OnDemand
Does Toyota Need to Forecast? When Lean Manufacturing Doesn’t Work
The relationship between sales forecasting, demand planning, and lean principles has been analyzed, evaluated, and debated for decades. However, in light of recent market volatility, this debate is final reaching resolution – executives overseeing even the most lean, JIT-focused supply chains, need to planning.
Chris Chiappinelli, a blogger associated with the Managing Automation Blog offers the following :
“Just in Time, in its purest form, is a thing of beauty. Read Toyota’s description of it on their website — it sounds like poetry in motion. But the marketplace doesn’t care for poetry. We don’t want to place our order and watch the gears — perfectly meshed though they may be — smoothly churn out our product. We want our hamburgers pre-cooked and waiting for us under a heat lamp. In that world, Just-in-Time has no place. It’s a museum piece, a relic of a more patient era. In this world of pre-heated hamburgers and mass customization, Toyota and its counterparts are forced to produce not to actual demand, but to expected demand. And that, my friends, not only belies JIT; it creates a huge amount of risk.”
“A New York Times article illustrates just how far from its roots Toyota strayed:Previously, plants operated under the sales force’s direction of “you make them, we will sell them,” said Real C. Tanguay, president of Toyota Motor Manufacturing Canada. Now the philosophy is, “if we can sell them, then you will make them,” he said.” “Oh, how the mighty have fallen. Who would have predicted that a Toyota executive would ever sum up the company’s philosophy as, “You make them, we will sell them”?”
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Steelwedge enables customers to better understand and anticipate demand through forecasting, collaborative engagement of field sales, and analysis of changes in sales pipeline opportunities. In today’s world, these are vital processes.
SaaS is Surging in the Downturn, says IDC
Market researcher IDC has published an upward revision to its market size projections for SaaS in 2009. At a time when most industries and economies around the world are slashing their growth forecasts into single digits or even negative territory, IDC now expects SaaS growth to surge by more than 40 percent in the current year. That’s a significant move up from its previous forecast of 36% growth, published back in July when most economists were still trying to deny the onset of recession.
SaaS’s counter-cyclical boom is entirely due to the enhanced attractions of the model when times are bad, says IDC:
“… the harsh economic climate will actually accelerate the growth prospects for the software as a service (SaaS) model as vendors position offerings as right-sized, zero-CAPEX alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams.”
Don’t you just love that definition of SaaS? “Right-sized, zero-CAPEX alternatives to on-premise.” The report’s author, director of on-demand and SaaS research Robert Mahowald, adds an interesting observation that bears out the uprating:
“… several key vendors finished the year very strong, reporting stable financials and inroads into new customer-sets.”
From my own conversations with privately held SaaS players, I can certainly confirm that business seems to be expanding with continued momentum. Yesterday I was on a call with Phil Fernandez, CEO of marketing automation vendor Marketo, when I heard a bell ring and some cheering in the background. “We ring that bell whenever someone closes a deal in the sales team,” he explained. “Someone’s had a good start to their day,” I commented, noting it was 10am in his timezone. “That’s the third time so far this morning,” he replied. Marketo, which launched its offering just ten months ago, has already signed up its first hundred customers, at subscription levels that start from $1,500 per company per month.
Yesterday, collaboration vendor Central Desktop reported that in 2008 it had seen a 150% increase in user count and revenue over 2007, bringing its user base to the quarter-million mark. Growth continued througout Q4 and the company signed ten new customers in December alone, including urban planning consulting firm IBI Group and on-demand ERP vendor Workday. In a counterpoint to this week’s bleak employment news, Central Desktop says it tripled its workforce last year.
Chris Cabrera, CEO of sales performance management vendor Xactly, which last week acquired its largest rival, blogged about the IDC finding yesterday and picked up on Mahowald’s contention that many of these SaaS purchases are seen as “tactical fixes which allow for relatively easy expansion during hard times.” Cabrera counters:
“I will be surprised, very surprised, if an appreciable number of SaaS customers dump their on-demand applications in favor of on-premise solutions when the economy eventually rights itself. The excellent renewal rates enjoyed by SaaS leaders show that, once bitten by the SaaS bug, there’s little impetus to go back to on-premise solutions.”
I side with that analysis, and it’s interesting that a mainstream market researcher like IDC, even when it can’t deny the success that SaaS is experiencing, still feels it has to qualify it as some kind of blip in the normal scheme of things. I think Cabrera is spot on when he concludes that IDC’s findings show that the tipping-point from conventional software to SaaS “is now a lot closer than anticipated. And once tipped, no matter what brought you to that point, it will be counter-intuitive to go back.”
Improving manufacturing operations during a recession . . . is software really a priority?
The headlines of today’s Wall Street Journal listed the rapid (vapid?) drop in manufacturing across the globe – Japan, Korea, the EC, the US – without exception the incredibly rapid drop in output is horrific. And yet, as history has proven, these are the very times that will sort out the best run businesses. The survivors will be those that make the investments and difficult changes necessary to become the kind of nimble and efficient manufacturer required to thrive during the next economic cycle.
How do know this? Q4 2008 was the best quarter ever for Steelwedge as manufacturers really focused on wringing out inefficiencies, moved quickly to improve agile planning practices, and set short-term goals to put in place the kind of infrastructure required to survive the dramatic downturn and be well positioned to thrive during the next cycle.
However, there is a distinction this time. Companies are not buying the kind of old-school, traditional cumbersome, transaction-focused software offered by the first generation of software companies – SAP, Oracle, Infor and the like. Leading companies already have this kind of infrastructure in place – now they are looking to leverage there investment by improving planning. Moreoever, they cannot wait for an expensive 12 month implementation cycle – they need a solution now!
The net effect of this change in focus has been a dramatic increase in interes in OnDemand (SaaS) software offered by companies such as Salesforce.com and Steelwedge. In fact, our partnership with Salesforce has brough in numerous deals as has our growing partnership with SAP. In each case, their customers were looking for a world-class, highly scalable, yet simple, cost-effective, and subscription-based solution.
This is at the heart of Steelwedge’s best-in-class OnDemand Sales and Operations Planning solution.
Steelwedge, the leader in OnDemand Sales and Operations Planning Solutions
Annual Sales up 160% over 2006 from existing and new customers deploying Steelwedge OnDemand Solutions; New Partnerships with Salesforce.com and Teradata
Pleasanton, CA – November 20, 2007 – Steelwedge Software , the innovator in OnDemand (SaaS) Collaborative Sales Forecasting and automated Sales and Operations Planning (S&OP), announced today that 2006 to 2007 sales grew by over 160%.
Representative customers launching Steelwedge Sales and Operations Planning (S&OP) applications include Juniper Networks, the leading provider of networking and security solutions; Honeywell, a diversified technology and manufacturing company; Nvidia, the worldwide leader in programmable graphics processor technologies; and Monster Cable, the world’s leading manufacturer of high performance audio cables. Examples of customers choosing the Steelwedge OnDemand Collaborative Sales Forecasting and Planning platform include Spansion, the world’s largest pure-play provider of Flash memory solutions and, EDS, a leading provider of information technology and business process outsourcing services.
New Partners include Salesforce.com AppExchange and Teradata. In September, Steelwedge announced the release of its OnDemand Sales and Operations Planning solution (S&OP) for salesforce.com’s AppExchange, extending CRM functionality to provide comprehensive sales forecasting and sales and operations planning (S&OP) solutions for manufacturers of complex products in the AppExchange high tech and manufacturing vertical. In October, Steelwedge entered into an agreement with Teradata, the data warehousing leader, to provide the S&OP component in Teradata’s SAP APO Accelerator enabling large enterprises to achieve real Demand Drive Supply Networks (DDSNs.)
“We are pleased that the world’s leading high technology manufacturing companies are selecting Steelwedge to drive their sales and operations planning and collaborative forecasting processes,” said Steelwedge CEO Glen Margolis, “Steelwedge’s unparalleled technology and S&OP expertise ensures that our customers quickly derive enormous value.”
ABOUT STEELWEDGE
Steelwedge Software. Inc. links Sales & Operations Planning (S&OP) processes to existing systems through familiar desktop applications including email and Excel. Steelwedge helps companies improve the effectiveness of their S&OP, Collaborative Planning, Sales Forecasting, sales planning, and Performance Management activities. Steelwedge customers include Harley-Davidson, Hewlett-Packard, Honeywell International, Emerson Electric, Juniper Networks, Monster Cable, Nvidia, Spansion, Tellabs, Enterasys Networks and Teledyne.
For more information, please visit www.steelwedge.com.
TAGS: sales forecasting, sales planning, S&OP
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