The Secret Sauce for Improving S&OP Execution

The Secret Sauce for Improving S&OP Execution

Even the best sales and operations planning (S&OP) can only take you so far. Regardless of the investment and brains you put into planning – by the time your blueprints are released into the unpredictable air of the real world, a significant chunk of your plans (at least 20% by some claims), will have to be re-planned.

As noted in this study by Accenture on Retail Supply Chain Reboot: Agilely Facing the Unknown, “As more companies increase their investments in supply chain logistics to offer the seamless customer experience consumers crave, some aren’t acknowledging the unusually high levels of uncertainty they face today. Lacking the ability to anticipate multiple scenarios or the agility to deal with them effectively, retailers could find themselves on the wrong side of fast-moving and costly logistics trends. ”

Some of the challenges you’ll face with executing the S&OP plan, particularly in a multinational company, will include:
• Connecting S&OP decisions to production scheduling and operational execution.
• Evaluating various scenarios to respond swiftly to unpredictable events such as demand spikes, supply shortages or competitor activities

So how can you improve your process and better execute supply chain plans once they’ve ‘gone wrong’? How can you respond to exceptions that will inevitably arise when plans meet reality? There are three key areas that I believe can help.

Real-time Insight into Multiple Systems

Real-time supply chain visibility is more than just knowing where parts or products are along the supply chain. Visibility means you are provided with actionable information that can help support customers and be applied to myriad touch points along the supply chain to remove redundancies and improve processes.

So how do you create this real-time visibility? First, you need a technology that can instantly absorb data arriving from numerous operational systems (e.g. WMS, TMS, ERP, POS, Planning tools etc) while capturing the most granular level of details.

Such real-time visibility across all channels and functions will allow your operational team to monitor the performance against the S&OP plan and make accurate fulfillment and delivery promises across multiple order channels and systems.

However, visibility on its own is not enough. It’s what you do with the visibility that makes the difference. When the market conditions change, real time visibility will let you respond quickly by changing plans and adjusting the execution in order to either minimize the impact of the threat or maximize the opportunity at hand.

Thresholds and Alerts for Supply Chain Indicators

With the abundance of data from multiple systems at your fingertips, the next step is a smart, proactive mechanism to sift and act on the data that matters.

In practice, this means the ability to define thresholds on end-to-end supply chain indicators (both present and forward looking) and get alerted in real-time whenever an indicator deviates from the desired limits or capacity levels. For example, a multinational FMCG company wanted only to be alerted when a delay in one of the transport legs would lead to the order fulfilment rate to dropping below the agreed threshold and immediately see which customers would be affected based on its own customer priority / product allocation rules.

Upon receiving an alert, you should be able to quickly track the root-cause for the event, so that you can move to the next step and take the necessary decision to reduce operational risks, cost impacts or opportunity losses.

Decision Support Via Scenario Simulation

Spply-cain-transportGood decisions are integrated decisions. They require an understanding of inter-related trade-offs, driving towards bottom-line
metrics with cause & effect analysis.

Being able to simulate various scenarios in real-time will allow you to analyze the impact of your alternatives before decisions are taken. Your objective is to not only understand the impact on one silo-ed business area, but rather the overall impact on the end-to-end
process chain.

Sharing these simulations with other users is another important factor that is often underestimated. By sharing the alternatives and collaborating with multiple stakeholder during the decision process you’ll ensure that you’ll be executing against the agreed S&OP plan in the best possible way.

Finally, you’d want the ability to validate scenarios and ‘push’ changes back to the source systems, in order to streamline your processes and accelerate the response time.

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