Tag Archives: Collaboration

It’s Storm Season: Is Your Supply Chain Insurance in Place?

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It took only minutes in 2011 for natural disasters to break apart supply chains that took global companies 30 years to build.

As a result, companies worldwide moved supply chain insurance to the top of their corporate agendas.  Supply chain/business interruption losses are the largest unknown; but for context, already insured companies incurred more than $55 billion in losses in 2011. Today companies can insure carry up to $1 billion in supply chain insurance, ranging in cost from 2% to an undisclosed a la carte pricing determined by presented risk.  Supply Chain insurance went from a “nice to have” to a matter of national criticality, as evidenced by a Presidential directive in January this year, when President Barack Obama directed the Departments of State and Homeland Security to come up with a plan to protect the $14.6 trillion U.S. economy from interruptions in the supply chain. The White House released a National Strategy for Global Supply Chain Security to make recommendations on identifying risks and making commercial infrastructure more resilient.

“We have seen that disruptions to supply chains caused by natural disasters — earthquakes, tsunamis and volcanic eruptions — and from criminal and terrorist networks seeking to exploit the system or use it as a means of attack can adversely impact global economic growth and productivity,” President Obama said in a letter earlier this year.

Are you insured for Storm Season?

As companies swept up and wrung out after the carnage to their bottom lines, it is understandable that they’d want a policy to help pay for the damage. Yet, that is only part of a smart insurance plan.  In fact, just like the medical industry has evolved to drive a heavy pre-emptive care agenda to boost healthier living and mitigate avoidable health issues, so too should businesses explore pre-emptive supply chain insurance.

Indeed, many are.  According to International Data Corporation, a leading technology research firm, the #1 supply chain “solution” for manufacturers is Sales & Operations Planning.  S&OP –a process established nearly 30 years ago –uniquely unites together people and process to better balance supply and demand. Yet,  over the past decade—driven by global business volatility—S&OP has garnered a new level of attention and leverage

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.

Raise a Cup of Kindness

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As we exit another wild, unpredictable year filled with economic, political and environmental upheaval—resulting in changes wrought of inspiration, desperation and perspiration, a virtual salute.

Indeed, as a global community there is much to be lauded, much to be learned and much to be leery from 2011. Cultural revolutions from the Middle East to Wall Street to Main Street; regional economic fissures, that have produced a global network of fiscal fault lines; and a heaping helping of Mother Nature’s wrath have both threatened and united us. It is the same in our industry, where finance, sales and operations teams are increasingly aligning to better recognize, respond and recalibrate to these same global dynamics. We are all learning the lessons of better alignment and agility in our ability to thrive.

Like it or not, VUCA (volatility, uncertainty, complexity and ambiguity), is our “new normal.” Nassim Nicholas Taleb, the author of one of my favorite books, The Black Swan, explores the idea that an event—positive or negative—that is deemed improbable, like the appearance of a Black Swan, can cause massive consequences.

I am inspired by what I’ve seen in 2011 from our customers, from our peers and from our Steelwedge team in approaching and resolving their own Black Swans. I’ve seen 100-year-old businesses face recession-driven loss in demand, and realign to come out tighter, stronger and better; I’ve seen consumer electronics powerhouses stare down the reality of ever-shortening product lifecycles with laser-focus on smart new product development; I’ve seen a Phoenix rise from the ashes of the automotive industry through powerful focus and improved management; I’ve seen manufacturers rebound after losing a supplier of 90% of a core part in the devastating tsunami; and I’ve seen hard choices made clearer, and sooner with better empirical data.

So, though we may not know the next Black Swan coming just around the corner in 2012, I raise a cup of kindness to what we’ve seen, what we’ve done and who we’ve met that have changed us for the better in 2011.

We too have paddled in the stream,
from morning sun till dine;
But seas between us broad have roared
since auld lang syne.
And there’s a hand my trusty friend!
And give us a hand o’ thine!
And we’ll take a right good-will draught,
for auld lang syne.

 

S&OP: Beyond the Basics

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Webinar featuring S&OP Expert Tom Wallace
Wednesday, November 30 at 10:00 a.m. PST

Register for the webinar here!

Just as the Sales and Operations Planning practice has evolved dramatically over the past decade, so have the global market dynamics and complexities. In global business, volatility is the “new normal.” So, how do S&OP leaders adapt to that volatility and still make the best executive-level decisions that balance supply and demand, and integrate operational and financial plans?

This month’s webinar presenter, noted writer and educator Tom Wallace, asked just that question to some of the world’s best practitioners. He has collected their stories of taking planning to the next level –beyond the basics– to deliver Executive S&OP that runs the business with one set of numbers for better agility, performance and profit against a backdrop of global economic, political and environmental turmoil.

‘Taking S&OP to the Next Level’ is scheduled for Wednesday, November 30 at 10:00 a.m PST. Here, Tom will share case studies from experts who’ve used Executive S&OP to:

  • support the merger of two businesses into one high-performance business unit
  • serve as the basis for earnings calls to Wall Street
  • help create a new business
  • optimize global production plans and profits and
  • make cash flow projections 18 months into the future based on operational demand and supply plans.

Tom will talk more about his belief that Executive S&OP is quite simple in its structure and logic. But in practice, he sees that this often misleads companies into assuming that the process is simple to implement, while nothing could be farther from the truth.

Following Tom’s presentation, Nari Viswanathan, Steelwedge’s Vice President of Product Marketing will use industry examples to outline the additional value of deploying Collaborative S&OP Platform technology.

Finally, get answers to all of your questions with an interactive Q&A session with Nari and Tom. Find out the process, organization and cultural challenges for achieving Best-in-Class Executive S&OP. Feel free to click here to send your questions in advance.