Is it a buzzword or does Sales & Operations Planning really deliver returns? What do you need to do to achieve this? And what are the pitfalls? Adriaan Vet shows that S&OP is a logical step when you want to improve your bottom line. It ensures higher sales, lower costs and less capital tie-up. Fortunately, this does not require turning your whole infrastructure upside down; a good S&OP system fits in with what you already have. Just pay enough attention to that one, often underestimated component: people.
'When I first talk to companies about Sales & Operations Planning, they often look a bit difficult. 'We just finished that ERP implementation, now what?' is often the tenor. However, S&OP is not a replacement for ERP or other systems, but rather a valuable addition to them. Whereas ERP, for example, mainly uses historical data, with S&OP you work together within the company to predict realistic future demand. A good S&OP system also allows you to calculate scenarios quickly. For example, what will it mean if we bring in that big new customer? How quickly can we then scale up and where can we do that? You then use this information to plan the supply as optimally as possible.'
Especially for manufacturing companies
'S&OP is not for everyone. It is especially useful for manufacturing companies with high volumes and different sales and production locations. You no longer manage such a complex puzzle with ERP and Excel. Moreover, the stakes are high for this type of company: it involves large investments. A line that stands still costs a lot of money, and out-of-stocks are obviously disastrous for customer relations. A product type that has to deal with a lot of peaks and troughs in demand, e.g. due to tender processes or seasonal influences, benefits completely from S&OP.'
You don't have to change everything
'A misunderstanding about S&OP is that you would have to replace other systems in the supply chain. In most cases you don't have to. Instead, you use data from different systems, such as the CRM, BI or ERP system. The art of S&OP is that you let different parties contribute their knowledge in a structured way to make better demand forecasts and supply planning. For example, Sales has good information about the market, Operations has good insight into capacity and costs, and Finance can calculate from different scenarios what will yield the most return.'
Human factor
'When implementing S&OP, the human factor is hugely important. While a system can provide the opportunity for input, it still has to be done. Too often we see a supply chain manager introduce the S&OP methodology enthusiastically but become disappointed because he or she does not get others on board with this process. It is essential to involve other departments from the start to emphasise that you need each other to achieve the best results. This way of working has benefits for everyone. If Sales gives the right input in time, it can thereby improve service levels, prevent out-of-stocks and react faster to market developments. Operations gets a realistic planning in good time and Finance can better manage returns. And for all parties: it takes less time and delivers a better outcome. A user-friendly system obviously helps with this. Don't take any chances: there are many different systems and providers on the market. Choose a system that suits you and a provider that guides the implementation with an eye for the human side of things.
And finally: don't want too much at once. S&OP is a process that lends itself perfectly to being introduced step by step. That way, you give people a chance to get used to the new way of working and see that it produces results. That is the best incentive to continue with it.'
Learn more about S&OP in the Supply Chain Arena
Adriaan is one of the practical experts performing in the Supply Chain Arena© during ICT & Logistiek on 7 and 8 November. Within the exhibition, the Supply Chain Arena is the hotspot for supply chain knowledge and contacts. Entrance is free, ga to the ICT & Logistiek website for more information about the Supply Chain Arena, the programme and registration.
How to select the best S&OP solution for your situation // 7 November, 1.45pm and 8 November, 12.15pm
Adriaan Vet presents a checklist that considers both functional and human factors when choosing an S&OP system that suits your situation. He also discusses the do's and dont's in implementation.
S&OP: the next level // 7 November, 10.45 am
Hans van de Sande shows how to effectively integrate S&OP into your business.
Strategy-driven S&OP // 7 November, 2.30 pm
Prof Dr Bram Desmet discusses how to use S&OP as a strategic tool and thereby improve your business results.
Demand management: Help, Sales is not doing what I want // 8 November, 10.45 am
Michel van Buren explains how to ensure that Sales gets more involved and delivers the right input on time.
Integrating new software into your existing IT infrastructure // 8 November, 11.30 am
Nick Verstraete sets out how best to approach the technical integration of new (S&OP) software.
These workshops are particularly interesting for directors and (senior) managers in supply chain, operations or IT, employed by large to medium-sized companies with a strong focus on the supply chain such as agri & food industry, manufacturing industry, process industry and fmcg.
