There are several vendors nowadays that offer S&OP software for process implementation, but here’s what you need to know: The digital transition is interrupting the business world flat out, bringing both opportunities and challenges, and supply chain management, with S&OP, is not an exception. Therefore, it is vital not to let the transition outpace your ability to develop, and this is not merely any platform can do with ease. So, it’s important to find an Integrated Business Planning (IBP) platform that can offer superior S&OP or demand planning capabilities.
On the tide of innovations
McKinsey pointed out that supply-chain digitization has much to do with companies’ technologies’ capabilities, of which upgrades were not available until recently. As a matter of fact, supply-chain management was one of the first business functions to relish substantial technology upgrades, as developers built applications that pool ERP-generated data. However, those applications primarily limited to improvements in three areas:
- streamlining transactional activities (i.e. end-to-end planning)
- supporting major operations such as warehouse management
- sharpening supporting arguments for decision-making
Yet, these applications lack the ability to leverage the transformative capabilities of S&OP. For example, linking and combining cross-functional external and internal data (inventory, shipments, and schedules); investigating the root causes of problems by jumping into ERP, advance-planning, warehouse-management, and other systems all at once; or using data and insights to forecast demand and performance.
Companies need to dig down to the smallest atoms of information and track down even the most elusive bit during the S&OP processes to find everything that might and will come in handy. And these are almost all that companies need to settle in order to gain operational benefits, as we mentioned above, and what are now mostly inducted in numerous next-gen S&OP solutions.
The ever-expanding ecosystem of technology vendors and service providers offers a bevy of solutions that satisfy anything the supply chains entail. Powerful analytical tools make it possible to handle large sets of unstructured data and derive meaningful insights from them. Artificial-intelligence applications can automatically detect potential setbacks and provide recommendations to eliminate rudimental threats. Major decisions can now be made and executed in an , with systems that convey adjustments horizontally across functions—from S&OP into other areas—and vertically from the executive level down to business-unit or location managers.
The asymmetrical development of technology and strategic mindset
However, as innovation accelerates, issues emerge. Although the digital transition is halfway from the beginning, and we are now heading towards the post-digital world, there are still companies or decision-makers holding onto the status quo, or in other words, skeptical and hesitant towards the benefits of a digital-elaborated S&OP solution.
Simplicity, or the new complexity?
If you are thinking: “Supply chains are moving so fast that companies don’t have time to plan.” You may want to think again! The fact is that not all companies cannot plan due to the supply chain’s high-velocity development. Only companies who don’t have the right planning platform in place are caught off-guard. The key to staying on par with supply and demand changes exists; it’s just that you haven’t been able to find out, or more unfortunate, you don’t want to find out.
Furthermore, a surprisingly large amount of companies hold firm beliefs that they don’t need a planning solution to latch onto an effective S&OP process. It’s actually more about finding the right solution to improve your current S&OP processes’ effectiveness. Organizations are adversary to change as they see the current setup of spreadsheets and enterprise business applications as satisfying.
This contentment is because people convince themselves that they can set up S&OP effectively with simple spreadsheets. Sure it can—if data and the market stay unchanged. But the market has never been static, rather dynamic. Spreadsheets-based modeling can eventually be the biggest hindrance to your company’s disruption-responding ability. However, while spreadsheets serve perfectly as the starting point for newcomers, they are not up for further usage if they cannot simulate “what-if” scenarios or get an ultra-detailed view into data.
What will happen then?
And now comes the intimidating part, what will be the calamities that companies have to suffer? What consequences will cast upon the well-being of your business with this conservative mindset?
Excess and obsolete inventory, first of all. S&OP is all about aligning manufacturing and sales. When your supply inputs and sales output swerve, you have inventory. Lots of it will accumulate from thousands of up to hundreds of millions of dollars in earnings; all go up in smoke.
Losses of sales follow up, which is a straight descend from above. Typically companies with poor planning don’t have too much of everything and end up either having too much of things that aren’t necessary and too few of things that are.
And most detrimental, you lost market opportunities! While the threat of inadequate planning mostly pertains to the loss of sales, the risk of planning without properly functioning or out-of-date S&OP processes lies in the market opportunities itself. Companies without an effective S&OP software are typically much slower to react to market changes. This setback gives their rivals the chance to beat them into new markets and products, all the while outdistancing them in existing competitions. When it comes to the matter of “first come, first serve,” and you just came second, or third, or even much later, it’s not a good thing, isn’t it? The good news is, you are not and will never be the last. But, the earlier you come, the more pie you get. So, it’s time to level up your S&OP software.