Supply Chain Interview
Leading
from
the front
with
S&OP
Manufacturing & Logistics IT spoke with Andrew Kinder, supply chain
solution marketing director at Infor, about Sales & Operations Planning, the
different ways it can be defined as a concept and how it can ensure a
company is far more agile – both from a business & operational perspective.
ales & Operations Planning plan,” Kinder said. “There’s never just one demand and supply scenarios and the
S
(S&OP) as a concept has been way of meeting demand. And there are always financial implications of their operational
around for many years. However, multiple possible supply scenarios such decisions,” he said. “For example, demand
the interpretation of the scope and as outsource, build inventory, add capacity could be for 10,000 units worth US$1 million,
objectives of S&OP spans many through overtime – all this has an impact but a company’s business plan mandates
different levels of maturity; depending, for on cost and cash flow, not just operational should be at US$1.3 million – how is it going
example, on the size of the company, its
industry vertical, the level of complexity
of its supply chain processes and its level
of technological maturity. As Infor’s Andrew
“
Reducing the cash-to-cash cycle time has become a key measure
of supply chain health. In simple terms, any fault line in the delivery
Kinder points out, we now have at least three
of product to the customer inevitably results in elongation of the cash
levels or categories of S&OP: “The first – or
‘classic’ S&OP as we like to refer to it – is
cycle time – payment by your customer doesn’t follow until the perfect
about forecasting what a company’s sales
order is delivered.”
demand is, and then putting in place an
inventory and production plan to best satisfy performance. So companies need look to to resolve this imbalance and drive demand
this demand – its demand-supply balancing. pull all the business and operational aspects to support the business plan – and then
Here, companies are measuring demand at together – demand, supply and financial – respond with a profitable supply plan? Every
a SKU level and it’s essentially viewed as a into a more holistic view of the business.” process involved – from buying-in product
planner’s tool, run by planners for planners.” for resale to overtime and outsourcing – has
However, Kinder points out that financial More of a business planning process a cost implication that needs to be weighed
implications are in danger of being sidelined Kinder adds that, in this way, S&OP becomes up. When you’re trying to rebalance costs
if a company relies purely on this more basic more of a business planning process, not at this executive level of S&OP you’re really
S&OP methodology. This, he believes, is just a technique owned by Planners. “Here, looking at alignment of demand, supply
where the next level – or ‘Executive S&OP’ companies can benefit from using S&OP and financial plans.”
can prove more beneficial. “A company needs technology components such as scenario
to consider its demand and supply options management, optimised planning and strong According to Kinder, the third – and highest –
and align these with the financial business analytics to help them understand different level of S&OP is one whereby a company >>
56
MANUFACTURING
&LOGISTICSIT July 2009
www.logisticsit.com
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