This week I was privileged to man the Kinaxis booth at the IBF conference held at the beautiful Disney Contemporary resort in Orlando. The event was well attended with Demand Planning, S&OP and Supply Chain professionals coming to discuss forecasting, sales and operations planning and supply management.
One of the ideas that was discussed is that there is still a wall between the demand planner and the supply planner. In other words, in some organizations, the demand planner feels they do not need to concern themselves with what the supply picture is. This is a very traditional view of demand planning and unfortunately doesn’t reflect the realities of modern supply chain management (note that supply chain management includes demand planning in my opinion). Think about the concept of supply shaping – that is the benefit of running promotions to reduce inventory or fill unused factory capacity. How can you make this type of decision without integrating supply and demand management? Inventory isn’t a supply side responsibility, nor is it a demand side responsibility. Inventory (an excess or shortage) is the result of a misalignment between demand and supply. Both parties have a stake in the problem. On the S&OP side, a statement I heard several times is that a successful S&OP implementation is the result of the right people, process and technology. I couldn’t agree more.
- You need the right People to design your process, but more importantly, you need the right people to take part in the meetings. Successful S&OP meetings require regular attendance by representatives of each group (Demand Planning, Supply Planning, Finance, HR, Engineering (for NPI activities)) who are capable and accountable for the decisions and agreements made at the S&OP meeting. A top level executive is also needed to chair the meeting and to render final decisions where needed.
- Also needed is Process. The S&OP team process must establish the groupings, or families that will be reviewed by the executive team. Further, S&OP meetings need to have a clearly defined agenda, with meetings scheduled on a predictable cadence, scheduled well in advance so that decision makers can plan to attend. Finally, the process needs to define roles, responsibilities and timing for creating the S&OP plan.
- The last piece of the puzzle is Technology. Companies have been successful running S&OP using excel spreadsheets, but new, robust supply chain tools can do so much more. Most S&OP tools we’ve seen focus primarily on the demand side and have relatively static representations of supply. Supply constraints are represented using rough cut capacity planning where key constraints or materials are included. Further, timing and interactions of those key constraints are rough estimates at best. The true impact of your plan isn’t truly known until after the S&OP plan is disaggregated down to the MPS.Now think of another approach. What if your S&OP plan could be modeled considering your entire supply chain? You make a change to demand, and instantly, you can see a constraint several levels down the supply chain, potentially at a different site – perhaps even at a supplier site which is overloaded. How might this change your S&OP planning process? How much more confidence would you have in the plan?
The last thought I have is around a statement one of the presenters made: “–We need to grow our demand planning organization. I have budget and headcount spaces allocated…the only thing I need is someone to fill the space. We can’t find those people.”– This is a disturbing trend that I’m hearing all over supply chain…there are jobs out there for supply chain professionals, but it’s getting harder and harder to find people to fill them. I know that many schools are offering supply chain management courses. If you are looking to find young energetic planners, try contacting local schools and interviewing graduating students. You might be surprised! Also, organizations like IBF and APICS offer training and certification programs that can take interested people from within your organization and turn them into superstar planners. As I sit at the Orlando airport waiting for my flight, and think back about the last few days I only have one disappointment. Mickey Mouse never came by the booth! Oh well, maybe next year.