Wallace Says:
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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
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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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