Sales & Operations Planning Special Report
<< Mike Novels, managing director of on executing the company’s
Preactor International has always viewed strategic and business plans –
S&OP as a function positioned somewhere rather than on fire-fighting.
between the shop floor (where the majority That level of detailed, short-
of Preactor’s planning & scheduling to mid-term management is
applications are situated) and more high- more effectively performed by
level strategic planning. “Typically, S&OP is mid-level managers.”
undertaken over a much longer timeframe
than detailed scheduling,” he points out. “In Baumann also states that the
fact, one of our products, Graphic MPS – a next-generation S&OP process
configuration of Preactor APS – operates at brings everyone to the same
this type of level; you feed in forecast page, working in collaboration to
demand and current orders and then add agree upon a single operating
capacity information. From this, and maybe plan that supports a company’s
based on some inventory control rules, you
In a very simplistic sense, S&OP sets out
overall strategy and business
to accomplish internal collaboration.
can work out how much product you need to plan. “The outputs of this well-
make within each period – whether weekly, executed, holistic process enable the
monthly etc. – and this is where S&OP really within the finance community. Their solutions creation of successful product/portfolio,
fits into the overall scheme of things. We can are geared to manage budgets and financials, demand, production and financial plans that
also take things further inasmuch that we link and offer a lot of analytics. In terms of S&OP, meet business objectives,” he remarked, also
Graphic MPS with more detailed scheduling.” these vendors found themselves having to pointing out that it enables executives and
move down into operational decision making functional managers to “build synchronised,
away from the balance sheets. Thirdly, there time-phased plans for sales, marketing,
Roots to S&OP are a few pure-play vendors who set out to promotions, inventory management,
create a dedicated S&OP engine. As regards purchasing activities, capital expenditures
Andrew Kinder, supply chain solution marketing ERP vendors, they don’t have enough and other investments along with determining
director at Infor, observes that various decision support functionality in their systems optimised financial management strategies”.
players within the vendor community have to really constitute S&OP, but they do provide
arrived at their individual S&OP solutions the bedrock of what S&OP needs in terms of Nicholas makes the point that Integrated
from three distinct avenues; supply chain data.” Kinder added that Infor has overcome Business Planning is an evolution from
management, office of finance vendors and integration issues concerning multiple S&OP and not an outright functionality. “The
pure-play S&OP vendors. “First, there are sources of data related to supply chain, emergence of the term ‘Integrated Business
Supply Chain Management software vendors, financials and S&OP by taking advantage Planning’ means an optimised match between
including Infor, who have very sophisticated of Service Oriented Architecture (SOA). supply and product, demand, strategic
demand and advanced planning engines finance, and line operations and is only for
that, pushing up beyond the decision criteria, businesses looking to take their supply chain
can also address the financial impact of Integrated Business and ultimately bottom line to the next level.
Planning S&OP is a journey and companies without
an S&OP process will not go from nothing
Fred Baumann, vice president, industry straight into Integrated Business Planning.”
strategy at JDA Software, comments on the He adds that, to achieve Integrated Business
benefits of the evolved S&OP model Integrated Planning from a process point of view,
Business Planning (IBP). “Many in the market companies must build on the nine-step S&OP
still focus on ‘real-time’ tactical problems and process framework AMR Research introduced
issues as their primary focus; such as tactical in 2006 to encompass the alignment of demand
replenishment and item level forecasting to response with financial goals, analysing
address operational issues. While every the implications of misalignments between
company needs to address real-time supply strategic, tactical, and operational plans.
chain issues, this is not the purpose of S&OP.
If leaders focus their time on real-time issues
(also known as ‘fire-fighting’), they are not Defining the concept
John Ewing: “S&OP is not just for large
thinking strategically over the long term. IBP
organisations and I am seeing far greater
adoption and uptake from within the
or Advanced S&OP is an aggregate planning In terms of an overriding definition of the
SME markets.”
process that occurs monthly to ensure all term, is S&OP largely open to interpretation,
company plans and strategies are aligned or have the main vendors largely reached
over at least a 24-month rolling planning a consensus as to its role/purpose and
decisions that are being made. Secondly, horizon. This timeframe enables the executive benefits? Nicholas’ view is that it is by in
there are Office of Finance vendors – leadership team to avoid problems, be large agreed that S&OP is the need for a
effectively, the Business Intelligence solution opportunistic in the marketplace and have predictable, profitable and agile Supply
vendors – who primarily have customers the freedom to focus their time and energy Chain to respond to change, meet >>
8
MANUFACTURING
&LOGISTICSIT October 2009
www.logisticsit.com
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