S&OP: More Than Forecasting (Part 3)

Sales & Operations Planning is a hot topic for wholesale companies. As a concept it’s significantly more powerful than the traditional excel-based forecasting many MKB businesses use to support the supply chain. Here we discuss what it is, and how its sophistication can drive performance beyond that achievable with spreadsheet planning.

Spreadsheets have their limitations
The information in a spread sheet is relatively static, not easily manipulated and not suited to easy viewing from different perspectives. Deep diving through a top level data set into the various processes that contributed to it is not realistic, while combining separate reports into a useful top level summary is difficult and time consuming.

In short, Excel misses the manipulative power needed to properly analyze the vast, wide-reaching data streams that hold the information needed to create effective plans. And that’s only in terms of collecting historical data to support planning decisions. Running a set-up where current performance and real time figures can be compared to the plans and then used to effectively update and adjust them is near-on impossible.

Dedicated solutions
The right S&OP software needs to underpin management by not only thoroughly analyzing the past, but providing easy access to the business’s ongoing progress against the planning as the cycle unfolds. It must be collaboration friendly, bringing often highly dispersed, international operations together with any external parties involved in the processes (customers and suppliers).

The ability to create and then manage scenarios is also a key aspect of a good solution, effectively sharing them with a wide community of stakeholders throughout the business’ ecosystem. Connecting operational planning, execution and financial planning capabilities — ideally at the data and process model level — will support a truly active planning environment that can be followed closely, adapted as necessary and analyzed fully at each point in the review process. Workflow management, controlling and cataloguing the passage of information through the involved people is an important part of this.

Dealing with complexity
Stakeholders need easy access to detailed reporting on the established KPIs – both vertically within specific operational processes, and horizontally in relation to the end-to-end supply chain – helping management identify the root of issues and make the right decisions when trading off competing values.

In short, the right tool needs to be able to capture and manipulate all business critical information, from right across the company, in whatever form the decision makers require it to make choices with confidence. Base planning data needs to be available in a range of views and formats specific to the various groups that will work with it, supporting them in releasing the patterns and insights they’re looking for.

Creating the right mix
The best results will be achieved when system calculations can be combined effectively with human insight. Think about a system that can combine input from sales and marketing professionals with output from a forecasting engine. The data tells a lot, but it’s also important to fine tune it with intelligence from the people working closest to the market.

Given the above, creating and then managing a realistic, trustworthy Sales & Operations Plan is obviously a complex process dependent on deep understanding of past and current performance. As such, it’s too big and too important a job to be trusted to a tool not fit for purpose.

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