It has been only a month or so since I joined Steelwedge from Aberdeen Group and I have already had many great opportunities to interact with customers and prospects around Sales and Operations Planning (S&OP) and Integrated Business Planning (IBP). I am planning to share my thoughts and ideas with you in a webcast on Thursday, October 13 on the topic, “Seven Keys to Integrated Business Planning Success.”
A very interesting statistic – the Purchasing Managers Index (PMI) for August 2011 – caught my eye this morning. This metric tracks the financial activity of purchasing managers connected to their acquisition of goods and services. It is calculated on a monthly basis through a survey conducted by the Institute of Supply Management (ISM).
Surprisingly, the statistic concluded:
“Economic activity in the manufacturing sector expanded in August for the 25th consecutive month, and the overall economy grew for the 27th consecutive month,” say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.”
A visual representation of the metric is below. Please note that the way the metric is captured, any value above 50 percent is an improvement and a 100 percent value indicates that everyone in the survey indicates an improvement. The degree of change month-over-month is reflected in the actual value. For instance, 65 percent PMI for a month is a bigger change than 55 percent PMI.
Figure: PMI for 2010-2011
Source: Institute of Supply Management
So what does this mean for the supply chain executive who is looking at S&OP and IBP initiatives?
- Need for Operational Efficiency: According to the ISM survey, the overall sentiment is one of concern and caution. In this sort of a situation, increasing operational efficiency and reducing waste in the end-to-end value chain is the best approach that
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It is known the world over as the purveyor of “all things for all people” and that includes animals. Apart from conventional pets such as cats, dogs, fish and birds, Harrods offers hamsters and mice for the less traditional.
But when the staff at London’s biggest department store was faced with a question from a man who was to later become President of the United States, they weren’t the least shocked. They could have balked, of course, when Ronald Reagan asked a salesman at Harrods if they sell elephants, but more surprised was Mr. Reagan himself at the salesman’s immediate response – “Would that be Indian or African, sir?”
This anecdote wouldn’t have traveled the globe had Harrods replied with the more expected — “Sorry sir, we do not sell elephants.” The store no doubt never forecasted the demand for elephants but their planning provided for unexpected customer requests.
Last week, we hosted a webinar on the topic of “Incorporating Supply and Demand Uncertainty in Sales and Operations Planning” featuring Stanford University professor Blake Johnson. An internationally recognized expert in the field of supply chain risk, Blake explored how S&OP allows companies to balance supply chain trade-offs against the value of improved market responsiveness and customer service. Blake, like the adroit Harrods clerk, knows that planning for the unknown and unpredictable is an indispensable part of supply chain management, particularly in today’s uncertain climate.
The webinar was recorded and is available for on-demand playback. Click here to learn more.
While “International Talk Like a Pirate Day” is a light-hearted poke at the past, pirates are no longer a romantic notion to be celebrated.
Until a few years, most of us thought of piracy as a quaint problem from the distant past – a romantic time for most of us. From a historical perspective, piracy in the USA is most associated with the period when Thomas Jefferson was sending American warships to the Barbary Coast to fight and payoff pirates that were disrupting American trade.
However, in the last ten years piracy – largely centered off the horn of Africa has again risen to the forefront – no longer a romantic notion of times past. Today’s pirates were born of a vicious brew of our contemporary world – rising global trade, technological advancement, post-Cold War politics, poverty, violence and terrorism.
One may not consider it the foremost supply chain risk, but piracy endangers civilians, disrupts economies, encourages corruption, and could trigger an environmental disaster. Acts of piracy — boarding a ship to commit theft or other crimes — totaled 2,463 incidents between 2000 and 2006 according to a report published by the RAND corporation. These trends are the result of a range of phenomena, including a surge in maritime traffic and a decline of coastal security. The overall problem is almost certainly even greater than the figures suggest as researchers suspect nearly half of all piracy attacks are not reported, usually because of fears about subsequent investigation costs and increases to insurance premiums. Pirate attacks have also risen steadily in 2009 and 2010 in spite of international efforts to protect shipping.
From a supply chain point of view, there are two key risks to manage. The most remote but most serious risk is the potential for a port or…
When it comes to implementing an effective S&OP process, do we need a hard-driving commander or a consensus driven committee? After all, S&OP is about collaboration, right? Well, yes and no. An S&OP process must be collaborative. But the implementation need not be heavily committee-based.
The Tony award winning musical Memphis includes a song titled “Change Don’t Come Easy”. Oh how true that is. In social norms and in business, change can be slow and painful. So what’s a successful recipe for S&OP change? Although every enterprise has its own unique characteristics that will influence its approach, here are five observations we see when assisting clients to employ best practice S&OP processes and tools.
Top Management Support: Do your senior executives know what S&OP is? Do they understand the value of S&OP? How committed are they to making S&OP truly ingrained in the culture of your organization? When S&OP implementations fail, often the root cause can be traced back to a lack of senior leadership. At all levels of the organization, it must be clear that the whole organization is committed to making necessary changes.
Company Goals Above Individual or Department Goals: What’s the goal of S&OP? It should be to drive strategic business decisions that benefit the entire company NOT one employee or department. Too often personal goals conflict with the greater good. Strive to minimize such incentives that detract from the overall goals.
Make Decisions and Keep Moving Forward: Cross functional representation is required to get buy-in from all business disciplines. One person will not implement S&OP on her own. Assemble a group of knowledgeable doers who have the company’s interests at heart and know their functional area well. When this group reaches an impasse, a single S&OP sponsor/leader should step in and make key decisions. …
