A CASE FOR CONTINUOUS SALES AND OPERATIONS PLANNING

Classic sales and operations planning (S&OP) is typically defined as a process that coalesces projections for all areas of a business—customers, sales, marketing, development, manufacturing, sourcing, and financial—into one integrated set of plans. It is usually done on a monthly basis, with more progressive companies providing weekly selective updates.

The problem with classic S&OP lies in its lack of responsiveness to everpresent changes. The lack of a single integrated S&OP modeling tool and the need to deal with myriad data sources make the process cumbersome, and its iterative nature (due to "what-if" questions) means that it often can take up to four weeks to complete. This makes the data stale, since significant events often occur during that time. Moreover, the forecasted customer demand, usually a specific number, is likely to be wrong. Better accuracy would be achieved by targeting a forecast range (e.g., plus or minus 30 percent of forecasted demand). Yet with hundreds of products and feature combinations, current S&OP cannot simulate forecast ranges in an acceptable time frame.

Andrew Gort is the former executive vice president of global supply chain management for Celestica and has more than 30 years of experience in material sourcing, procurement, production planning and control, inventory management, logistics, and order fulfillment in both the OEM and CM manufacturing environments.
Contact Andrew at Andrew@andrewgort.com.

A new approach is clearly needed—one that lets companies augment their current S&OP process by modeling the impact of many forecast scenarios in real time while quickly and asily calculating the flexibility/cost tradeoff of forecast ranges. Leading manufacturers are turning to Response Management for these richer analysis capabilities and, more importantly, the ability to ensure that the supply chain is utilizing the most current view of demand and the best supply response. Response Management complements S&OP perfectly by enabling businesses to:

Dramatically reduce S&OP cycle time by improving business performance through continuous alignment of supply and demand

Model an environment that includes all supply chain participants, including critical outsourcing partners

Include all relevant variables of demand, supply, capacity, and product, including new product introduction

Frequently and easily assess in real time the impact of proposed changes in all areas

Instantly model and score multiple "what-if" scenarios in terms of how well they meet financial and corporate goals

Gain immediate access to continually updated data from ERP and legacy systems to make intelligent, reality-based decisions

To succeed in today's competitive market, companies must respond rapidly to customers and increase operating efficiency—capabilities that only continuous S&OP complemented by Response Management provides.