Author Archives: Nari Viswanathan

S&OP and Simplicity for “Steve”: Getting it Right

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Nari Viswanathan | Steelwedge Software Inc.

Last week, Lora Cecere penned a piece in her Supply Chain Shaman blog post about a conversation with a Mining company executive, “Steve.”  He called for her advice on S&OP technology as he was equally hamstrung between limited Excel scalability and his IT team’s edict to leverage their Oracle ERP investment—which was not meeting his flexibility needs.

Lora’s message was twofold: technology is becoming more and more important to powering the S&OP process; and it is more and more challenging to understand which solutions are the best fit for each company’s unique needs. For real analysis of supply/demand tradeoffs, it’s the right time for S&OP technology, but how can providers help companies get it right?

At Steelwedge we’ve spent a decade partnering with leaders across the Global 1,000 to help them optimize their planning around unique business requirements and complexities.  And we’ve also seen a set of similarities in their needs.  “Steve the Miner” has technology needs that are similar to those from “Jane the CPG manufacturer”, “Frank the Consumer Electronics retailer” and most other manufacturing company planning leaders.  These characteristics include:

a)  A gap between IT and Line of Business technology requirements

b)  A desire to leverage Excel-based solutions for S&OP

c)  A challenge to model tradeoffs between supply, demand and finance

d)  A lack of an adequate data model to power decision-making

We agree with Lora that finding the right vendor who understands how to meet both your unique and more universal S&OP needs can’t be done in just a conference room or via a PowerPoint presentation.  First, you must be able to clearly articulate your technology expectations; a challenge for many companies since the S&OP process may not be well defined.

Once you have your expectations defined, the best way to simplify the technology selection process is to test drive the technology—with YOUR data.  Steelwedge pioneered S&OP Test Drives a number of years ago. Since then, dozens of our customers have been able to upload a set of their key master, product, history, order, and inventory data into our secure cloud-based Data Center to see their S&OP data in action.  And to break the technology selection Gordian knot with IT.

Steelwedge Software | S&OP cloud–based technology

In the spirit of this holiday shopping season, why not simplify your S&OP technology selection process—get it right—and “try before you buy?”

 

 

 

 

 

What is leadership, anyway?

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The verdict is finally in. After two years in the making, Gartner recently published its Marketscope report for S&OP.  And, Steelwedge was once again positioned as a leader in this market landscape summary report.

While the industry recognition is gratifying, we think leadership is about continuing to think ahead of the market:  to set the bar, and to deliver on solutions that help pave the way.  At Steelwedge, we believe in the importance and potential of technology-enabled process design to power Integrated Business Planning.  And we believe in simplicity and speed in delivering those solutions– most readily realized through the cloud.

Business Context

Dramatic changes in the economy and global operations have changed how planning operates in organizations. A well-organized Supply Chain process can enhance sales, operations, finance and other functional areas of an organization. Incorporating collaborative inputs from customers and suppliers into the planning process is instrumental in today’s highly outsourced supply chains. This is the reason why many organizations are increasingly focused on advancing the leverage they get from their planning processes to enable cross-functional and multi-enterprise visibility.

Leading the Way to IBP

At Steelwedge, we’re helping to lead the journey to the most agile, collaborative form of planning. Gartner calls this Level 4 S&OP, or Integrated Business Planning.

From our deep experience with large global manufacturers, we see seven key success strategies for successful  IBP:

  1. Engage sales and marketing
  2. Link financial plan to the operational plan
  3. Ensure cross functional and multi-enterprise collaborative process
  4. Continuously align strategy with operations
  5. Ensure process agility and flexibility through technology
  6. Capture metrics for performance management as part of the process
  7. Optimized demand-supply-finance balancing

 

Single Platform, Purpose-Built for Planning

Highlighted in the Gartner report, the Steelwedge Integrated Business Planning solution is a single, cloud-based platform with modules that enable companies to engage at any stage of their planning maturity, including: S&OP Sales, S&OP Operations, S&OP Collaboration and Executive S&OP. Further, we’ve added a Service Delivery Platform to dramatically lower implementation cycles.  Indeed, Gartner highlighted Steelwedge for its broad range of S&OP support from early demand and supply balancing through collaboration and orchestration, and also called out our roadmap for continued delivery.

We take seriously our responsibility, as a leader in business planning solutions, to continue to drive value and drive the agenda in this exciting space.  We’d love to hear from you on what planning leadership means at your organization.

What questions AREN’T you answering with S&OP today?

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The good news: 87% of companies see S&OP as key to driving better agility and growth in a tumultuous business climate. And, the average enterprise has at least five S&OP initiatives in play to handle better balance of supply/demand/ finance. These initiatives cross multiple dimensions including: business units, product families and geographies.

The bad news: Without a connected, collaborative view of S&OP across the enterprise, companies are leaving some pivotal business questions unanswered.

Following are a few questions you should be answering today as well as some perspective on the risk– or cost– of not getting them on your company’s radar. Are you answering the right questions today?

1. What is the variance between my revenue forecast, budget and compensation target by service line?

Cost of not knowing: inability to understand how much of budget should be allocated for each service line; and understanding which service lines are truly improving company performance vs. which are impeding company performance

2. How much revenue does each business unit expect to earn in the coming quarter?

Cost of not knowing: ineffective trade promotion budget allocation. In CPG industries if the revenue projection of each business unit is available then the optimal allocation of trade promotion funds can be made. In high-tech manufacturing environments, allocation of inventory can be done based on expected business unit performance. For instance: either upselling in high performing units vs. storing inventory at component level (rather than finished goods) level for poor performing business units

3. Which Business Units’ forecasts are above corporate plan?

Cost of not knowing : limited availability and awareness of the financial impact associated with the business unit forecast. For example, those BUs that have consistently not met forecasts and if they have provided current forecasts that are above corporate plan implies a level of risk that the executive management team has to understand. The key challenge with existing solutions is that they are designed to be operational supply chain planning tools rather than providing an executive S&OP dashboard with operational and financial metrics.
4. What is the variance between my forecast product revenue and my compensation target?

Cost of now knowing: misaligned commissions structure. For sales organizations , compensation is mainly based on commissions and meeting forecasted sales. Having direct visibility of the variance between forecast product revenue and compensation target will provide positive motivation for the sales force to meet targets versus if the information is not readily available in operational supply chain planning tools This kind of data is usually resident in CRM systems like Siebel or SalesForce.com. It is important for the S&OP solution to provide integrated visibility to sales performance and how it ties to operational performance.

5. Do any business units predict significantly more or less revenue than last quarter? Why?

Cost of not knowing: the potential to miss budgetary and AOP targets. If there is a revenue reduction trend that exists then it is important to know this as soon as possible so that corrective measures can be taken. Revenue is a mix of price and volumes. It is important to know if one unit predicts significantly more or less revenue than previous quarter, why so? This question, in turn sparks more follow ups, such as: Is it because of poor sales or is it because of poor pricing? What is the current margin at the product family level for current quarter versus last quarter? Have there been seasonal factors resulting in reduced volumes? Are there quality issues forcing reduction in volumes?

While good S&OP practices answer supply and demand balancing at either a corporate or a departmental level, great S&OP can take a much tighter look at interdependencies, sort out root causes and impact across both departmental as well as corporate S&OP Processes.  What questions aren’t you answering with S&OP? Let us know.

Linking Tactical Performance with Executive Sales and Operations Planning (S&OP)

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Too often, I’ve noticed a disconnect between an executive sales and operations planning (S&OP) process and the tactical, execution-level implementation of the plan. For example, the operations staff lacks the executive sponsorship necessary to provide input on process improvements or executive S&OP plans are not communicated to the tactical team for implementation. How do you reconcile S&OP strategy with tactical execution?

We see that companies are either too focused on execution without consideration of strategy or have a disconnected strategic  and execution oriented process. In today’s situation, this is not sufficient.

Ideally, companies should adopt a continuous Sales and Operations planning process that spans the strategic & operational horizon. The company should also integrate the execution process tightly to obtain feedback in both directions and ensure that plans are actually converted into viable action. It may so happen that the execution may vary greatly from the plan, it is fine if that is the case, but only if the reasons are clearly understood. Continue reading →

Need to Handle Change? “There’s an App for That”

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Based on a recent Steelwedge survey of more than 160 business leaders:

-89% are either experiencing or seeing signs of external volatility/change impacting their business and
-91% are planning on internal change (products, channels, services, markets) to also create planning challenges

Given that the majority of respondents face the need to manage some sort of change within their demand-supply networks, why is it that their S&OP processes are based on the paradigm of “business as usual?”  Why is the emphasis on a very rigid, prescriptive approach to managing the S&OP process when business does not behave in that manner?  It is disheartening, but not surprising to see the schism between the corporate strategic goals and the goal of the S&OP process.

But this too, is beginning to change.

During a series of integrated business planning seminars in Europe last week (Feb 7th, 8th and 9th), we discussed these issues with an audience of manufacturers and distributors from London to the Netherlands and we got the same perspective on anticipating change. In fact, since Europe is reeling under a tough financial climate, they expect to see significant amounts of change and volatility happen. It was our observation that European IT organizations are more entrenched in traditional, inflexible ERP systems which constrains their ability to respond rapidly to market conditions.  Add to that, the challenge of managing a proliferation of stand-alone systems for demand planning, supply planning, and business intelligence that require significant integration to work together.

Business leaders however are looking for flexible tools that can accommodate inevitable change in their businesses. They are not trying to retrofit their existing process to a one size fits all approach through inflexible ERP and SCP applications but looking for ways they can augment industry best practices with innovations of their own.

At Steelwedge, we believe that S&OP technology should not only enable –but flex with– process. In other words, when new elements are added to the business like new products, new services, new channels, or other changes, it should be easy to identify the impact of each of those on the overall business.

Better yet, just like with your iPhone, wouldn’t it be great when it comes to your business decision making to identify a need and know: “there’s an app for that”?  We think so.

With the Integrated Business Planning platform we can build simple open architecture apps that address new changes to business processes. For example, we saw an emerging need across many of our consumer and discrete manufacturing customers for a demand policy optimization tool which stratifies the corporate product catalog into products that can be statistically forecasted versus those that have to be dealt with in a collaborative manner. The demand policy optimization app was built in a matter of weeks using the Enterprise Enabled Excel user interface and integrated with the overall workflow.

This is a rapid deployment approach taken to the next level where end users and partners can now adapt to changing business conditions and flex their S&OP process.  This is just the first of many apps that are bubbling to the surface as companies make the transition to more resilient planning tools and apps that help them manage change.

Across the industry we are seeing the shift towards adopting S&OP for growth rather than for getting control.  Are your plans agile enough to accommodate growth?  I’d love to hear from you.