Author Archives: Nari Viswanathan

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.

 

Time is the New Currency

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This week, the Wall Street Journal pegged it: Global companies took years building supply chains. In 2011, natural disasters took just days to break them all apart. Like it or not, VUCA (volatility, uncertainty, complexity and ambiguity) is the new normal, and more than ever before, time is the new currency.

Here’s what I mean by that: with the rapid outgrowth of linear supply chains into multi-enterprise networks, loss of control and visibility have become the top challenges for many supply chains. Proliferating risks in the demand-supply network and increasing lead-times due to expanding networks makes flexibility the key to overcoming challenges.

This was indeed a hot topic at the latest trade show I attended, Supply Chain Logistics 2011, where the theme was agility and flexibility.  Leaders of supply chain strategies and leading global companies were on hand to discuss, debate and deliver ideas about how they—and the industry at large—can tap different approaches, such as Integrated Business Planning, to ensure they are more agile. It is imperative that they are able to beat the clock and deliver better returns to their companies in a world where VUCA reigns and no one has the luxury to sit out the storm and wait for smoother seas.

Well known risk management expert, Yossi Sheffi of MIT drove a fascinating discussion on resiliency. He used case studies to highlight examples of enterprise resiliency in the face of unexpected “Black Swan” disruptions. Gerry Smith, Global VP of Supply Chain at Lenovo, brought home the message with real-life examples of the challenges Lenovo faced during the Japanese Tsunami and the Thai Floods of 2011.

Think of it this way: you advance your planning process with flexibility; you protect your business with agility. While both flexibility and agility have short-term and long-term results, it is no longer enough to focus primarily on the short-term benefits. There is a limit to the strategies and tactics that companies can adopt in the short term within the lead-time.  To optimize the new time currency, you must be able to look at strategic scenarios and analyze longer term tradeoffs based on the market conditions within the lead-time. This mix of strategic and operational scenario management has become mandatory due to the rising complexity of supply chains.  Sales & Operations Planning provides the ideal balance: an antidote to volatility.

What do you think? Are you capitalizing on time?

Visit the Steelwedge community on LinkedIn to share your views or to discuss the topics in this blog post.

S&OP Beyond the Basics: Q&A Part 2

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As part of our commitment to drive engaging dialogue in the industry around the best and ‘next’ practices, Steelwedge recently teamed up with Sales & Operations Planning expert Tom Wallace to host a webinar. ‘Taking S&OP to the Next Level’ is based on the new book, Sales and Operations Planning: Beyond the Basics. You can watch a recording of the webinar here if you missed the live event. Given that S&OP is a top priority for companies to tackle volatility, the Steelwedge webinar drew a huge attendance and just as many questions! Due to time constraints, our experts couldn’t answer all of them.

In this blog post, Tom Wallace answers some key questions from his perspective.

Q. Is S&OP ideal for large organizations which have their own manufacturing, inventory & products? Is S&OP applicable to a service company?

Yes to both. Some of the most successful users of S&OP are large organizations with manufacturing, inventory and product: BASF, the largest chemical company in the world; Procter & Gamble, the largest consumer packaged goods company; and Staples, a very large on-line retailer. S&OP has been shown to work well in organizations that don’t make physical products as well: banks, central engineering staffs, IT departments and the like.

Q. Should the same forecast drive both manufacturing and profit and loss?

Absolutely. The forecast, once authorized, becomes the one and only one statement of future demand. Only with this can you achieve a “one-number process,” which means running the business internally with one set of numbers.

Q. How do you balance continuous improvement to the S&OP process against over-engineering the process?

Listen to the people actually using the process, including senior management. The best way I know to drive continuous improvement is, at the end of each executive meeting, ask each person present to rate the meeting on a scale of 10 and give 50 –or fewer– words why, finishing with the leader of the business. Those people will tell you where to improve and where not to.

Q. What is the best approach to organize promotional activities in the forecast process?

Within the 5-Step Process of S&OP, Step 2 is Demand Planning; this includes the addition of promotions and related activities by people from organizations like Marketing, Sales Promotion, and Merchandising. The promotions are added to the forecast early, well in advance of the consensus forecast going to Step 3, Supply Planning.

Q. What are the main pitfalls if you are in an S&OP process implementation?

The primary pitfall, much greater than all others, is to fail to educate the people in S&OP. Note the use of the word “educate” rather than “train.” That’s deliberate: training tells people how to run the software; education addresses how to run the business using this new tool.

Please write to us at info@steelwedge.com should you have any questions or need elucidation on any of the concepts mentioned in this blog.

Have a Happy New Year!

S&OP Beyond the Basics: Q&A Part 1

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Two weeks ago, more than 800 people registered for a terrific conversation with industry pundit and author, Tom Wallace.  We simply ran out of time to answer all the questions live, so have captured common themes and answered them here. This is the first of a two-part series.

Q: How do you best manage the proliferation of S&OP meetings? People inherently object to having meetings for meetings sake!

It is important to differentiate between meeting and working sessions. Executive S&OP meetings are intended to be very efficient and structured, given the CXO level participants. These meetings should have a very specific agenda with clearly defined goals for the meeting.

Working sessions are more of a combination of structured agenda as well as unstructured time to discuss collaboratively on various topics. Demand review and supply review meetings are examples of these working sessions.

From a technology perspective, the solution should provide the ability to document business context, assumptions, action items and opportunities for further follow-up and tracking.

Q: How do you handle “what if” analysis & scenario analysis within Steelwedge?

Steelwedge provides a platform that balances supply, demand and finance and enables the end-to-end S&OP process. Scenario management and what-if analysis can be implemented at any stage of this process: demand forecasting, supply planning or executive S&OP. For example, as part of the out of the box application called Compass Express that is implemented by this platform, 26 scenarios can be created as part of the Executive S&OP process. These scenarios can be compared based on pre-defined metrics and the best scenario can be ‘promoted’ to be the plan of record for the organization.

Q: How do you do the Bill of Material explosion and how is SW exploding the confirmed demand plan to material requirements?

The Steelwedge S&OP platform has the ability to model both a standard bill of material as well as a statistical bill of material (attach rates).  As part of the Rough Cut Capacity Planning process, the consensus demand forecast at a finished goods level is converted into material requirements at a component level for the purpose of performing a build-versus-buy decision using the sourcing template. In cases of configured products,  the dependent as well as independent demand associated with components is computed as part of this process.

Q: S&OP is limited to quantitative views of supply and demand. How do you validate qualitative assumptions about external factors?

Steelwedge estimates that only about 50% of the decision making at S&OP meetings is based on quantitative factors – the rest of the decisions are made based on tribal knowledge or ‘gut’ feel. It is important to capture these decision factors as part of the process so that the validity of these assumptions can be tracked later. It is expected that over a period of time these assumptions are re-evaluated and quantitative approaches are incorporated instead. We understand that collaborative planning and S&OP is never going to be completely fact based and that the solution should support the ability of the end users to make informed decisions based on data as well as qualitative factors.

Q: How do we get end users more engaged in the process. What kind of reports / alerts are commonly presented at S&OP meetings?

Excel continues to be the most commonly used business planning tool. That is why Steelwedge provides a platform that utilizes Enterprise Enabled Excel, which powers the S&OP process on top of the Excel application. A familiar paradigm is one way to get end users more engaged in the process.

Another common problem that sales reps face as part of S&OP process is that they are asked to input data into very complex Demand Planning applications, resulting in loss of interest and use.  Also,  sales people are often completely mobile and don’t have the internet bandwidth to provide inputs into these Demand Planning applications.  Steelwedge addresses this two ways:

a) One Click Planning provides an event driven push based mechanism to alert sales executives of areas that require their input. When the users click on an email that they receive from the application, they are taken directly to a template that they can fill out for products that they have access to.

b) Offline tools – this allows sales reps to input data without being connected to the internet. Once they log into the internet, they can do a net change submit to the server to sync up the data.

Combating Complexity: Are You Agile Enough?

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As the world grapples this month with the ripples from Europe’s debt crisis, the political turmoil in the Middle East, and the flooding in Asia, companies can’t ignore the imperative to plan for all those scenarios they’d never want to plan for. But have you?

What used to be an annual spreadsheet event is no longer an option for global businesses that have to navigate and course correct for the daily onslaught of economic, political and environmental events that could derail the best laid plans.

Supply chain complexity is multiplying as businesses become more global and interconnected. To remain competitive, organizations are changing how they source , sell and develop products. The rate of product obsolescence in consumer electronics market alone puts business agility to the test. Add to that the disruption and risk that is part of the volatile global marketplace, and business leaders recognize that the “new normal” is likely nothing like last year…or even last month. Agility is imperative; and it is keeping business leaders up at night.

Next week, On December 7th, I look forward to leading a discussion at the Supply Chain and Logistics Summit in Dallas in a workshop I will be presenting there: “S&OP: Enabling Agility and Flexibility in a Global Organization.” Sales and Operations Planning is the ammunition companies require today to combat complexity, respond to market events faster and manage risks. In this session, we will look at how companies need to create an S&OP plan, ensure that it is executed well so that the desired business performance is obtained to gain profits. In other words, S&OP is not only about the strategy but also about how the strategy can be executed.

I hope to see you in Dallas at my session or at the Steelwedge booth ,#9, to understand how you are addressing business agility in your organization. But even if you can’t be in Dallas, we’d like to hear from you on what agility issues keep you up at night.