collaborative S&OP
Tiger Woods, S&OP and Elephants
As Tiger Woods s
lowly recedes from visibility in today’s fast paced, polyphonic, multi-media environment, I am driven to identify some sort of meaning in it all. And, in a world in which bits, bytes and terabytes of data stream before us daily this is no easy task. Living in an age when global conflict shares a table with global social networking, creating personal connections has become the Holy Grail. On occasion connections do occur. When this happens the information that fog my life temporarily lifts. So, ending a long day immersed in Sales and Operations Planning (S&OP), I ponder — do S&OP, Tiger Woods and Elephants share something in common?
At its best, a highly collaborative, data-driven Sales and Operations Planning process creates visibility. The consequences of bad choice become clear. And, elephants sitting in the room – or perhaps obsolescent inventory lying in a warehouse – cannot be avoided. In good S&OP scenarios are created, alternatives examined, and the path forward is understood. Often, the process of S&OP itself surfaces important issues that might otherwise have been missed. Were there early indications of bad choice in Tiger Wood’s behavior? Was his life story of discipline and perfection to good to be true? Was there an elephant in the room all along that we were all ignoring?
We all love a hero. And of course, we seek to avoid unpleasant experience. While the world worshipped Tiger, Tiger was spending his energy struggling to contain a boiling maelstrom of problems. There indeed was an elephant in Tiger’s room and neither he nor the rest of the world was willing to confront this painful fact until the elephant crashed through the house. The good news is that life will go on for the rest of us and Tiger will survive the storm.
However, in today’s troubled economy, corporate executives cannot afford to ignore the elephant’s in the room. There is no room for bad choice. Constant vigilance and decisive action are imperative. Sales and Operations Planning is a process that can elucidate the elephant in the room. Moreover, Steelwedge S&OP drives better decision making and good choice. Did a major customer in a remote region of the world just cancel a major order? If so, how should we react? Should we discount aging inventory before promoting new products? Can we improve profitability with a different price structure? The answer to these questions is the fuel that powers successful corporate governance. And, indeed the story of Tiger Woods, Elephants and S&OP provides an important message.
H1N1, Sales and Operations Planning (S&OP) and your Doctor
What does the H1N1 epidemic have that most Sales and Operations Planning (S&OP) processes do not have? Is this a ridiculous question? Well, the question is not as ridiculous as it might seem and the answer is simple – H1N1 has the US Center for Disease Control (CDC). The state of the N1H1 epidemic is closely monitored by the CDC using real-time dashboards, sophisticated predictive metrics, external sensors, and tailored email alerts directed at the medical profession (see below). However, few global manufacturing companies have the tools to close monitor and manage their sales and operations processes. And even fewer have the tools necessary to make the right strategic decisions when confronted by a crisis.
What tools does your company have to proactively manage during these highly volatile times? Not unlike the Center for Disease Control, the mission of Steelwedge Software is to enable companies to proactively identify and manage risk while improving strategic decision making through adoption of a fact-based Executive Sales and Operations Planning process. In normal times, the outcome of an effective S&OP process is increased asset utilization and improved operational efficiency. In extraordinary times, S&OP is even more important as it provides a framework and toolset for crisis management.
What is the roadmap to improved S&OP? Start with a crawl-walk-run approach. Adopt the basics first– establish a fact-based monthly process. Automate the demand sensing process and drive collaboration. Then, establish a system-based rough cut capacity or supply planning process. And finally, drive an effective Executive S&OP process that enables executive decision-makers to understand strategic trade-offs and proactively respond to business challenges. Once this end-to-end process is in place and fully enabled. A comprehensive set of performance metrics, predictive analytics, dashboards, and exception-based alerts can be implemented to improve corporate agility (see below).
Step back for a moment - is S&OP with its associated metrics, dashboards, alerts and warning indicators that different than what the CDC has created to manage the H1N1 epidemic?
Top Criteria for SAP Customers to Use in Evaluating S&OP Solutions
A question in the minds of many executives in companies running SAP ERP and/or SAP APO is what type of organization would benefit from a Sales and Operations Planning solution (S&OP) solution by a best-of-breed vendor. Below are some guidelines that can help clients decide if they should also evaluate another vendor’s products before making a decision.
Before outlining the criteria, let’s define the scope of the S&OP solution to include demand planning, rough cut capacity planning, performance management, product life cycle planning and business-planning (revenue/margin). With that scope defined, a company with some the following attributes should also evaluate an S&OP solution from a best-of-breed vendor:
• Has the business need to go live with the solution within weeks rather than years.
• Needs the ability to analyze trade-offs and develop alternate planning scenarios to determine the best outcome
• Currently spends an inordinate amount of time compiling and massaging data into a usable format
• Uses a direct sales force and believes that the ability to transform high level, sales opportunities from their CRM system into detailed, unit-based forecasts will significantly improve the quality and relevance of the demand forecast.
• Has a complex product mix or configured products and needs attach rate forecasting capabilities.
• Wants to create a consensus demand plan by incorporating input from other organizational plans such as new product introduction plan, sales pipeline, finance forecast etc and some of that data exists in non SAP systems such as SFA systems, PLM systems and even ERP systems from other vendors in different divisions.
• Is looking for a secure, integrated solution for sales and operations planning across the enterprise.
• Operates in a changing environment and wants the ability to easily update and evolve their S&OP process (a straightforward mechanism for creating and updating business rules, time series, and attributes) as their business processes changes.
• Does most of their planning on Microsoft Excel today and expects adoption issues with planning systems that have web-based user interface rather than an Excel-based interface.
• Wants to extend the solution beyond the firewall to support collaboration with distributors and customers.
• Wants to simplify and streamline their planning process and is looking for a simple-to-use workflow based S&OP process that is driven by E-mail and leverages an Excel “front-end”
Steelwedge is uniquely positioned as the only dedicated Sales and Operations Planning (S&OP) provide in the SAP Ecohub partnership ecosystem. With standard connectors and process maps for SAP, Steelwedge meets the urgent need for improved strategic decision making driven by a scalable S&OP process faced by SAP customers large and small face.
Sphere: Related ContentRelease 5.1 with Sales & Operations Planning (S&OP) Dashboards
Steelwedge introduces Release 5.1 with Executive Sales and Operations Planning Dashboards Steelwedgecontinues its rapid growth as five new customers select SPPM Release 5.1 — the industry’s leading cloud-based Sales and Operations Planning (S&OP) solution.
Youtube Video Link: Steelwedge Sales and Operations Planning release 5.1
Steelwedge Software, the leading innovator in Sales and Operations Planning (S&OP) solutions, today announced a new product release for its Cloud-based Sales Planning & Performance Management (SPPM) solution featuring configurable Executive S&OP Dashboards, enhanced best-practice based Executive S&OP workflow capabilities, and expanded scalability.
Steelwedge SPPM Release 5.1 represents a significant milestone in the product’s maturity and development life cycle. The primary focus of Release 5.1 was to further enhance usability, scalability, elevate a business user orientation and extend the supportability of the platform. In particular, enhancements and new capabilities have been developed for Release 5.1 in the following areas: User Interface, Dashboards, Workflow Scheduling, Configuration and Platform.
One of the most visible changes in SPPM Release 5.1 is the new web based Executive S&OP homepage which has evolved into a more powerful business user work center designed to help a user plan, monitor performance and manage by exception. The new homepage includes an intuitive tabbed structure.
Release 5.1 also incorporates a new, best-in-class statistical forecasting engine – the Steelwedge Optimized Forecasting Engine (SOFE), enhanced Excel-based S&OP Templates and powerful customer-level S&OP Master Data management capabilities.
“Steelwedge Release 5.1 enables Steelwedge to further strengthen our leadership position in the S&OP marketplace”, said Steelwedge CEO Glen Margolis, “Existing Steelwedge customers and prospects are extremely excited about the new release because it will have a significant impact on their financial and operational performance.”
“With Release 5.1, Steelwedge has continued to assert its leadership position as the best-in-class S&OP solution – Steelwedge has enabled us to reduce our inventory by over 18%. We are confident that the new release will enable us to even further improve our business operations” said the COO of a leading high technology manufacturer and Steelwedge customer.
As a Certified SAP Partner, the Steelwedge S&OP solution release 5.1 seamlessly integrates into SAP ERP and APO to drive Executive Sales and Operations Planning processes. Recent Steelwedge customers adopting Release 5.1 include General Electric, Intuit, Contech and Hospira.
Sphere: Related ContentKaizan, The Boston Marathon and S&OP
Successful S&OP implementations requires strong executive leadership, a process-focused S&OP planning application, teamwork, an understanding of the best practices and clarity in regard to the two levels of S&OP—Executive and Operational. Best-in-class S&OP processes also require continuous improvement and a never-ending drive toward better organizational alignment – Kaizan. In other words, implementing a really effective S&OP is a marathon not a sprint.
Frequently heard pain points include:
| PAIN POINT | PERSPECTIVE | |
| Sales, Marketing, Finance and Supply Chain seem to be operating to four different numbers. We spend a lot of time reconciling different views of what ‘demand’ will be. | Rather than driving to “one number”, which often leads to non-value added reconciliation, leading companies are instead operating to an “aligned set of numbers”. | |
| We’ll invest in a promotion to stimulate demand but then have trouble supplying the product to satisfy that lift in demand. | In industries such as consumer goods with substantial event-driven demand, companies are moving from a total forecast to a “base and lift” component design. | |
| We never seem to be able to predict how new products will do. | The demand forecast for a new product needs to systematically incorporate insight on the amount of marketing funding and the breadth of distribution (regional vs national). | |
| Shortfalls to our financial plans force us to ‘push’ product last minute to our trade partners at the end of the quarter. | To proactively identify revenue/profit gaps in time to develop consumer pull programs to close them, companies are systematically “dollarizing” their volume forecast across the entire planning horizon. | |
| We seem to be flooded with customer data / POS information that we do not know how to effectively use. | Companies are developing Demand Sense and Respond capabilities to dramatically increase visibility to customer demand and the ability to use this information effectively.
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| Executive presence is limited. We spend more time talking about data problems than making decisions | Companies with best-in-Class S&OP processes leverage a single S&OP platform that provides drill down, ‘what if’’ analysis capabilities, and true cross-functional integration. |
Successful companies are increasingly shifting focus from driving functional excellence to improving synchronization across internal functions and with external trading partners—suppliers and customers.
S&OP links strategic and operational planning including production, sales, finance and marketing across all time horizons. A robust S&OP process ensures that marketing, sales supply chain and financial processes are synchronized to deliver an accurate view of customer demand. Demand sense and respond capabilities provide visibility to near term demand requirements and financial trade-offs. Continuous improvement — Kaizan — requires constant refinement of every element of S&OP. With repetition and Kaizan, S&OP becomes ever more effective and drives constant efficiency improvements across a corporation.
Sphere: Related ContentThirsty Horses and S&OP
If you had the perfect S&OP tool, would you use it?
I recently presented at the Demand and Sales Forecasting Forum at the University of Tennessee. More evident than ever, Sales & Operations Planning (S&OP) has become the number one topic of discussion. The S&OP discussion typically touches these three areas:
1. Tools
2. Training
3. Adoption
An executive once said to me, “what’s tough about adoption? Just tell them they have to do it!” While top level executive support is crucial, dictating collaboration is like mandating world peace.
There’s an old idiom, “You can lead a horse to water, but you can’t make him drink.” When it comes to S&OP, having the right tools and training is not enough. Users must welcome the change as an improvement for the company, their department or themselves.
Selecting the right collaborative planning solution is critical. Steelwedge has been the market leader for years and understands that the tool alone is not sufficient. Users must be trained in both the use of the tool and how it fits in their process. Too often, new tools and training are abandoned by users because they did not adopt the tool as an integral part of their process. And why did they resist the tool? It was either too complex or not complex enough. Yes Goldilocks, the bed was too hard AND too soft! The paradoxical answer is that the tool must be BOTH simple and powerful.
Herein lies the true challenge of S&OP. Cross-functional collaboration. How do you get disparate groups of individuals to agree on the tools and processes necessary to drive successful S&OP? The answer varies for each organization. Yet, we see repeatedly that organizations must:
1. Define effective and efficient collaborative processes
2. Select tools that support simplicity and complexity of varied participant needs
3. Provide essential education and training
4. Support individual growth and participation
5. Monitor performance and usage
S&OP champions are thirsty for participation from all organization levels and departments. S&OP participants are looking to lessen their loads and achieve their objectives. In the end, the S&OP champion will get participation when participants see the S&OP process as time well spent.
Will participants drink from the S&OP trough? Yes, if they’re thirsty!
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