeholders agree to a plan of record, this operational plan can be seamlessly executed across the collaborative trading partner platform. We need to say goodbye to the Stone Age swivel-chair approach of manual movement of plans among planning and execution systems. Doing so will ultimately reduce the inherent errors and latency of data transfer and entry.
Taking the next steps for S&OP leadership
In today's fast-paced, global business climate, companies need to know that they can commit with confidence to their customers and suppliers. To do so, S&OP teams need to adopt state-of-the-art platforms with collaborative planning and execution tools that facilitate real-time information sharing across their trading networks. Only in this way can C-level executives, trading partners, and procurement managers work in harmony to provide the right sets of products to the right destinations at exactly the right time.