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About the Author

Karin L. Bursa
Vice President of Marketing
Logility


Karin L. Bursa is vice president of marketing at Logility, a provider of collaborative supply chain management solutions. Ms. Bursa has 25 years of experience in the development, support and marketing of software solutions to improve and automate enterprise-wide operations. You can follow her industry insights at www.logility.com/blog. For more information, please visit www.logility.com.


Supply Chain Comment

By Karin L. Bursa, Vice President of Marketing, Logility

September 13, 2012



The Challenges of a Global S&OP Roll-Out

A Clear Vision and Strategy of Where you Need to be is Key to Propel your Business Forward


A clear vision and strategy of where you need to be is key to propel your business forward; forward into new markets, new geographies and ahead of your competition. Success lies in the ability to tie your goals, strategy and execution into a single, measurable plan.

Cost reduction, expansion in to new geographies and visibility across the company are common goals I hear many global companies discuss. As I work with leading companies to develop sustainable sales and operations planning (S&OP) processes we see industry research supports these benefits. According to Gartner a “demand-driven S&OP processes can improve revenue from 2% to 5%, reduce inventories by 7% to 15% and improve the success of new product launch commercialization by 20%.”1


A majority of companies focus their S&OP efforts at the local or regional level which creates multiple, independent S&OP processes across the company. Recent research from Supply Chain Insights shows the average company has five S&OP processes and 63% of companies have more than one.2 This leaves a lot of opportunity to clean up inconsistencies across the system. However, many companies struggle with how to get there, how to cross the cultural and regional differences to ensure everyone speaks the same language–the language of success.


Bursa Says:

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The benefits of S&OP are well documented and have helped many companies dramatically improve operations and gain a competitive advantage in an increasingly more difficult global economy.
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Sources:

1 “Toolkit: How Demand Driven is your S&OP Process” Jane Barrett, Gartner, 10 April 2012.
2 “S&OP Planning Improves Supply Chain Agility” Lora Cecere, Supply Chain Insights, 22 May      2012
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The following are three of the most common challenges I see companies face as they embark on their global S&OP journey.

 

1. Language Barrier. This is not a reference to the differences between Chinese, Dutch, English, and Spanish, instead to how each regions defines success, what an accurate forecast looks like, how service level is calculated, etc. Chances are inconsistencies exist in your business from region to region in how these basic principles are discussed, executed and measured. It is important to develop a consistent framework that brings a common set of terms and definitions to the organization. Software can help you provide a consistent framework.

 

2. Flexible vs. Rigid. Many companies have grown through acquisition which has brought on a myriad of enterprise resource planning (ERP) systems each presenting data slightly different than the other. Moving toward a single ERP system takes times (years in fact) and the expense doesn’t typically justify the endeavor. When working with multiple systems, definitions and local customs, you need to find the right balance between rigidity and flexibility. Be standard enough to provide a consistent framework for all divisions in the company and yet flexible enough that local business drivers can be reflected.

 

3. Timing. The order and pace at which an S&OP roll-out occurs is critical to its success. When a company realizes it wants to formalize its S&OP process, the first inclination is to get there quickly. The excitement to get started can be overwhelming. Patience, though, is critical. For example, a multi-billion dollar company with operations in 170 countries set out to implement a global S&OP process. The company set up a systematic approach, rolling out the process regionally. Each deployment benefited from the best practices of the previous. This global rollout took place over the course of four years which allowed for refinements to be made along the way and to ensure everyone involved was comfortable with the new process.


Technology Enabling People and Process

In addition to people and process, technology plays a large role in a company’s ability to manage a global S&OP process. First and foremost is the ability to create a feasible plan, one aligned with corporate capabilities, not a lofty, theoretical plan for the business. Tied to the plan is the ability to visualize progress, measure success and be alerted to potential issues before they become a problem. Developing a closed-loop business process is paramount to long-term success.

Sales and operations planning breaks down organizational silos to ensure everyone is on the same page and understands why margin, availability, service level, forecast accuracy, etc. are important and what they mean to the organization. The data presented to each department needs to be consistent and presented in a way that is meaningful to their role in the business. You can give accounting a plan in terms of volumetric numbers but that is not meaningful to them. They need the plan see it in terms of financial numbers. How much investment in inventory do we have/need? What is the carrying cost of that inventory? Work towards one plan that is viewable and understandable by all parties involved and that is analyzed from multiple perspectives.


Final Thoughts


The benefits of S&OP are well documented and have helped many companies dramatically improve operations and gain a competitive advantage in an increasingly more difficult global economy. Don’t ignore the potential reward of a global S&OP process because the task seems daunting. Make sure everyone understands the importance of the change and how it will directly benefit them and the business.

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