Archive for September, 2009

Kaizan, The Boston Marathon and S&OP

kazian Kaizan, The Boston Marathon and S&OP Successful S&OP implementations requires strong executive leadership, a process-focused S&OP planning application, teamwork, an understanding of the best practices and clarity in regard to the two levels of S&OP—Executive and Operational.   Best-in-class S&OP processes also require continuous improvement and a never-ending drive toward better organizational alignment – Kaizan.  In other words, implementing a really effective S&OP is a marathon not a sprint.

Frequently heard pain points include:

PAIN POINT PERSPECTIVE
Sales, Marketing, Finance and Supply Chain seem to be operating to four different numbers. We spend a lot of time reconciling different views of what ‘demand’ will be. Rather than driving to “one number”, which often leads to non-value added reconciliation, leading companies are instead operating to an “aligned set of numbers”.
We’ll invest in a promotion to stimulate demand but then have trouble supplying the product to satisfy that lift in demand. In industries such as consumer goods with substantial event-driven demand, companies are moving from a total forecast to a “base and lift” component design.
We never seem to be able to predict how new products will do. The demand forecast for a new product needs to systematically incorporate insight on the amount of marketing funding and the breadth of distribution (regional vs national).
Shortfalls to our financial plans force us to ‘push’ product last minute to our trade partners at the end of the quarter. To proactively identify revenue/profit gaps in time to develop consumer pull programs to close them, companies are systematically “dollarizing” their volume forecast across the entire planning horizon.
We seem to be flooded with customer data / POS information that we do not know how to effectively use. Companies are developing Demand Sense and Respond capabilities to dramatically increase visibility to customer demand and the ability to use this information effectively.
Executive presence is limited. We spend more time talking about data problems than making decisions Companies with best-in-Class S&OP processes leverage a single S&OP platform that provides drill down, ‘what if’’ analysis capabilities, and true cross-functional integration.

Successful companies are increasingly shifting focus from driving functional excellence to improving synchronization across internal functions and with external trading partners—suppliers and customers.

S&OP links strategic and operational planning including production, sales, finance and marketing across all time horizons.  A robust S&OP process ensures that marketing, sales supply chain and financial processes are synchronized to deliver an accurate view of customer demand.  Demand sense and respond capabilities provide visibility to near term demand requirements and financial trade-offs.  Continuous improvement — Kaizan — requires constant refinement of every element of S&OP.  With repetition and Kaizan, S&OP becomes ever more effective and drives constant efficiency improvements across a corporation.

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Thursday, September 24th, 2009 Managing in a Recession, Sales & Operations Planning, Sales Forecasting Comments Off

Thirsty Horses and S&OP

horses

If you had the perfect S&OP tool, would you use it?

I recently presented at the Demand and Sales Forecasting Forum at the University of Tennessee. More evident than ever, Sales & Operations Planning (S&OP) has become the number one topic of discussion. The S&OP discussion typically touches these three areas:
1. Tools
2. Training
3. Adoption

An executive once said to me, “what’s tough about adoption? Just tell them they have to do it!” While top level executive support is crucial, dictating collaboration is like mandating world peace.

There’s an old idiom, “You can lead a horse to water, but you can’t make him drink.” When it comes to S&OP, having the right tools and training is not enough. Users must welcome the change as an improvement for the company, their department or themselves.

Selecting the right collaborative planning solution is critical. Steelwedge has been the market leader for years and understands that the tool alone is not sufficient. Users must be trained in both the use of the tool and how it fits in their process. Too often, new tools and training are abandoned by users because they did not adopt the tool as an integral part of their process. And why did they resist the tool? It was either too complex or not complex enough. Yes Goldilocks, the bed was too hard AND too soft! The paradoxical answer is that the tool must be BOTH simple and powerful.

Herein lies the true challenge of S&OP. Cross-functional collaboration. How do you get disparate groups of individuals to agree on the tools and processes necessary to drive successful S&OP? The answer varies for each organization. Yet, we see repeatedly that organizations must:
1. Define effective and efficient collaborative processes
2. Select tools that support simplicity and complexity of varied participant needs
3. Provide essential education and training
4. Support individual growth and participation
5. Monitor performance and usage

S&OP champions are thirsty for participation from all organization levels and departments. S&OP participants are looking to lessen their loads and achieve their objectives. In the end, the S&OP champion will get participation when participants see the S&OP process as time well spent.

Will participants drink from the S&OP trough? Yes, if they’re thirsty!

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Tuesday, September 8th, 2009 Sales & Operations Planning Comments Off

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