Communication of the strategic purpose to supply chain constituents should not remain in the minds of top executives without filtering out to other levels of management. If lower-level managers are to help make change happen, they need to fully understand why some actions are good for the business, the customer, their own areas, and themselves.
Aligning supply, demand, and profits helps ensure product availability with minimal waste and inefficiency. This process of aligning must be designed to ensure that the plans in all functions and geographies are aligned with and support the corporate strategy. Once a consensus is reached on a single operating plan, the members of the executive and operational management teams must hold themselves accountable for allocating critical resources to effectively and profitably meet customers’ needs in order for the plan to work.
One should resist the deeply ingrained temptation to use the balanced scorecard (BSC) (explained in part 3) mainly as a brainstorming tool without understanding that the four BSC focus areas need to be mutually reinforcing and aligned with the strategy. For example, if the supply chain strategy is to penetrate a new, high-end market with an innovative electronics gizmo, then the business process perspective in the scorecard might be to develop a more rapid product innovation cycle. This aim could then be linked to measures of process innovation and design workshops in the scorecard’s innovation and learning area, reduced delivery cycles in the customer perspective area, and a profitability measure in the financial area.
I would say that products from Logility, Oracle, i2 Technologies, Demand Solutions, and JDA Software could all be considered strategic S&OP solutions. The key is these vendors’ S&OP offerings’ ability to link back to the actual supply chain planning (SCP) and enterprise resource planning (ERP) systems that are feeding data to the S&OP process, along with the ability to drill down to the stock-keeping unit (SKU) level of information.
John Bermudez, Senior Director of Oracle’s SCM Product Strategy (who was mentioned in Part 2), said:
“I think the popularity of S&OP is a combination of the economy and the availability of better technology. The rapid downturn in business was a wake-up call to even the best-run companies that nothing less than a fully synchronized response from all functional areas would enable companies to survive this turbulent business environment. Improving their S&OP process is the fastest way for companies to coordinate their response to changing market conditions. As companies look to improve their sales and operations planning processes, they find that they are supporting this process with inadequate spreadsheets and reports that are not integrated with the ERP and supply chain planning systems.
The Oracle Sales and Operations Planning solution is built into Oracle’s Value Chain Planning applications so that as planners are doing their daily planning work they are also contributing to the sales and operations planning process. This means once decisions are made at the Executive S&OP meeting, these changes are immediately reflected in the systems that drive the required changes to purchase and manufacturing orders. With spreadsheets, these changes must be done manually with great difficulty.”
Aligning supply, demand, and profits helps ensure product availability with minimal waste and inefficiency. This process of aligning must be designed to ensure that the plans in all functions and geographies are aligned with and support the corporate strategy. Once a consensus is reached on a single operating plan, the members of the executive and operational management teams must hold themselves accountable for allocating critical resources to effectively and profitably meet customers’ needs in order for the plan to work.
One should resist the deeply ingrained temptation to use the balanced scorecard (BSC) (explained in part 3) mainly as a brainstorming tool without understanding that the four BSC focus areas need to be mutually reinforcing and aligned with the strategy. For example, if the supply chain strategy is to penetrate a new, high-end market with an innovative electronics gizmo, then the business process perspective in the scorecard might be to develop a more rapid product innovation cycle. This aim could then be linked to measures of process innovation and design workshops in the scorecard’s innovation and learning area, reduced delivery cycles in the customer perspective area, and a profitability measure in the financial area.
I would say that products from Logility, Oracle, i2 Technologies, Demand Solutions, and JDA Software could all be considered strategic S&OP solutions. The key is these vendors’ S&OP offerings’ ability to link back to the actual supply chain planning (SCP) and enterprise resource planning (ERP) systems that are feeding data to the S&OP process, along with the ability to drill down to the stock-keeping unit (SKU) level of information.
John Bermudez, Senior Director of Oracle’s SCM Product Strategy (who was mentioned in Part 2), said:
“I think the popularity of S&OP is a combination of the economy and the availability of better technology. The rapid downturn in business was a wake-up call to even the best-run companies that nothing less than a fully synchronized response from all functional areas would enable companies to survive this turbulent business environment. Improving their S&OP process is the fastest way for companies to coordinate their response to changing market conditions. As companies look to improve their sales and operations planning processes, they find that they are supporting this process with inadequate spreadsheets and reports that are not integrated with the ERP and supply chain planning systems.
The Oracle Sales and Operations Planning solution is built into Oracle’s Value Chain Planning applications so that as planners are doing their daily planning work they are also contributing to the sales and operations planning process. This means once decisions are made at the Executive S&OP meeting, these changes are immediately reflected in the systems that drive the required changes to purchase and manufacturing orders. With spreadsheets, these changes must be done manually with great difficulty.”
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