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“Illustrating the impact of the supply and demand side on the fi nancial objectives is crucial for sound decision-making.”


SALES & OPERATIONS PLANNING MATURITY Strategy


Stage 1: Reacting


Balance: S&OP Goals


Development of an operational plan


Demand and supply matching


Profitability


Demand sensing & sha- ping


Stage 2: Anticipating Stage 3: Collaborating Stage 4: Orchestrating


TACTICAL Source: Gartner


STRATEGIC


such as SAS Demand Driven Forecasting, advanced data analyses can be integrated into the S&OP process, and it’s easy to run through and compare several differ- ent scenarios, says Patrick van Loon. This enables the supply chain manager to react quickly and effectively to the increasing level of demand from other disciplines, and allows senior management to offer insights into the impact of the various alternatives on the company’s supply chain performance within no time. This is the only way to achieve total, integral, business optimisation.


Integrated Business Planning


“Successful S&OP evolution is made up of 60 percent change management, 30 percent process change and is 10 per- cent technology driven,” says Chase. “The more volatile the demand, the more advantages a well-designed S&OP process offers. Broader participation in forecasting demand and structural meetings about managing demand lead to better decision- making. It can be compared to flying a plane: the closer you get to your desti- nation, the more focused you are. Only around ten percent of all companies have a system in place for demand shaping and scenario planning. And it is of the utmost importance to combine it with product and market knowledge.” Ultimately, it’s about Integrated Business


Planning: connecting the company’s key planning processes – perhaps even under the auspices of a neutral coordinator, such as the supply chain controller? Struc- tured and multidisciplinary collaboration pays off, according to the experiences of Antoine Leclercq, Logistics Director at NXP Semiconductors: “We used to have four plans: operations, finance, marketing and sales. Now, the individual objectives have been aligned, which makes it much easier to discuss and manage them. S&OP forces you to work as a team, both in terms of fine-tuning the plans and adjust- ing the expectations.”


Senior management involvement


Many companies that are still struggling to balance supply and demand are not sure how to integrate S&OP with the com- pany’s strategy and objectives. According to Hylke de Cock, VP Supply Chain at Philips Lighting, S&OP is at the very heart of his company’s planning processes and everything is well organised. “As a result, it’s a process that reacts increasingly quickly. Our challenge now is to ensure that S&OP achieves a real top-of-mind position at senior management level.” Full involvement of senior management is cru- cial to complete the circle from strategy to operations. Maarten Bánki underlines the importance of rolling financial forecasts based on a


balanced Sales & Operations plan and Financial Gap Analysis: “Illustrating the impact of the supply and demand side on the financial objectives is crucial for sound decision-making.” “Validating forecasts is very complex,” cautions John Sookias, Managing Director Europe at Steelwedge. “The question of how to translate decisions on the supply and demand sides into financial implica- tions is the most important point for dis- cussion within S&OP.”


One size doesn’t fit all


“There are hundreds of reasons why the levels of maturity vary between companies and divisions,” concludes Frits Schaafsma. “S&OP is different for every company, and even for every region. Influencing factors include the business model, the compa- ny’s complexity, the number of different products, the sales pattern, the inventory costs and the risk of stock becoming obso- lete. Does production follow a ‘make to stock’ or ‘make to order’ principle?” The common denominator is that S&OP is an ongoing process of improvement that is not the responsibility of the sup- ply chain department alone – which is why all the participants appreciated this opportunity to share their experiences. “Definitely to be continued,” predicts Martijn Lofvers.


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SUPPLY CHAIN MOVEMENT, No. 1, Q1 2012


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