Wallace Says:

Today, virtually all companies use spreadsheet software to collate and display the S&OP information; the data is downloaded from their ERP software system, from their CRM system, from their legacy system(s) and so on. This approach works, but it’s cumbersome and doesn’t support the kinds of rapid simulations that we’re talking about here. What do you say? Send us your comments here

Here’s a look into the future of S&OP. Imagine that you’re the S&OP Process Owner facilitating an Executive S&OP meeting. While discussing a product family that contains a major new product launch, the President raises a question:

“I’m starting to get some input that our competition may be working on a similar product. If we can move our new product launch up by six weeks, I’m certain we can get to the market first. Can we do that? And, if so, what else might be impacted?”

You’re projecting the S&OP display for this family from your PC, which contains all of the company’s relevant demand, supply, and financial data. You ask for a brief time-out while you activate your S&OP simulation software. In a few minutes, you have answers:

• Plan A is feasible and is the lowest cost alternative but it will require getting certain material from a supplier who’s had quality and delivery problems in the past.

• Plan B is also feasible and has moderate costs, but will probably cause some shortages on other products.

• Plan C can work and has the lowest total cost, but will cause serious stock outs across much of the product line because of capacity constraints at Plant 3.

Armed with these facts, the Executive Team is well equipped to make a decision about the new product launch. But there may be more; let’s say the Chief Financial Officer raises a question:

“Okay, so you guys have selected Plan B. You’re moving the new product from next quarter into this quarter. To do that, you’re pushing out production of established products into next quarter. I’ve got to give a quarterly earnings projection to Wall Street before long, so what do I tell ‘em?”

You reply: “Ellen, here’s the delta on Revenue, Cost of Goods Sold, and Gross Margin for Plan B. It doesn’t appear to be major, but you’ll probably want to take it into account in developing your earnings call for the financial analysts.

The phrase “top management war room” comes to mind:

• Sales & Operations Planning running with simulation software at the speed of light,
• enabling the rapid development of alternative scenarios,
• operating in both units and dollars,
• supporting major demand/supply decisions with facts, not guesses,
• with intense executive involvement.

So why hasn’t this capability become widely used before now? The answer lies in how companies process Sales & Operations Planning. Today, virtually all companies use spreadsheet software to collate and display the S&OP information; the data is downloaded from their ERP software system, from their CRM system, from their legacy system(s) and so on. This approach works, but it’s cumbersome and doesn’t support the kinds of rapid simulations that we’re talking about here.

We’re seeing the onset of a new breed of simulation software that will support the top management war room concept.

This then is the future of Sales & Operations Planning; a process with a superb track record to date will get even more powerful, even more useful to executive and operating management. The barrier to this development has been the lack of the right kind of software, and that barrier is now gone.

The software exists. It supports not only the top management war room concept but also does a far better job in other aspects of S&OP . Yes , the future of Sales & Operations Planning looks very bright indeed.

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