Ventana Research recently re-issued a set of slides describing Sales and Operations Planning Best Practices. I would like to add my personal observations about S&OP. S&OP should be a critically important aspect of every company, certainly for any company involved with manufacturing or distributing physical product to customers. However, as markets and technology change, the business processes to satisfy those markets must also change. Ventana states “The objective of S&OP is to enable decision-makers to reach consensus on a single operating plan that allocates critical resources to reach corporate performance targets.” This objective aligns well with what most companies using an S&OP process are trying to accomplish. However, a more aggressive objective might be: The objective of S&OP should be to enable decision makers to reach consensus on a current operating plan that best allocates critical resources to give the best likelihood of reaching or exceeding corporate performance targets. In addition, the plan must be reviewed and updated frequently in response to changes in the market and supply chain. According to the Ventana survey, the number one issue why users are dissatisfied with their S&OP software is that it is difficult to do what-if analysis. I see an interesting parallel with this point and recent blog postings about the probability of ROI in supply chain projects. I suggest that the need for what-if simulation is to understand the impact (probability of success) of various potential S&OP decisions. The number two issue is the lack of integration amongst supporting applications. I suspect this is seen as a significant issue because lack of integration delays the process, often to the point where S&OP can only be updated on a monthly cycle, not whenever significant changes occur in the business environment. Also, lack of integration inevitably adds complexity to the user environment, imposing a strict process (to get the right data into the decision process) and rigidity in the analysis and information available to users (and lengthy training cycles to teach users how to get any useful information from the system). Although only 20% of the survey respondents stated spreadsheets are the software they use for S&OP, I suspect that number would be much higher if the question had been posed as “Do you use spreadsheets at any stage in your S&OP process?” The widespread use of spreadsheets is a symptom of using inadequate S&OP tools. It too leads to delays and lack of integration. Imagine how your S&OP process would be used and the decisions you could make if you could instantaneously analyze the impact of actual or potential changes on your key performance measures. Further, imagine how you would use S&OP if you could “drill” from those measures to the level of individual operational actions! I completely agree that best practice for S&OP must address all four aspects of People, Process, Information (data), and Technology. All too often, companies focus on the technology without addressing the other three aspects – resulting in disappointing results. I also believe that people are generally incredibly creative. They create processes to do the best job they can with the data and technology available to them. Thus, the right changes in technology could allow for significant improvements in processes.
Top two reasons users are dissatisfied with their S&OP software
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