Tag Archives: S&OP process

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?

S&OP and Simplicity for “Steve”: Getting it Right

Last week, Lora Cecere penned a piece in her Supply Chain Shaman blog post about a conversation with a Mining company executive, “Steve.”  He called for her advice on S&OP technology as he was equally hamstrung between limited Excel scalability and his IT team’s edict to leverage their Oracle ERP investment—which was not meeting his flexibility needs.

Lora’s message was twofold: technology is becoming more and more important to powering the S&OP process; and it is more and more challenging to understand which solutions are the best fit for each company’s unique needs. For real analysis of supply/demand tradeoffs, it’s the right time for S&OP technology, but how can providers help companies get it right?

At Steelwedge we’ve spent a decade partnering with leaders across the Global 1,000 to help them optimize their planning around unique business requirements and complexities.  And we’ve also seen a set of similarities in their needs.  “Steve the Miner” has technology needs that are similar to those from “Jane the CPG manufacturer”, “Frank the Consumer Electronics retailer” and most other manufacturing company planning leaders.  These characteristics include:

a)  A gap between IT and Line of Business technology requirements

b)  A desire to leverage Excel-based solutions for S&OP

c)  A challenge to model tradeoffs between supply, demand and finance

d)  A lack of an adequate data model to power decision-making

We agree with Lora that finding the right vendor who understands how to meet both your unique and more universal S&OP needs can’t be done in just a conference room or via a PowerPoint presentation.  First, you must be able to clearly articulate your technology expectations; a challenge for many companies since the S&OP process may not be well defined.

Once you have your expectations defined, the best way to simplify the technology selection process is to test drive the technology—with YOUR data.  Steelwedge pioneered S&OP Test Drives a number of years ago. Since then, dozens of our customers have been able to upload a set of their key master, product, history, order, and inventory data into our secure cloud-based Data Center to see their S&OP data in action.  And to break the technology selection Gordian knot with IT.

Steelwedge Software | S&OP cloud–based technology

In the spirit of this holiday shopping season, why not simplify your S&OP technology selection process—get it right—and “try before you buy?”

Constrained vs Unconstrained Demand and S&OP

Rick Blair

Does this sound familiar?
The Sales VP is agitated…very agitated. “Don’t tell me what you CANNOT do, I made the sale, now you fill the orders!!!” The Operations VP responds in kind, “Your forecast was not even close to what you just booked. We cannot increase supply that fast!”

Where do they fit in an S&OP cycle?
Sales and Operations Planning (S&OP) serves as a critical process to project, balance and manage the integration of supply and demand. The process starts with the demand signal. The Sales organization collects bottom-up forecasts from the distributed sales force. Sales management provides a top-down review injecting market and product insights. At this point, no supply constraints have been levied to temper the forecast. Thus, we refer to this as an unconstrained demand forecast.

The S&OP cycle continues with demand and supply reviews. The intent of these cycle steps is to validate assumptions, check reasonableness and align resource plans needed to support planned demand. Although planning horizons vary from one business to the next, in general, manufacturers must commit in advance to facilities, material purchases and even labor. These supply side plans will limit the ability of the organization to significantly exceed its projected business level. Limitations tend to be tighter in the near term with greater flexibility in the medium to long term.

Through the S&OP process, the organization sets a projected business level that balances expected sales and production capabilities with financial and inventory implications. The constrained demand plan reflects a demand plan aligned with the supply plan.

Do we need both?

Many companies find it useful to distinguish and track the gap between unconstrained and constrained demand plans. An increasing gap may indicate lost opportunity to realize sales that exceed current capacity. Companies should scrutinize unconstrained demand signals to verify demand is real versus “pie-in-the-sky.” Long term capital improvements aimed at increasing capacity need to be aligned with realistic projections of future demand.

Finally, the constrained demand plan feeds a consensus plan to which the organization agrees to execute. Our Sales and Operations VPs need to stop fighting and starting aligning. S&OP facilitates this necessary collaboration.

Reduce Surprises. Reduce Inventory. Improve Operational Efficiency. Increase Sales.

Steelwedge Successfully Completes SAS70 Audit

SAS70 has become the gold standard for the auditing of service organizations,  especially for providers of Software as a Services (SaaS). Steelwedge, the leading provider of Cloud based Sales and Operations Planning (S&OP) Services, has successfully completed the SAS70 Type II audit.

The SAS70 Audit is performed in two steps, each resulting in a report that’s issued by an independent and certified auditor.

The Type I Report describes the control objectives and controls that have been put in pace by the SaaS provider. The auditor renders an opinion on whether these objectives and controls are suitable for the type of operation the SaaA provider is offering. As Steelwedge’s controls and objective have been based on relevant ISO and COBIT guidelines, a positive SAS70 Type I report was easily issued in August 2009.

The Type II Report investigates actual compliance with Type I controls. In the Type II Report, issued to Steelwedge in January 2010, the auditor confirms Steelwedge’s adherence to established and documented industry standard processes. The auditor’s opinion was formed over a five month period through on-site visits, investigations and reviews.

The SAS70 audit offers piece of mind for our customers, knowing that their data is secure with Steelwedge. Our data center, our applications and our processes conform to the highest level of industry standards, and will continue to do so as Steelwedge continues to undergo Type II Audits in regular six month intervals.
Steelwedge customers and prospects alike can rely on the opinion of a certified and independent auditor to ensure compliance with their internal data and security needs. This eliminates the need to conduct individual custom audits, saving both time and money.

Steelwedge’s regular SAS70 Audits do more than simply check the box on the currently popular topic. As the business world evolves and security requirements continue to increase, Steelwedge empowers its customers to stay ahead of the curve.

Also, Business Continuity Planning (BCP) and Disaster Recovery Process (DRP) have increasingly gained significance over the last six to twelve months in the SaaS world. Companies continue to trust Steelwedge with their S&OP needs due to our ability to provide a rapid fail-over solution in the unlikely event of disaster, enabling them to continue to run their business on Steelwedge.


How to Ensure that your S&OP Process Succeeds – Drive Change Management!

Chomping on the last bagel in the breakfast laid out on the conference room table,  the CEO stands up, stretches, and comments “Excellent presentation,  S&OP really drives change… cutting edge ideas…this will definitely work.”   The scene has been set.   Following lots of nods, another three million in cash is headed down the drain.

Does this sound familiar?  The launch of yet another change initiative triggered by a compelling presentation from external consultants, software vendor or even the latest best selling business book. However, after years of initiatives being unleashed on organizations, senior managers should understand that certain success factors must be in place to enable successful change.

1. Provide Strong Leadership

Sales and Operations Planning (S&OP) transformation initiatives are rarely sustainable unless they are led from the top.  There is a direct linkage between the success of a change management program and leadership capabilities.  An effective leader must demonstrate vision, courage & conviction

  • A willingness to take both personal and business risks.
  • A demonstrated commitment to change, not simply demanding it of others.
  • Organizations such as Motorola and GE that have implemented exceptionally successful change programs include the development of key elements in their leadership training.


2. Develop a Compelling Vision

Developing a clear vision is important in making a culture change a reality.  With an inspiring vision, people can visualize exciting possibilities and begin to act in accordance with them.  Keeping the vision in the forefront of an organization’s thinking will ensure that energy and focus are sustained.

  • What will the organization look like during and after the change program?
  • Why should individuals and teams be engaged?
  • What’s in it for them?
  • What are the concerns that will emerge and how can they be addressed?

These are all critical questions that a powerful vision can address.

3. Ensure Team Commitment

  • Whether it’s the CEO or department heads, committed managers are a key to successful change programs.
  • Managers who only pay lip service to change are one of the swiftest ways to undermine transformation.
  • Building a supportive team is an essential part of the early stages of any effort to restructure, re-design, retool or improve.  John Kotter, in his best-selling book Leading Change, refers to such a group as a “Guiding Coalition.”

John Kotter chose his terminology carefully.  The word “guiding” defines the group as one that will not actually be implementing change, but rather removing barriers and creating an environment where responsibility is spread throughout the business.  Any change program that will be sustainable must involve the full organization.

4. Build a Coalition

A “coalition” (from the Latin coalitus, meaning to grow together) is an alliance.  It is a group that has completely aligned objectives.  Putting in place a credible group that acts as one and drives change relentlessly is critical.

  • Unfortunately, many senior teams struggle to act as a coalition, often pulling in different directions. The biggest threat to any change initiative is when this is done underhandedly, with leaders saying one thing in the boardroom but really challenging the decisions in the corridors. In a true coalition, there is not only unity of thought on the overall objective, but also an environment where differences of opinion on lesser issues can be aired constructively.
  • Real change can be particularly threatening to managers. After all, they reached their positions by doing things in a certain way. At a fundamental level, senior people have to review their roles, responsibilities, attitudes, behaviors, personal leadership styles and above all – their relationships with each other.
  • Some of this is uncomfortable. Experience shows that a true coalition will learn how to work through conflict to get a shared view as to the best way forward. Training and development play a critical role in facilitating this “growing together” of the coalition prior to launching any initiative.
  • Middle managers need to be on board early. Directors have a key role to play in leading from the top, but the attitudes and behaviors of middle managers also are vitally important. During the initial stages of a change program, there can be a great deal of excitement and activity. Keeping middle managers fully informed can ensure there isn’t a feeling of being marginalized.
  • An ignored manager can end up undermining and blocking the change progress. Process improvement teams with good local management support tend to go from strength to strength. Conversely, such teams fizzle out and have to be rekindled when managers aren’t interested or see teams as a threat to their role.

5. Identify and Train Change Facilitators

Engaging people throughout the organization in change activities is a departure from the old directive style of leadership. The best way to enable broad-based action through teamwork and securing the success of change teams is by trained facilitators. (The word facilitator comes from the Latin facere, meaning to make easy or simple.)  Armed with powerful tools of problem-solving and an ability to inject energy and enthusiasm, these individuals can be the catalyst of any change initiative. By seeking volunteers from the organization who, with training, can be capable and credible agents of change, the backbone of change will be in place.

Meanwhile back in the boardroom, the coffee has been cleared away and the meeting is beginning to wrap up. Then, one by one, board members begin asking questions:

  • “How will we communicate this to the business?”
  • “How can we engage our middle managers?”
  • “Has anyone thought about how we can resource it with trained facilitators?”
  • “What exactly do we expect this will achieve – what will the business be like in two to three years as a result?”
  • “What capabilities will I need to develop to make this change program a success?”

6. Communicate and then Communicate Again

All organizations know that communication takes time and effort – but the investment is worthwhile.

It is critical for people to be reminded of the vision but also how far they have come. This helps maintain morale and belief in the change process. Positive evidence that things are changing will combat any cynics.

Communicate ten times more frequently than you think is necessary.

  • Recent research shows that on average the total amount of communication going to an employee during a three-month period is 2.3 million words or numbers, transmitted in meetings, notice boards, bulletins, etc.
  • The typical communication of a change vision during a period of three months is approximately 13,400 words or numbers.
  • So on average the vision communication captured only 0.58 percent of the company communication market share – nowhere near enough.

Communication is not through words alone – it’s the dance and it’s music too. Clear messages are sent through actions. It never ceases to amaze that companies struggle to re-launch an improvement program after just having concluded a downsizing where change facilitators were first on the list to go.

7.  Measure Performance, Track Process, and Ensure Accountability

Ownership and Accountability is the key to any successful initiative.  While ownership requires empowerment, accountability requires the development and use of key performance metrics that enable everyone to monitor progress and identify bottlenecks.

So what’s next?  Time to finish breakfast and get to work on building your world class Sales and Operations Planning (S&OP) Process (S&OP Process)!

Note: This article was created based on work by Steelwedge (www.steelwedge.com), John Kotter, the Kaizan Group, the Six Sigma Institute and others.

S&OP: What can we learn from Martin Luther King, Jr.?

Rick Blair


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.”

Tiger Woods, S&OP and Elephants

As Tiger Woods s1lowly 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.

- See more at: http://www.steelwedge.com/blog/tiger-woods-sop-elephants.html#sthash.MhHQ3Tjs.dpuf

Sales and Operations Planning: Are Executives Killing Collaboration?

Rick Blair

Why do some executives feel inclined to make substantial forecast changes based solely on their own judgment? There’s no doubt the typical executive has keen insights into the business she directs. Yet, when that executive chooses to override other inputs, she undermines the integrity of the collaborative process.

“Why should I put any effort into creating a forecast when I know he will change it anyway?” This quote came from a client with whom I worked. The clear message was that their company’s collaborative forecasting process was not supported by the senior executive who had the final say in what the “consensus” plan would be. His actions unintentionally conveyed a message that the Sales and Operations Planning process which led to his desk had little merit in his eyes. The prevailing sentiment shared by S&OP participants was that their work was unimportant.

Opportunity lost! Executives must understand that S&OP can be successful only when they are engaged and supportive. Trumping the collaborative output sends a demoralizing signal. Empowered participants deliver superior results.

An effective S&OP process leverages inputs from across functional disciplines and at various levels of responsibility. Most decisions should be made prior to the Executive S&OP meeting. Executives should focus on setting policy, reviewing lower level decisions, breaking ties and making critical, strategic decisions.

Don’t kill collaboration. Empower participants and achieve better results.

By the way…the executive who applied his own final forecast values achieved forecast accuracy levels worse than if they had used the statistical forecast alone. Lots of analysis and meetings with nothing to show for it!

Sales and Operations Planning, Collaborative Demand Planning Depends on Bottom-up, Top-down and Statistical Forecasting

Rick Blair

Helping hands

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.

Steelwedge Software, Inc. Named to Software Magazine’s 27th Annual Software 500

Steelwedge Software Inc., the leading provider of software-as-a-service Sales and Operations Planning (S&OP) solutions, today announced that it was named one of the top 500  software companies.  This year’s inclusion in the Software 500 marks the third straight year Steelwedge Software, Inc. has been ranked.

“The 2009 Software 500 results show that revenue growth in the software and services industry was healthy, with total Software 500 revenue of $491.3 billion worldwide for 2008 representing 8.8 percent growth from the previous year,” said John P. Desmond, editor of Software Magazine and Softwaremag.com.

“The Software 500 helps CIOs, senior IT managers and IT staff research and create the short list of business partners,” Desmond says. “It is a quick reference of vendor viability. And the online version to be posted soon at www.Softwaremag.com is searchable by category, making it what we call the online catalog to enterprise software.”

“Our continued growth is further validation that our customers experience substantial business benefits from the Steelwedge S&OP solution,” said Glen Margolis, CEO and founder of Steelwedge Software, Inc. “We will continue to innovate and provide our customers with the Sales and Operations Planning (S&OP) solutions they need to increase their revenue and competitive advantage.”

The Software 500 is a revenue-based ranking of the world’s largest software and services suppliers targeting medium to large enterprises, their IT professionals, software developers and business managers involved in software and services purchasing.

The ranking is based on total worldwide software and services revenue.  This includes revenue from software licenses, maintenance and support, training and software-related services and consulting.  The financial information was gathered by a survey prepared by King Content Co. and posted at www.Softwaremag.com, as well as from public documents.