The level of interest in Steelwedge S&OP from large Asian manufacturers has recently increased dramatic.   Frequently, they are asking the question “Do I really need a collaborative Sales and Operations process?   The answer to this question is a definitive Yes!

We have most typically observed that the more sophisticated Asian manufacturers leverage staffs of PhD graduates to manuallly anualize transactional history (from ERP and APS systems) and use statistical methods to make estimates of the future.  While this highly rigorous approroach worked extremely well for them in the past when growth was relatively stable and predictable, depending on a rear view mirror to drive has proven to be a disaster in today’s volatile times.

While Asian manufacturers often find collaboration more challenging than their US counterparts, given language, cultural, and logistical challenges, in today’s world, there is no choice.  Getting direct and immediate feedback from customers and from a company’s own salesforce are imperatives.   Eliminating information latency, capturing qualitative feedback, and keeping a direct pulse on markets are the keys to surviving the recession.  Establishing a fact-based, highly collaborative Executive S&OP is a crucial starting point in this long journey.

Working with a client recently, I came across an old problem that challenges many manufacturers trying to produce accurate forecasts. They were forecasting at too low a level and the result was unstable and unreliable forecasts.

The challenge for this client was to predict future sales for each customer. Using the most recent 2 years of demand history, we observed that:
• 36% of customers had no demand
• Of the customers with at least one purchase during past 24 months, 62% had 6 months or fewer of purchase activity

To further complicate matters, demand showed huge spikes and negatives (returns). Facing sparse data and high variability, the statistical forecasting engine produced forecasts ranging from credible to unbelievable.

The solution was to aggregate historical demand and generate forecasts using a more stable demand picture. But just how to aggregate? Turns out there was a natural grouping by industry that served this purpose very well. By combining sales history by industry group, we could isolate demand patterns that were unique to those industries and produce a meaningful and credible forecast.

The next challenge was to design rules to distribute the industry group forecast to the individual customers. To preserve the spike demand nature inherent in this client’s business, we used the prior year’s demand pattern for each customer as basis for distributing the industry group monthly forecasts.

In the end, we achieved a statistical forecast which will serve as a solid demand signal input to their Demand Planning and Sales and Operations Planning (S&OP) process.

For any readers not already aware of our exciting new partnership with the world leading expert on S&OP — Tom Wallace – below is today’s release describing the details.  Tom previously worked with SAP and is very excited about joining forces with Steelwedge to offer the industry’s leading integrated planning solution

Steelwedge and Tom Wallace have entered a Strategic Partnership to provide an integrated solution offering of Education, Training and Software for Executives. As a kick-off for the partnership, Steelwedge is featuring Tom Wallace, in the first of a Webinar series on Executive S&OP Best Practices titled, “Executive S&OP: Surviving the Recession, Preparing for the Upturn.”

The strategic partnership of Steelwedge and Tom Wallace combines two industry leading companies specializing in Executive S&OP. Tom Wallace has a proven track record of helping companies successfully implement Executive S&OP through delivering education, training materials and books, while Steelwedge has built a reputation among customers and industry analyst as the Leading “Pure Play” S&OP software provider.

As partners, Steelwedge will integrate training and education materials developed by Wallace into its standard implementation methodology and Wallace will periodically review and provide input around the Steelwedge product roadmap and direction. Additionally, Steelwedge and Wallace will conduct a Webinar Series on Executive S&OP Best Practices.

The joint webinar series kick-off on March 31, 2009 will help companies and executives who are looking for answers to the question “How can Executive S&OP help me survive the downturn and prepare for the upturn?”. Webinar attendees will benefit from hearing Tom Wallace’s views and lessons learned from his decades of experience as a thought leader in the area of Sales and Operations Planning. In addition, Steelwedge will share how its customers are leveraging its software to survive the…

When Steelwedge customers are being asked what changed since they implemented and started using Steelwedge, the likely answer is: “Before I had a lot of data, too much data – but not enough information, I used to spend all my time on data collection, I did not have time for analysis. Month after month I had to guess at key strategic decisions, both on the demand and the supply side, causing poor financial results on the bottom line.

Today, with Steelwedge we’re able to collect, review and plan all necessary data in one tool. What used to take months now gets accomplished in a matter of hours and days. This allows us to anticipate and quickly react to changing market conditions. As a result we’re able to more accurately forecast, monitor and steer our business.”

Steelwedge enables its customers to do Sales and Operations Planning, effectively overcoming the traditional silos of demand, supply, and finance. The result is truly Integrated Business Planning (IBP) – which will make the difference between hoping to weather the current economic climate and being to survive it or even to capitalize on it.

While time is always of the essence, Steelwedge solutions can be implemented in as little as 2-3 months, long before this recession will finally be over.