Tag Archives: Collaborative Planning

New Documentary Examines the Evolution from “Supply Chain” to “Value Chain”


The traditional notion of supply chain management takes a linear approach to moving goods from the supplier’s supplier to the customer’s customer. Anyone involved in the industry knows that today’s marketplace dynamics are anything but linear. So a “supply chain” becomes a bit of a misnomer. The term “value chain” was popularized in the 1980s and gained momentum in the late 1990s as business became increasingly global.Traditional SC

A value chain involves conversations among multiple partners in the chain that may not be directly “next to” each other. This model has evolved as modern, global business necessitated that manufacturing and distribution become more collaborative and mutually beneficial for all parties.

Value chainTIA NOW, who provides programming on the latest information and communication technology (ICT) insights and trends, recently published a documentary on this topic entitled, “The Value Chain: Building Value in the Chain.” Here’s a description of the film, which explores the evolution of yesterday’s supply chain to what’s now known as the value chain.:

No matter where you are in the supply chain of the ICT industry, collaboration between your suppliers and customers increasingly dictates the success of your new products and services. The value chain is changing with each cycle, from chip maker to end user and everybody in between. So how does increased collaboration help strengthen your company’s position in the marketplace? What is driving a more communicative value chain towards multi-vendor systems and increased demand for heterogeneous technologies and applications?

EJ documentaryEJ Tavella, Chief Evangelist and Vice President Strategic Sales and Solutions at Steelwedge, is featured in the documentary as an expert on supply chain management in the Silicon Valley.

EJ discusses the old way that businesses managed their supply chains, stating, “When you looked at most of the people I worked with in the Silicon Valley, they thought of their supply chain as one of their golden jewels. They didn’t want to share information. They wanted to make sure that how they did it was specific to their business. They would share information, but share it sparingly. You’d see companies that would specifically give one set of plans to a supplier because they wanted them to perform to that, while they had their own set of internal plans.”

Drawing on the depth of experience of numerous supply chain experts interviewed in the film, the documentary goes on illustrate how the value chain concept has driven more cooperative business processes, to the benefit of everyone involved. You can view the documentary here.

Steelwedge has championed supply chain collaboration for more than a decade, developing technology that extends your planning process to your partners and customers to provide an outside-in perspective. Steelwedge customers can securely share forecast and supply planning assumptions with key partners to dramatically improve everyone’s planning accuracy.

Have you been in the industry long enough to experience the shift from “supply chain” to “value chain”? Share your thoughts on the evolution in the comments!

Game On! Sony Plans for Biggest PlayStation Launch Ever With Steelwedge


Sony PS4In the world of video-game consoles, the Sony PlayStation is undoubtedly leading the pack. In January 2014, PlayStation 4 (PS4) sales were nearly double that of its nearest competitor. The release of new game consoles comes years after their preceding versions, so significant planning goes into the launch by their manufacturers.

Sony Computer Entertainment America (SCEA) launched the much anticipated PS4 in November 2013. There was high complexity inherent to readying the system in time for the make-or-break holiday season; allocating to the right reseller channels; assembling the right combination of accessories and game bundles; and ensuring the product launches at right price point. Sony used Steelwedge integrated business planning software to connect all the crucial people,  processes and data to help it navigate their biggest launch ever—delivering an anticipated approximately 5 million units in the coming months—without cannibalizing the ongoing PS3 business.

The Steelwedge services team helped fast-track Sony’s internal planning process with the
implementation of the Steelwedge solution in a phased approach. The first phase incorporated demand planning and an executive engagement phase of the total sales and operations planning (S&OP) life cycle.

Phase two involved synchronizing Sony’s new forecasting strength via supply planning and collaboration with Sony corporate suppliers and telescopic planning. Telescopic planning is a Steelwedge feature that enables easy movement between weekly and monthly planning periods, allowing Sony a much closer, more frequent look at impacts to its supply and demand.

“Without the insights we gained from Steelwedge on channel and bundling optimization and well as potential PS3 cannibalization, we wouldn’t had as powerful a launch plan,” said Sree Vaidyanathan, SCEA’s  Director of Business Applications. ”Months ahead of the launch, we sold out $1.7 million in pre-orders. We are planning to sell approximately 5M units of the new PlayStation 4 console by April, and we are more confident in that forecast due to Steelwedge.”

Increased visibility from consensus planning at SCEA translates into better:

Profitability. SCEA forecast accuracy improvement from 60% to high ~90% immediately
drives better profitability—ensuring the right goods at right time and right place. Now,
Sony has enough data insight to push platform and SKUs to channels, more intelligently.

Market Share. Better consensus planning, powered by Steelwedge, helps SCEA make better supply/demand tradeoff decisions, due to more reliable data. The faster to market, the better the market share potential.

Scalability. The cloud-based solution from Steelwedge allows Sony to power its process
in scope with its evolving market.

Risk Mitigation. The proven, secure Steelwedge platform limits Sony’s IT exposure to
risks around data, business continuity and security.

To learn more about Sony’s implementation of Steelwedge, read the full case study here. Do you have any best practices to share around using the S&OP process to enable a successful product launch? Share your insights in the comments section!

Why won’t Sales participate in our S&OP process? Five tips to get Sales in the game


Change is a challenge. Implementing sales and operations planning (S&OP) is a massive challenge. We put recurring processes in place with meetings scheduled months in advance. We gather vast amounts of data and force it into predefined buckets. And we expect diverse functional groups to talk with one another and arrive at a consensus plan. But despite the most diligent efforts, every practitioner of S&OP—even those who are even best in class—encounters obstacles to true collaboration.

So, what’s blocking collaboration? Each functional group may have differing responses to these questions, based on their priorities:

  • Are we planning in units or dollars?
  • What’s our planning horizon?
  • What level of detail is needed?

In the table below, goals differ between functional groups. Sales wants to maximize revenue, thinks in dollars and is focused on the near term. The Operations group wants to know what to manufacture, when it’s needed and where it needs to go. Operations is focused on minimizing operating costs, thinks in units and is looking at the medium term. Meanwhile, Finance is trying to maximize profit, manage cash flow, thinks in both units and dollars and is focused on a much longer horizon.

Goals of Sales, Finance, Operations

So then, is it surprising that Sales does not want to participate? Here’s what we’re asking from Sales:

  • Provide your forecast much further into future
  • Tell us specific products you will sell
  • Tell us number of units of each specific product
  • For each product specific unit projection, tell us into which months they fall
  • And, by the way, if you don’t sell to meet your forecast, we’ll have a conversation about that, too

So what’s a salesperson to do? Well, the first inclination is to resist. “I gotta be out in the field, lookin’ my customer in the eye. I don’t have time to give you a detailed forecast.”

As an organization that sees the value of sales and operations planning, we must conquer the “Get me outta here” reaction. Mandating sales participation may be necessary, but that’s not enough. The organization needs to allow salespeople to do what they do best…sell. That means making S&OP easy and helpful to Sales.

Here are 5 tips for bringing Sales into the S&OP partnership:

  1. Provide a starting point. Salespeople are much better adjusting a forecast than creating one from scratch. The starting point can be a statistical forecast based upon historical demand.
  2. Make it easy to enter forecasts. Allow salespeople to enter their forecasts in a user-friendly tool. The tool should allow users to view actuals and forecasts at desired level of aggregation. That is, allow roll up of values by customer, by region, by product family or other levels as defined by planning hierarchies. Then spread the aggregate forecasts across the all other levels using sound business logic. The planning tool does the heavy lifting, not individuals.
  3. Share the value of a better S&OP plan. A more accurate consensus plan will translate into better customer service levels and improved customer satisfaction. Yes, it really works, and increased satisfaction usually bodes well for increased sales.
  4. Set realistic and achievable sales targets. S&OP requires one plan that the organization agrees to execute against. Sales should use the same approach to set sales targets. Stretch goals are fine provided it’s clear that these go above and beyond the S&OP plan.
  5. Put the thumbscrews away. Measuring forecast accuracy is a great way to learn from the past and make improvements. It should not be the means by which to call out underachievers. If a salesperson’s actual sales are significantly and consistently under or over forecast, look into what may be driving that behavior. Does the company demand stretch goals and set commission plans at levels that are unlikely to be achieved? Is the salesperson reluctant to share leads for fear of being held accountable if she does not close the deal?


Sales participation is critical for S&OP success. Make it easy and non-threatening and the challenge may become less massive.

Avoid the Most Common S&OP Mistakes: Here’s Our Top 5


Knowing is half the battleIn the wise words of G.I. Joe, “Knowing is half the battle.” And in the battle for sales and operations planning (S&OP) success, knowing where the potential pitfalls lie will serve every company well. Some of those pitfalls were recently outlined by Steelwedge Vice President of Industries Danny Smith in a Manufacturing Business Technology article entitled “The 5 Most Common S&OP Mistakes And How To Avoid Them.”

Recognizing that knowing what not to do is just as important as knowing what one should do, Danny described the following mistakes that companies frequently make in their sales and operations planning initiatives:

1) Lack of executive ownership. The biggest problem I see is the executive leadership team not owning the S&OP process. If executive leadership isn’t fully engaged, the process won’t be as successful. If they aren’t engaged, find out why. Maybe you aren’t giving them the things they need to run the company: forward-looking, global visibility; timely, concise information that is digestible to them (e.g. their KPIs) and that is actionable; the ability to ask “what-if” questions so they can put boundaries around their risk. A good technology platform can help tremendously here. After all, the best people and process can only take you so far. Technology serves as a lever to speed up the process and shift the focus from calculations to analysis.

2) No cross-functional engagement. The whole point of S&OP is getting the entire organization moving in the same direction. That’s hard to do without the involvement of all the key stakeholders in the process. Research around S&OP failures right after the global downturn showed that a third of the respondents didn’t have Sales engaged in the S&OP process. That was the good news! Almost half didn’t have Operations or Finance engaged. Lack of a way to translate between different functional views of information tended to leave one or more participants out of the process. Sales would input revenues by account, Operations would need demand in units by product, and Finance wanted to see net margin. To really make S&OP work, you need to have the same information, but expose it to each stakeholder in the form they need and understand. Even if you start with a quick win/small project, extend the scope to just across the functional boundaries to provide the needed translation.

3) Focusing only on one consensus number. An S&OP mantra for years has been getting to a “one number plan,” but this simplifies things too much. And worse, it limits the value of S&OP for executives. Executives are paid for predictability. It’s their job to identify and proactively mitigate risk – to avoid the danger before it’s a reality. S&OP can be a great tool to help (i.e. GPS telling you to avoid a route due to traffic) but only if you don’t fall into the “one number” trap. Instead, you need to plan in ranges – worst case, best case and expected – all along the S&OP process. The ability to identify the impact of things not going to plan is priceless. As Eisenhower once said, “Plans are nothing; planning is everything.”

4) Complexity! Follow the “keep it simple” principle, especially with metrics. I’ve seen companies become paralyzed trying to make the right decision when they have to evaluate hundreds of metrics; the complexity prevents them from being able to ask the right questions. Pick your big 10-15 metrics (see Figure 1) and go with them. Track them, make performance transparent so everyone understands where they are, and learn from them.

Figure 1: Simple KPIs

Figure 1: Simple KPIs

5) Lack of documentation. How do you learn from your mistakes? You have to capture all the institutional knowledge and assumptions that go into your plans. Provide a mechanism to capture this information from every participant, and make it easy for them to contribute. For example, if you collaborate as a group using social media, automatically capture those chats and the context and embed it into the plan assumptions so you can understand the context of decisions or changes six months later. Remember, those who don’t learn from history are doomed to repeat it.

Do you agree with Danny’s top five S&OP mistakes? What lessons have you learned in your journey to sales and operations planning success? Weigh in with your “war stories” in the comments.

 

Do You Have Planning Insight? Collaborative S&OP Requires Easy Access to Data and Analytics


Chances are you’re collecting volumes of data to manage your business. Most companies today amass veritable mountains of digital details on how their business has performed in the past in the form of reports, customer feedback, trading partner metrics, and KPIs. They also collect sales and operations planning (S&OP) data on how it should perform in the future via demand plans, supply constraints, and statistical forecasting metrics. But are you adept at culling through this data at any time to optimize where you are NOW?

At Steelwedge, we have a perspective that your planning data ought to be able to tell you, anytime and on any device, the impacts of supply/demand tradeoffs based on your current business reality. That insight powers S&OP and comes from a blend of both historical and forward-looking planning data for real decision-making context. And your entire team must be able to access that data in a single plan of record to enable truly business-transforming collaborative S&OP.

Simply put: business parameters change and plans—and people—have to flex with them. Check out this video about Bob and his quest for better S&OP insight. Only his animated form is two-dimensional. His business planning needs are not. Seem familiar?

We’d love to hear from you about your journey to get better planning insight. Can you keep your business plan on course even when you know it will occasionally go off road?

Is Your Global Planning Like Whack-a-Mole?


Join us on Wednesday, May 29 at 9:00 AM PDT/12:00 PM PDT for “Is Your Global Planning Like Whack-A-Mole?,” a compelling addition to the Steelwedge 2013 Agility Webinar Series.

The sheer velocity of change in business complexity, global volatility and available data is making the prospect of managing regional and global planning a more elusive mission. It’s like hitting a whack-a-mole with a mallet—only to have another pesky problem pop up somewhere else.

This session will explore how to tie together smart strategy and integrated software to capture and scale a process that can out-flex even the gnarliest of planning challenges.

Join sales and operations planning (S&OP) author and educator, Tom Wallace, and Steelwedge Vice President, Nari Viswanathan, to learn how to:

  • Do more with S&OP beyond “just” supply/demand balancing
  • Go global with smart strategy and scalable technology
  • Turn your big data into big insights
  • Build an agile enterprise and outmaneuver volatility

Click here to register. We hope to see you online for the webinar!

“Scenario Modeling: What Don’t You Know About Your Business?”


MetroPCS knows a lot about its 9.5 million customers. With churn of smart phones and handsets shrinking annually, this  leading provider of mobile service is all about predicting demand and understanding each of hundreds of features and functions that will sell the best across a portfolio of phones.  But it wasn’t until MetroPCS worked with Steelwedge that if found out that it’s business was not bound by seasonality.

Check out MetroPCS’ video story on scenario modeling to see how they tapped cloud-based planning solutions from Steelwedge to get a whole new perspective on their business.  Ask yourself:  “what don’t I know about my business?”

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


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.

8 S&OP How To’s with Lora Cecere


Lora CecereEd. note: At Steelwedge’s May webinar, Lora Cecere, unveiled the results of a new study on supply chain agility and the role of S&OP in improving an organization’s response capabilities. Following the webinar, Lora took a few questions from the audience but we couldn’t get to all of them, so we threw out a short answer challenge. Answer 16 questions from the webinar as succinctly as possible. Here are the first eight in the series. -R

  1. What is the most surprising thing you discovered researching the importance of agility?
    That only 13% of companies effectively tie S&OP planning to agility.
  2. How do you achieve agility when faced with long lead times (1 yr+)?
    I believe that the longer the lead times the greater the impact that agility techniques can have on the supply chain.  This is accomplished by modeling demand and supply volatility and building playbooks to anticipate these impacts on supply chain reliability.  A mature S&OP process helps companies to align against variability. 
  3. How can you visualize the process of sales and operations for long-term future, if this is so volatile?
    Through role-based dashboards.
  4. What is your perspective of impact of “external changes” on stable industries such as mining, oil, gas etc?  Customers simply need coal, oil or gas they do not care how these products are e.g. innovated,packaged, delivered etc.
    I believe that this needs to be handled through market-to-market modeling in S&OP.  Buy modeling demand shifts (e.g. the changing price structures of fuel alternatives) and market supply variability (the levels of stockpiles), companies can do what if analysis to mitigate market risks.
  5. In your opinion has S&OP technology with process and change management finally become the recommended approach, and if so why?
    It depends.  There needs to be a system of record for companies that have multiple S&OP processes. 
  6. We have mixture of S&OP by Microsoft Excel and ERP. How do you rate the “flexibility” of specific supply chain software to cover specific needs?
    ERP is inflexible, and excel is not deep enough.  Neither are good alternatives.
  7. We use S&OP for supply / demand balancing of resources but find the complexity of the person’s skill set impacts our decisions. Any thoughts on how to balance the understanding of the detail against the need to make effective decisions?
    This happens through the selection of technology that aligns with the skill sets with the what-if modeling.  If there is still a gap, consider business process outsourcing.
  8. What are the critical success factors in implementing a S&OP/IBP in a large organization?
    The most critical element is the building of a supply chain strategy and educating the executive team on why this matters.

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


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!