Why has Sales and Operations Planning moved to the forefront?
Over the past six months, Sales and Operations Planning (S&OP) has moved to the forefront of corporate agendas. Why has S&OP - a long established business process for integrating supply with demand to improve decision-making - risen in prominence? The answer is that multiple forces have converged to not only raise the need for improved integrated supply-demand planning to the top of the agenda, but also to make it truly possible:
1. For the first time in the history of S&OP - thanks to cloud computing and other technologies - it is possible for companies to implement and adopt this mission-critical process in a timely manner. The evolution of ERP, CRM and SCM solutions coupled with improved data stores, data integration tools and user sophistication has further driven this growth.
2. The cloud computing approach and the advent of highly specialised S&OP applications means that business users no longer need to rely on weighty IT support to drive their S&OP process. In the past, business users were dependent on internal IT organizations with long lists of competing priorities, disparate platform standards, long capiital budgeting cycles, and limited bandwidth to support such initiatives. Today, thanks to cloud computing and improved integration tools, it is possible to implement an S&OP system in the time it used to take just to order the hardware - as little as 10 to 12 weeks.
3. Oversupply and unpredictable demand in today’s economy coupled with staff shortages are making it more imperative than ever to improve, reduce the latency, and automate the process. If in past years the focus was on supply deliver, today the focus is on tightly matching supply against demand.
4. The high cost and limited availability of credit have put new pressures on working capital and therefore inventory management. The need for more effective inventory management coupled with volatilty in demand make S&OP an essential process for corporate success.
And so, the list of reasons why S&OP has become so hot grows daily. What other items would you add?
Does Toyota Need to Forecast? When Lean Manufacturing Doesn’t Work
The relationship between sales forecasting, demand planning, and lean principles has been analyzed, evaluated, and debated for decades. However, in light of recent market volatility, this debate is final reaching resolution - executives overseeing even the most lean, JIT-focused supply chains, need to planning.
Chris Chiappinelli, a blogger associated with the Managing Automation Blog offers the following :
“Just in Time, in its purest form, is a thing of beauty. Read Toyota’s description of it on their website — it sounds like poetry in motion. But the marketplace doesn’t care for poetry. We don’t want to place our order and watch the gears — perfectly meshed though they may be — smoothly churn out our product. We want our hamburgers pre-cooked and waiting for us under a heat lamp. In that world, Just-in-Time has no place. It’s a museum piece, a relic of a more patient era. In this world of pre-heated hamburgers and mass customization, Toyota and its counterparts are forced to produce not to actual demand, but to expected demand. And that, my friends, not only belies JIT; it creates a huge amount of risk.”
“A New York Times article illustrates just how far from its roots Toyota strayed:Previously, plants operated under the sales force’s direction of “you make them, we will sell them,” said Real C. Tanguay, president of Toyota Motor Manufacturing Canada. Now the philosophy is, “if we can sell them, then you will make them,” he said.” “Oh, how the mighty have fallen. Who would have predicted that a Toyota executive would ever sum up the company’s philosophy as, “You make them, we will sell them”?”
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Steelwedge enables customers to better understand and anticipate demand through forecasting, collaborative engagement of field sales, and analysis of changes in sales pipeline opportunities. In today’s world, these are vital processes.
OnDemand Sales and Operations Planning in 30 Days for SAP Customers
Steelwedge today announced a new release called “Compass Express S&OP” which offers a highly scalable “out-of-the-box” S&OP solution that can be implemented in less than thirty days. The solution leverages Steelwedge’s award-winning Sales Planning and Performance Management Platform (SPPM) and advanced partnership with SAP. The solution also draws on leading-edge technological developments to usher in a level of ease-of-implementation and ease-of-use never before available.Steelwedge Compass Express S&OP delivers the full range of functionality available in SPPM in a packaged, best practice-based format that expedites implementation, integration and training. Standard functionality includes Executive S&OP, collaborative demand planning, revenue planning, and performance management. The next release of Compass Express will also include direct integration with SAP BusinessObjects Xcelsius and SAP BusinessObjects Explorer for enhanced data analysis, reporting and business intelligence capabilities. Steelwedge Compass Express S&OP also includes standard integration with Salesforce.com (SFDC).
Steelwedge Compass Express was developed in response to growing demand from manufacturing companies in North America, Europe and Asia for an easy, highly cost-effective packaged OnDemand S&OP solution with standard integration into SAP, very low upfront costs, low total-cost-of-ownership (TCO) and a subscription pricing model. “Steelwedge Compass S&OP represents a major milestone for the software industry. Compass Express offers a packaged, OnDemand S&OP solution with standard integration points that enables manufacturing companies to increase planning visibility and improve profitability,” said Glen Margolis, CEO.
Steelwedge Compass Express Release is scheduled for general availability in Q2 of 2009.
Creating Value through Purpose Built S&OP Technology
Many corporations are turning to S&OP to create value by improving financial and operational performance through better alignment of supply and demand. However, the majority applications that claim to be “S&OP” solutions (e.g. excel, demand planning, supply planning, business intelligence…), where designed as “building blocks” to solve only a subset of the S&OP problem. S&OP “building blocks” are critical functions for an effective S&OP solution, however, they where not architected and designed to leverage the full value resulting from a fully technology enabled Executive S&OP process.
To achieve the full benefits of S&OP, a convergence of multiple capabilities within a technology platform is required to enable the process including:
- Centralized Database
- Info Bridge
- Multi-Level Planning
- Multi-User Collaboration Model
- Flexible Business Rules & Formulas
- Workflow
- Performance Management
The Steelwedge OnDemand Executive S&OP solution was designed with a 100% focus on S&OP. It was architected and designed to specifically meet the requirements of an Executive S&OP solution. The Steelwedge OnDemand Executive S&OP solution is built on an enterprise class three-tiered Java platform that embraces the seven key capabilities identified above.
S&OP: The need for automation
S&OP continues to gain visibility among global manufacturing companies as a key process to drive improvements in revenue, profitability, customer service and competitive advantage. Unfortunately, many companies are confused about what it is and where it fits. Executive S&OP is focused on the medium to long term planning horizon based on product family volume versus SKU level unit mix. Engaging executive management in a monthly review for a 1-2 hour meeting requires a more aggregate level of planning to drive strategic level decisions around balancing supply and demand.
The types of decisions addressed in Executive S&OP are as follows:
– How much to increase or decrease plant capacity Should we add or delete operational shifts?
– Do we need to pursue alternative global sources of capacity?
– Does our pre-build inventory strategy support our needs looking out 3 quarters?
– What is the best timing for a major new product introduction?
– How does reducing our capacity by 25% impact Revenue and Margin?
Is it practical for executives to log onto an SAP or Oracle ERP, CRM, Demand Planning, Supply Chain Planning, or Business Intelligence application to get answers to the above questions? Do these applications provide the appropriate level of detail in one solution to support strategic level decisions?
Most enterprises do not have a single application with the appropriate level of detail to support Executive S&OP. The primary application used to support the process is desktop Excel, which has many short comings including: manual data consolidation, lack of security, limited version control…
Steelwedge Software (www.steelwedge.com) is purpose-built for Executive S&OP. The application is designed to consolidate data from multiple applications and provide multi-level aggregate views needed for cross functional collaboration and Executive level decisions. Companies that implement Steelwedge have a single application with built in workflow, user security, catalog management, excel user interface, and performance management.yes;”>While Executive S&OP has existed as a concept for many decades, for today’s complex, data-rich, highly collaborative global organizations, application-driven Executive S&OP is no longer a luxury but rather a necessity.
Why is the SaaS Adoption Rate Rising in Spite of the Downturn?
The week’s Blog entry is provided courtesy of Christian Smagg, a respected French SaaS expert. Further commentary by Christian can be found at http://www.saastream.com/my_weblog/ Christian’s experience is very simliar to the Steelwedge experience on a daily basis - demand for SaaS appliciations are rising.
As experienced in previous economic downturns, companies that invest smartly during the bad times, emerge quicker, and better equipped to grow faster after the recession. Thinking creatively about how to do more with less is the key to IT innovation during challenging times and allow companies not only to survive but also to seize the extraordinary opportunities that arise during periods of vast uncertainty. When you think about it, creative application of new technologies during weak economies actually gave rise to huge waves of productivity like Software-as-a-Service, Web 2.0 or social networking.
But fear is driving decisions at many companies these days, causing this unhealthy lock-up of budgets. Current miasma should not slow down or prevent companies from innovating and creating value so as to survive, weather the economic storm or even outperform competition.
Financial crises are often having a huge impact on IT departments, resulting in significant increases in business activity, placing greater burden on IT resources and forcing them to find new ways to boost productivity while slashing expenses. At times like these, it is highly recommended that companies seriously consider leveraging applications delivered via a software-as-a-service (SaaS) model, harnessing the broader value that these solutions can play in not only moving the business forward but moving it beyond the current economic crisis as well.
Indeed, CIOs should take a much closer look at SaaS solutions as a way to avoid significant up-front investments in new software platforms by simply “renting” on-demand applications that would provide added returns where most needed: the top line. SaaS would empower IT teams to achieve and sustain efficiency and quality, while facilitating the kind of cost-effectiveness that becomes a top priority during a recession.
SaaS is providing a faster and more economical way for organizations to deploy, run and utilize softwares. This flexibility is particularly valuable during economic uncertainty for the following obvious reasons:
1. Reduced upfront costs. SaaS makes it more affordable for budget-conscious organizations to implement the new applications they need to execute effectively their “recession-proofing” plans.
2. Reduced in-house IT overheads and increased focus on strategic IT projects. SaaS is helping the business through the economic downturn by freeing IT staff from deploying and maintaining in-house solutions.
3. Continuous quality of service. Even if business activity and the demand placed on technology solutions are often increasing significantly.
4. Lower licensing and maintenance costs, reduced overall cost of ownership, also smoothed by the actual SaaS subscription model.
5. Quicker, easier and less risky deployment and upgrade to new future versions. This reduced implementation risks together with the ability to respond more nimbly to changing business needs while smoothly and incrementally adding new capabilities are making this option significantly more attractive in tougher economic times.
A major advantage of SaaS solutions is the optimum flexibility provided, enabling companies to downsize or reorganize while minimizing waste by instantly reducing or increasing the size and scope of their solution, at any time.
These benefits mean that SaaS is now being increasingly used by companies in a number of areas, not only including Customer Relationship Management (CRM) and Sales Force Automation but also enterprise collaboration, web conferencing and back-office requirements such as expense management, procurement, Supply Chain Management, Enterprise Resource Planning (ERP) and Human Resources functions to name a few.
In tougher economic times, companies want to shed the extra costs and risks inherent in large, long-term IT implementation projects. It is therefore becoming obvious that, as companies aggressively implement cost-cutting measures, IT organizations that leverage SaaS solutions will realize tremendous cost savings, while continuing to support the business’ needs in the most flexible and effective manner.
SaaS is already an important part of mainstream IT in companies both large and small. Its basic value propositions are now widely established and accepted, including low upfront costs, simplified software management (for both maintenance and upgrades), effective security, high reliability, and increasingly, integrative capabilities to bridge data and functional gaps that exist as a result of existing systems and processes. It is therefore expected that SaaS solutions will gain significant share during and immediately following the current economic turmoil, since offering customers the ability to continue to innovate at a substantially lower absolute cost of entry and ongoing TCO, during a period of intense capital spending constraint.
For further insight on this topic, you may want to review a recent Gartner survey analysis focusing on identifying usage patterns and key trends for SaaS within the enterprise, including SaaS usage per market segments, migration activity between deployment models, projected future usage and investment for both on-premises and on-demand, and the state of governance policies within enterprises currently using or planning to use SaaS.