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…

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…

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…

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?

1. 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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