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The journey for S&OP is a road with many ruts and potholes. In my twenty years of following the progression of S&OP as an analyst, I am amazed at the number of “experts” with so little expertise. For most companies, building a great S&OP process is a missed opportunity. Governance.
In my recent Mea Culpa post, I mentioned my prior work on Sales and Operations Planning (S&OP), and the importance of leadership. Leadership and S&OP? How aligned do you believe your organization is to drive these metrics? My observation was that Mondelez’s processes were worse than Kraft’s.
Sales & Operations Planning (S&OP) as a process has been around since the 1980’s. While the terminology evolved, the underlying thesis of S&OP has stayed the same, i.e., bridge the divide between sales forecasts and operational plans while respecting the budget.
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. The average company has seven S&OP processes, but a global chemical company averages over 30. Metrics Definition. Reporting Structure.
We consistently see that companies focused on functional excellence–a focus within a functional silo like manufacturing, transportation or distribution– or singular metrics– like inventory or costs– underperform against their peer groups. Reward teams for cross-functional metrics. This is the goal of this post.
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. Today, the average company has seven S&OP processes, but a global chemical company averages over 30. Each defining S&OP differently.
But by monetizing Sales & Operations Planning (S&OP), supply chain planners can speak the language of finance while developing S&OP into a more mature process. This isn’t just aligning financial planning with S&OP. Value-driven S&OP is about “what’s important”.
Today’s planning market is muddy : the methodology is inadequate to compare entities that are not alike. I liken today’s selection process to making a bowl of minestrone soup. Let’s play out the analogy. For 80% of industries, the supply chain metrics represent more than 40% impact on value. The reason?
Use of Supply Chain Descriptors Most organizations are locked into functional silos driven by functional metrics. Stuck in a rut, supply chain leaders try to punch their way through a set of conflicting metrics and priorities each day. The metrics defining success in manufacturing and procurement do not align.
Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Imagine that your child brings home their report card and it’s a mix of good and fair grades. Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric.
I wrote my first report on Sales and Operations Planning (S&OP) while sitting on the floor in the Atlanta airport in 2005 when I was an AMR Research analyst. I wrote many reports on airport floors in those days–electrical plugs were just too scarce.) Sales and Operations Maturity Model from 2005-2008.
I will also pen my 95th report for this week’s Supply Chain Insight’s newsletter. It is one that is often asked: “S&OP How Do I Get Started?” ” S&OP: How Do I Get Started? I asked, “Why is S&OP important to your business?”
Sales and Operations Planning (S&OP) is over thirty years old. With the rise of the global multi-national, S&OP increased in importance as a way to align and drive organizational balance. Today, companies do not have one S&OP solution. Our journey to better understand S&OP continues.
An effective S&OP plan is the goal of many, but there is no clear industry definition of an effectiveness. To better understand the characteristics of an effective S&OP plan, we just completed a study of seventy-three companies. 2) Tie the S&OP Plan to Execution. This is a maturity factor.
This afternoon I put the finishing touches on a new report, “What Is the Value Proposition for Sales and Operations Planning?” ” I think it is the most complete assessment of the S&OP value proposition I have seen in the industry. Building S&OP maturity takes time, discipline and focus.
Supply Chain Metrics That Matter: A Focus on Aerospace and Defense. In Supply Chain Metrics That Matter: A Focus on Aerospace and Defense , Supply Chain Insights benchmarks A&D companies against other industries and dives into data from five top A&D companies over the last decade. Get the research.
This report takes me about six weeks to complete.). One of my stark realizations this year is that smaller companies are beating larger and often more established companies on growth metrics, inventory turns, operating margin, and Return on Invested Capital (ROIC). (In In the report, we study twenty-eight sectors.
For organizations layered in functional metrics and driving a cost agenda, this is a tough nut to crack. S&OP is too slow and cannot achieve the needed alignment. Process latency, the time for an organization to make a decision using a traditional S&OP process, is two-to-six weeks.
The companies with the strongest year-over-year performance (placing in the winner’s circle for six more times in ten years) are Apple, L’Oreal, Nike, Paccar, TJX, and TSMC. As an old gal, with over forty-years of supply chain experience, writing this report for ten years taught me many lessons. I admit it.
Integration of corporate social responsibility metrics in planning. Sales & Operations Planning (S&OP). There is a lack of clarity on what drives value and metrics are functional. Planning data is often debated and participation in S&OP decisions is often ad hoc. Functional metric orientation.
Puricelli A few weeks ago, I launched a new blog series on sales and operations planning (S&OP ). To make sure everyone is on the same page, I want to review the basics, the foundation, which is… what exactly is S&OP? S&OP is so much more than a process or a meeting.
KPIs are essential in S&OP as they provide a quantitative framework for gaining visibility, aligning efforts, supporting decision-making, and driving continuous improvement across the business. Ideally, your S&OP KPIs should consist of a mix of strategic, tactical, and operational metrics.
It will be launched during a webinar on April 25, 2013 and through a series of reports that will run in our May newsletter and throughout the summer. However, we have found that only a few companies are improving the potential of their supply chain to balance supply chain metrics. Does S&OP improve agility?
As a result, we shelved Ed’s idea. Testing Ed’s idea was beyond my circle of control. Despite goals to improve agility and resiliency, functional metrics for manufacturing efficiency continually throw the supply chain out of balance. I am currently writing the Supply Chains to Admire report for 2020.
” As I finished the report on organizational alignment, I felt a bit silly ever writing this statement. As we tabulated the data for the report , what fascinated me was how differently each of these organizations view functional alignment. In the report, we outline three actions that a team can take today to deploy these skills.
IBP vs S&OP. Organizational metrics are important. S&OP plans often focus on objectives like on-time in-full (OTIF) , inventory turns, and resource utilization. S&OP vs IBP, they have distinct time horizons that are not in alignment with one another. Financial Planning IBP vs S&OP.
In the last 30 years S&OP improved performance in many businesses. However, S&OP has not yet substantially delivered on its ultimate promise of enterprise wide resource management, rolling financial forecasting and strategy deployment. Worse, overall S&OP development and progress seems to have stalled.
Supply Chain Insights recently published a Metrics That Matter report covering both the Semiconductor and Hard Disk Drive (HDD) industries. Notice in the Supply Chain Insights report, there are only two HDD companies. Semiconductor is poised to consolidate, which will have huge impact on the metrics. by CJ Wehlage.
Having a strong Sales & Operations Planning (S&OP) strategy ensures that your forecasts, raw materials availability and production capacity all match up and that the factory floor can meet its defined deadlines. But simply putting an S&OP strategy in place isn’t enough.
Is it identical to sales and operations Planning (S&OP), an extension of it, or something altogether separate? Call it what you want, IBP is probably best thought of as mature S&OP. Lora Cecere reminds us that IBP is actually the third step of maturity in an S&OP implementation.
A new report from Nucleus Research, Value Drivers of Single Model S&OP , concludes that the historical disconnect between planning and execution in S&OP is best bridged by a single unified data model that allows companies to continuously synchronize their strategic, tactical and execution plans.
In Part 1: An S&OP Q&A with SCM World’s Kevin O’Marah we discussed the drivers impacting S&OP, the value of the process and the changing rhythm of S&OP meetings. What is in your conversations with them that is different from those who are just starting and S&OP process?
Combining rolling forecasts and S&OP to streamline business processes. Tighter integration can also lessen the pain of the budgeting process since a forward rolling plan means managers will already have consensus approval for some of the next year’s requirements through confirmation of the S&OP process.
Over the course of the last two years, we at Supply Chain Insight s have worked on a methodology to gauge supply chain improvement. We have found that supply chain metrics are gnarly and complicated.During In our program, cost avoidance, while desirable, does not count towards the metric. We named it the Supply Chain Index.
According to the Global Supply Chain Disruption and Future Strategies Survey Report, this goal was the top-ranked planned tool investment. Agility relies on having this kind transparency at your fingertips, through concurrent planning, so you aren’t waiting on analysis and a report from a link up or down the chain.
Fondly I remember the days of Walter Cronkite and Dan Rather with eye-witness accounts and on-the-ground reporting. For the past six years, I have analyzed public reporting and triangulated the results to the quantitative research. We selected these metrics based on correlation work with Arizona State University in 2012.
Next year’s conference will be on September 8th-11th in Franklin, TN, south of Nashville, TN. The budget is for a fiscal year with quarter reporting and updates. Instead, it should be mapped as an input to track supply chain forecasting to financial budgets for reporting and insights. The Role of the Budget in S&OP.
Gartner defines a sales and operations planning (S&OP) System of Differentiation (SOD) as a software solution that supports a Stage 4 or higher maturity S&OP process. According to the report, “Leaders have a strong vision for their S&OP SOD capabilities. 1 Payne, T., May 1, 2017.
Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Have you ever seen a situation where some result from a system– whether a bill from the phone company, a stock report or MRP recommended actions have been messed up? Reason #7 Making decisions based on bad data (supply chain data accuracy).
Last weekend, I wrote two reports. In the first report, I rolled up my sleeves and analyzed balance sheets of process companies over the past decade with Abby Mayer ( @indexgirl ). One of the primary issues, shown in figure 1, is the executive team’s understanding of the supply chain. Today’s supply chains respond.
Yet despite these advances it is still difficult to normalize and compare performance metrics given the geo-demographic, product, financial, political, and socio-economic differences they face in each increasingly competitive national, multi-national or global market. Cloud S&OP SCM The Network Effect cloud Collaboration PaaS'
Sales and Operations Planning (S&OP) is important to building value chain agility and improving enterprise performance. The building of an effective S&OP process takes many years–often three to seven. 1) Right Reporting Relationships. Figure 1: Leadership Understanding of S&OP Planning Basics.
The story unfolds as Max’s bedroom undergoes a mysterious transformation into a jungle environment, and he winds up sailing to an island inhabited by malicious beasts known as the “Wild Things.” The business requirements have outpaced the first and second generation of capabilitie s of the Advanced Planning Systems (APS).
Each player begins with eight pawns on the second row/rank and can promote a pawn to become any other piece (typically a queen) if it reaches the opponent’s end of the board. Dan’s peer was a man named Fred. They reported to a man named Tony. The metrics were not aligned. Or Dave, Jim and Bill(s).
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