P
lanning Opinion
S&OP and MEIO make waves
By Karin Bursa, vice president of marketing, Logility.
• Future time-phased demand. • Production capabilities. • Sources of inventory and levels of safety stock.
Karin Bursa: “Companies of all sizes have gained a clear advantage from S&OP, driving efficiencies across the supply chain and improving service levels.”
T
he supply chain profession continues to grow in scope adding more responsibility and the need for increased visibility while the networks expand to new
markets. This growing complexity is amplified by the fluctuating economic conditions. Combine these challenges and it is easy to understand why there is so much buzz about two supply chain opportunities, Sales and Operations Planning (S&OP) and multi- echelon inventory optimisation (MEIO).
S&OP – the great unifier
According to a recent report from Gartner, “The benefits that early-adopter enterprises are getting from this technology [S&OP] are impossible to ignore .” Companies of all sizes have gained a clear advantage from S&OP, driving efficiencies across the supply chain and improving service levels. One key to successful Sales and Operations Planning is the ability to obtain reliable, accurate information regarding:
The challenge, once all stakeholders (sales, manufacturing, operations, finance) agree to a plan, is keeping it in action in daily operations. To maintain focus, the supply chain stakeholders must achieve two things:
1. One consistent plan for the business. 2. Trust the data presented to them.
Continental Mills discovers S&OP
Continental Mills is a dry bakery mix products manufacturer established in 1932 for the food service and retail industries. Realising its supply chain was a leverage point for profitable growth; Continental Mills evaluated its processes and technology and discovered several performance improvement opportunities. The first opportunity called for more accurate demand planning and increased visibility. The company selected Logility Voyager Solutions software to begin reaping the benefits of increased forecast accuracy. Following implementation, one division reduced its forecast error 50 per cent.
Secondly, the supply chain team used Logility Voyager Solutions to drive results in inventory performance. They uncovered more opportunities for improvements, such as connecting supply planning system recommendations to the manufacturing process, which improved production efficiency and end-to-end supply chain
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visibility. Logility helped streamline production planning to add useful capacity within its existing network: now Continental Mills is able to constantly change its production lines depending on the forecast (one line can run more than 175 individual SKUs in a year) to optimise flexibility and more profitably satisfy demand.
Insight provided by Logility Voyager Solutions makes Continental Mills’ S&OP smooth and effective. The supply chain team is able to plan and allocate the usage of each asset, minimise the downtime between changeovers and, ultimately, provide improved customer service by ensuring product availability when it is promised. This fully integrated approach has created a significant competitive advantage measured in higher customer service with reduced inventory for Continental Mills.
Inventory Optimisation – bring balance back
Inventory Optimisation is a discipline that has been in use for more than a decade, but today it is a hot trend available for mid and large companies. Many companies have discovered that APS and ERP systems actually have very limited capabilities to perform inventory optimisation—especially for companies that want to optimize across multiple tiers of the supply chain. More and more companies are achieving results like those enjoyed by innovative leaders, using multi-echelon inventory optimisation (MEIO) to balance service levels and inventory investments. MEIO models the end-to-end
October 2011
MANUFACTURING &LOGISTICS
IT 25
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