Julie Fraser: S&OP matures into strategic process

In tough times, everyone must pull together. Fortunately, companies have been learning to do that for a while. In the past five years, sales & operations planning (S&OP) has become a more common process for manufacturing companies of all sizes and segments. And it's being forged into a new and more valuable practice in the crucible of this challenging economy.

03/01/2009


In tough times, everyone must pull together. Fortunately, companies have been learning to do that for a while. In the past five years, sales & operations planning (S&OP) has become a more common process for manufacturing companies of all sizes and segments. And it's being forged into a new and more valuable practice in the crucible of this challenging economy.

Since S&OP is a multi-departmental business process, it's bound to evolve. For many companies, it began as a tactical process to balance supply with demand. In the early stages, sales and forecasts often drive operations plans, so most demand-planning providers have experience supporting the process. As the process matures, companies recognize the need to bring warehousing and production in as full partners in the process.

With the credit crunch and market volatility, inventory must be central to the plan as well. In fact, in Europe, S&OP is commonly called sales, inventory and operations planning (SIOP). Both tactical and strategic inventory management are involved in effective S&OP.

Now S&OP is moving into a far more strategic realm. Companies are learning to drive activities throughout the company to better match financial goals and corporate objectives. As that occurs, the CEO and CFO should become involved as well.

While S&OP is a business process, not a software application, supply chain software is essential to supporting a mature S&OP process. Some of the key characteristics to look for in software to support strategic decisions are increasingly common:

Integration. Look for integration among data sets with master data management from broad suite supply chain management and ERP vendors such as i2 Technologies, Infor, JDA, John Galt, Logility, OM Partners, Oracle, Prescient, and SAP. S&OP was the foundational concept behind Supply Chain Consultants' Zemeter suite.

Analytics. Data analytics to support the multiple views and "what-if?" analysis inherent in S&OP can be in a larger suite, or an addition. Specialist supply chain analytics come from IBM's Cognos, Pelyco Systems, River Logic, and SAS, among others.

Fast-moving forward views. In today's market, many companies are making changes to plans well within their forecasting horizon. Specialists such as Kinaxis, Right90, and Terra Technology that deliver short-span, frequent forward-planning views can support improved S&OP accuracy and timeliness too.

Inventory coverage. Inventory optimization is different from other planning in that it uses stochastic or probabilistic planning. Rather than a single inventory need number—which is bound to be wrong—these tools provide a range to improve inventory availability. Companies using stochastic methods in software include IBM's ILOG, Llamasoft, Optiant, and SmartOps. ToolsGroup announced SO99+ this year—a supply chain planning suite with stochastic logic at its heart, not only in an add-on inventory optimization module.

No matter how mature your S&OP process is, it's likely you will need to conduct the process more frequently and with more granularity. As C-level executives leverage the output of S&OP meetings to help the business succeed, the process will continue to improve and mature. Be sure your people and software systems are ready.


Author Information

Julie Fraser is Principal Industry Analyst for Julie.fraser@cambashi.com .




No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
Safety standards and electrical test instruments; Product of the Year winners; Easy and safe electrical design
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Diagnostic functions for system safety; Specifying industrial enclosures; Effective decision support for a crisis
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Natural gas for tomorrow's fleets; Colleges and universities moving to CHP; Power and steam and frozen foods

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me