Demand Forecasting
S&OP: What can we learn from Martin Luther King, Jr.?
Last week, we celebrated the birth of Martin Luther King, Jr. MLK was a brilliant man with an amazing talent for delivering the spoken and written word. As I pondered several quotes from MLK, there was one that struck me as having a strong relevance within the business world.
“We must learn to live together as brothers or perish together as fools.”
Now don’t get me wrong. The words of MLK go much deeper than business relationships. Still, I can’t help but think that the teachings of MLK can offer us some helpful insights into how we manage our businesses. Effective S&OP requires individuals from varied backgrounds, functional responsibilities and positions within the organization work together for the benefit of the overall organization.
All too often, companies struggle with functional silos, poor communication and a misalignment of effort. If you are a leader in your organization, collaboration and consensus building should be your goal. Be engaged in the S&OP process and encourage all participants to contribute their insights. A dictatorship is not S&OP. Likewise, a free-for-all democracy where each participant has an equal vote is not S&OP either. An effective process leverages bottom-up inputs from distributed resources as well as top-down market and business insights from company leaders.
MLK on leadership:
“A genuine leader is not a searcher for consensus but a molder of consensus.”
Sales and Operations Planning, Collaborative Demand Planning Depends on Bottom-up, Top-down and Statistical Forecasting
An effective S&OP program depends on solid, accurate demand forecasts. Best practice companies do three things well: statistical, top-down and bottom-up forecasting. Many companies are doing one or two of these, but few are doing all three well. Of course, some companies do none. Let’s just say these companies have a huge upside improvement potential.
A statistically generated forecast should use a “best fit” approach to select the mathematical algorithm that minimizes error (such as mean absolute percentage error (MAPE)). The statistical engine should select the best algorithm for each time-phased data series or set of regression data. The resulting forecast should serve as a starting point for bottom-up and top-down forecasts.
Bottom-up forecasts are accumulated from many contributors. A distributed sales force may have hundreds or thousands of contributors. Each contributor has a specific area of expertise such as a specific customer, product or geographic area. The contributor enters her forecasts for her specific area of responsibility. Forecasts from all contributors are summed to capture an overall bottom-up forecast.
Conversely, a top-down approach applies a more centralized view. A small number of forecasters will look at various inputs and generate forecasts. Influencing factors may include market data, economic indicators, and general product and customer trends. Here, too, the statistically generated forecast is a good number from which to start.
The beauty of top-down and bottom-up forecasts is their ability to look at the world from differing vantage points. The folks in the “ivory tower” know important information, but they don’t know everything. The folks in the field have keen insights into their unique areas, but they only see their small piece. The challenge is to capture the small pieces without tainting the field forecaster’s view. In other words, don’t tell the field forecasters the top-down targets. When field forecasters are told what their forecasts are expected to be, they tend to send back values right in line with the top-down values. Such tainted bottom-up forecasts miss the point of gathering field intelligence.
An effective marriage will capture top-down and bottom-up forecasts separately. A management by exception S&OP tool will make comparisons quickly to enable users to analyze critical differences and refine the ultimate consensus driven forecast.
Sphere: Related ContentExcel, S&OP and the Comfortable Old Chair
I have an old recliner chair that’s so comfortable, I refuse to let it go. It’s various shades of green (much lighter in the seat area) and worn in the usual spots after 20 years of service.
Excel is a lot like that old chair. I’m often impressed by the creativity found in home-grown Excel planning spreadsheets. Typically, an individual has spent months or years to model the company’s forecasting and planning intricacies producing a complex set of worksheets with never-ending links and calculations. The net effect is that this individual is the only one who really understands the model. Obviously, if this wise individual were to leave the organization, the planning tool and process would break down or cease to function at all.
Smart organizations recognize this vulnerability and take steps to establish supportable enterprise-wide tools. And thus starts the internal battle over the apparent need to throw out Excel in favor of a scalable S&OP tool.
Newsflash: You don’t have to choose. You can have a collaborative, scalable S&OP solution and keep Excel. Enterprise Enabled Excel was expressly created to address the need to provide an organization-wide collaborative planning S&OP solution with the familiarity and ease-of-use of Excel as a front-end user interface.
Steelwedge Software provides a planning and forecasting environment using Excel coupled with a world-class, highly scalable, server-based enterprise planning infrastructure. You get all the advantages of Excel without the complexity, long learning curve and inflexibility of a traditional enterprise application.
Imagine a single planning application that offers ease of use, familiarity, power, flexibility, aggegration/disaggregation, qualitative notes tracking, waterfall reporting, offline capabilities, internal and external collaboration, security, scalability, drill down, data integrity, reduced data latency, and an archived Plan of Record.
The Steelwedge solution uses Excel templates supplemented by Internet Explorer (web browser-based) “pop-up” windows as the presentation interface to deliver a powerful next-generation planning application that leverages AJAX. Web Services, and XML technologies. E3 represents a radically new approach to managing your Excel-based planning process.
An enterprise S&OP tool with an Excel interface. The best of both worlds! Have your cake and eat it too! And…
Keep the comfortable chair!
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 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!
Sphere: Related ContentOnDemand Sales and Operations Planning in 30 Days for SAP Customers
Steelwedge today announced a new release called “Compass Express S&OP” which offers a highly scalable “out-of-the-box” S&OP solution that can be implemented in less than thirty days. The solution leverages Steelwedge’s award-winning Sales Planning and Performance Management Platform (SPPM) and advanced partnership with SAP. The solution also draws on leading-edge technological developments to usher in a level of ease-of-implementation and ease-of-use never before available.Steelwedge Compass Express S&OP delivers the full range of functionality available in SPPM in a packaged, best practice-based format that expedites implementation, integration and training. Standard functionality includes Executive S&OP, collaborative demand planning, revenue planning, and performance management. The next release of Compass Express will also include direct integration with SAP BusinessObjects Xcelsius and SAP BusinessObjects Explorer for enhanced data analysis, reporting and business intelligence capabilities. Steelwedge Compass Express S&OP also includes standard integration with Salesforce.com (SFDC).
Steelwedge Compass Express was developed in response to growing demand from manufacturing companies in North America, Europe and Asia for an easy, highly cost-effective packaged OnDemand S&OP solution with standard integration into SAP, very low upfront costs, low total-cost-of-ownership (TCO) and a subscription pricing model. “Steelwedge Compass S&OP represents a major milestone for the software industry. Compass Express offers a packaged, OnDemand S&OP solution with standard integration points that enables manufacturing companies to increase planning visibility and improve profitability,” said Glen Margolis, CEO.
Steelwedge Compass Express Release is scheduled for general availability in Q2 of 2009.
Sphere: Related ContentReceive Blog Updates Via Email
Categories
Recent Posts
Archives
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2006