S&OP Solution

Using Sales and Operations Planning (S&OP) to Manage through Uncertain, Recessionary Times

With rapidly increasing frequency, customers and prospects are asking us for assistance in improving their S&OP process. When we ask the question “why now?” the answer is consistent – in a supply contrained world – balancing suppy and demand and reviewing business strategy were not central issues.

In a world of volatile demand and unpredictable margins, however, S&OP planning moves to the forefront.

For example, Steelwedge (www.steelwedge.com) is currently working with a leading alternative energy production company. Until last month, they were confident that demand would far outstrip supply and therefore did not place any emphasis on strategic intiatives for managing supply-demand gaps. In the new world they are anticipating a rapid swing to excess supply. Suddenly, the institutionalization of a disciplined sales and operations planing process that drives integrated business planning has become mission critical.

Prior to the recent shift in the supply-demand balance, their focus was exclusively on eliminating supply bottlenecks and improving production quality. Today, however, the focus is necessarily on understanding and anticipating demand patterns and tightly managing the associated inventory bets. Eliminating latency out of their planning process is essential. Their current planning process is limited to a few individuals downloading data from various systems and creating a build plan after six weeks of number crunching. There future, with the assistance of Steelwedge, is the creation of a monthly sales and operations planning process that harnesses real-time data and is updated daily on an exception basis.

This new approach will enable them to manage the demand shocks, supply concerns, and frequent surprises endemic to today’s world.

How is your company managing in these unpredictable times? Have you eliminated all informatoin latencies? Are you collecting and collating all relevant supply and demand information? Do decision makers have visiblity into detail level exceptions and aggregate level signals? Is strategy aligned with opeational tactics? Are you leveraging operational performance management information to create accountability and flexiblity?

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