February 19th, 2014 3:51 pm Category: Supply Chain Optimization, by: Karen Bird
The economy has been slow to recover after the Great Recession of 2008, however, many economists believe that 2014 and 2015 will be strong years for the US and Global economies. How accurate will your forecasting model be in projecting the supply needed from your business? Since forecasting models typically use two to three years of history (actual sales) to predict the future and we are coming out of a down economy and heading towards positive growth, the standard forecasting models will not predict the future very well. This is where human intelligence and companies with a formal Sales and Operations Planning (S&OP) process have an advantage.
A formal S&OP process gives companies a monthly opportunity for their Sales and Operations teams to come together and review the data, latest intelligence from the field and make the best decisions possible for the company. In addition, a formal S&OP process gives the business a forum each month to challenge the current execution plan and either reconfirm or adjust the plan to meet the strategic goals of the company. A monthly review of key forecasting metrics can provide the Sales team with valuable feedback regarding the forecast.
Read the Profit Point S&OP Research Report
A study by the Aberdeen Group shows that greater than 60% of Best-In-Class companies view a formal S&OP process as a strategic priority for their organization and that Best-In-Class companies hold an 18 point advantage in forecast accuracy. According to an AMR Research study from 2008, companies that are best at demand forecasting average:
- 15% less inventory
- 17% higher perfect order fulfillment
- 35% shorter cash-to-cash cycle times
- 1/10 the stock-outs of their peers
How does a formal S&OP process help to deliver these benefits? It is a combination of getting the right people together to make the right decisions at the right time. A few years ago, Thomas Wallace, author of Sales and Operations Planning: How-To Handbook initiated a project to study the experiences of companies using Executive S&OP very well. The companies in the Best Practices Project cited similar hard benefits listed above but they also said “the soft benefits are equal in importance, or perhaps greater, than the hard benefits”. The soft benefits most often cited were:
- Enhanced Teamwork
- Embedded Communications
- Better Decisions
- Better Financial Plans
- More Focused Accountability
- Greater Control
- A Window Into The Future
A well run S&OP process will put a spotlight on problem areas or gaps in your business 18 – 24 months in the future. This allows the team to collectively see a potential problem or upside opportunity and produce scenarios to help the company to react to them in a timely and efficient manner.
The primary goal of Big Data Analytics is to help companies make better business decisions by enabling analysts or other users to analyze huge volumes of transaction data as well as other data sources that may be left untapped by conventional business intelligence programs.
Ask yourself, does your company:
- Use advanced analytical techniques (e.g., simulation, optimization, regression) to improve decision making
- Routinely use data visualization techniques such as dashboards to assist users or decision-makers in understanding complex information?
- Combine and integrate information from many data sources for use in decision-making?
- Use systems that automatically make operational changes, based on performance criteria, business rules in response to signals from sensors?
- Use systems to give you the ability to decompose information to help root cause analysis and continuous improvement?
If your answers are yes then your company is on the road to implementing Big Data Analytics. If your answer is no, then read on to learn more.
We see companies develop and employ enterprise applications that use advanced analytical techniques to explore Big Data and generate optimal supply chain plans to improve decision making. These applications allow management to visualize their supply chain before and after optimization, helping to identify areas of risk and recommending and allowing management changes to these plans in an almost real-time environment.
The most advanced applications use sophisticated mathematical algorithms, typically mixed integer programming optimization models, to analyze their Big Data and generate optimal schedules and supply chain network designs. In addition, these tools allow the user to modify those plans in real time to align with their tactical or strategic goals.
For example, in S&OP optimization some of these advanced technologies implement color-coded information, which allows users to identify shortages or constraints with their production operations by SKU. The user then has the ability to point and click to drill down for further data analysis and quickly make the needed changes to modify the plan. The key to this type of a system is to provide actionable insights into their global supply chain, and allow worldwide operations the ability to make changes or corrections to their production process at any time 24/7. This process of examining Big Data using advanced technologies provides global supply chain plan visibility and an improved decision-making process. Contact us to explore a professional approach to take advantage of Big Data Analytics.
July 30th, 2012 12:56 pm Category: Enterprise Resource Planning, Global Supply Chain, Network Design, Operations Research, Optimization, Profit Network, Profit Vehicle Planner, Profit Vehicle Router, Risk Management, Supply Chain Improvement, by: Jim Piermarini
There is nothing like a bit of vacation to help with perspective.
Recently, I read about the San Diego Big Boom fireworks fiasco — when an elaborate Fourth of July fireworks display was spectacularly ruined after all 7,000 fireworks went off at the same time. If you haven’t seen the video, here is a link.
And I was reading an article in the local newspaper on the recent news on the Higgs: Getting from Cape Cod to Higgs boson read it here:
And I was thinking about how hard it is to know something, really know it. The data collected at CERN when they smash those particle streams together must look a lot like the first video. A ton of activity, all in a short time, and a bunch of noise in that Big Data. Imagine having to look at the fireworks video and then determine the list of all the individual type of fireworks that went up… I guess that is similar to what the folks at CERN have to do to find the single firecracker that is the Higgs boson.
Sometimes we are faced with seemingly overwhelming tasks of finding that needle in the haystack.
In our business, we help companies look among potentially many millions of choices to find the best way of operating their supply chains. Yeah, I know it is not the Higgs boson. But it could be a way to recover from a devastating earthquake and tsunami that disrupted operations literally overnight. It could be the way to restore profitability to an ailing business in a contracting economy. It could be a way to reduce the greenhouse footprint by eliminating unneeded transportation, or decrease water consumption in dry areas. It could be a way to expand in the best way to use assets and capital in the long term. It could be to reduce waste by stocking what the customers want.
These ways of running the business, of running the supply chain, that make a real difference, are made possible by the vast amounts of data being collected by ERP systems all over the world, every day. Big Data like the ‘point-of’sale’ info on each unit that is sold from a retailer. Big Data like actual transportation costs to move a unit from LA to Boston, or from Shanghai to LA. Big Data like the price elasticity of a product, or the number of products that can be in a certain warehouse. These data and many many other data points are being collected every day and can be utilized to improve the operation of the business in nearly real time. In our experience, much of the potential of this vast collection of data is going to waste. The vastness of the Big Data can itself appear to be overwhelming. Too many fireworks at once.
Having the data is only part of the solution. Businesses are adopting systems to organize that data and make it available to their business users in data warehouses and other data cubes. Business users are learning to devour that data with great visualization tools like Tableau and pivot tables. They are looking for the trends or anomalies that will allow them to learn something about their operations. And some businesses adopting more specialized tools to leverage that data into an automated way of looking deeper into the data. Optimization tools like our Profit Network, Profit Planner, or Profit Scheduler can process vast quantities of data to find the best way of configuring or operating the supply chain.
So, while it is not the Higgs boson that we help people find, businesses do rely on us to make sense of a big bang of data and hopefully see some fireworks along the way.
Sales and operations planning (S&OP) is an integrated business management process that enables a company to continually balance and manage the supply chain supply and demand to achieve its strategic and tactical business objectives. More and more business leaders are relying on S&OP to align and improve decision making across the disparate parts of their organization. And, many companies are still adopting and improving the techniques and tools that they use to improve S&OP.
So this year, we conducted an S&OP Survey of key decision makers to learn more about their challenges, concerns and expectation for 2012. Business leaders from a variety of companies and industries were polled. Here’s what we learned:
- Many companies lack the metrics needed to capture the benefits from S&OP
- Scenario and sensitivity analysis is the tool of choice for S&OP planners who understand that sales forecasts are imperfect
- More companies are beginning to collaborate with suppliers and customers to improve S&OP
- For many companies, point-of-sale (POS) data may be the key to effective sales and operations planning
To read the complete report, including our conclusions, click the link below:
June 16th, 2011 9:00 am Category: Enterprise Resource Planning, Global Supply Chain, Inventory Management, Press Releases, Supply Chain Improvement, Supply Chain Planning, Supply Chain Software, by: Editor
Profit Point, the leading supply chain optimization software and services company, today announced the release of its Profit S&OP software to complement it’s S&OP consulting services. Profit Point’s combined S&OP solution provides business decision makers with the process and tools to manage and optimize sales and operations planning across the supply chain.
The Profit S&OP software tool is fully-customizable to meet the needs of supply chains across all industries and is designed to improve tactical planning for the key decision makers across a company, including finance, sales, manufacturing, logisitics and supply chain. The software provides a centralized dashboard to gain insights and control over a company’s supply chain, including features to enhance collaborative forecasting and improve manufacturing, distribution, and inventory decisions.
“Global manufacturers struggle to accurately plan for global demand across their product lines in a timely manner,” noted Alan Kosansky, Profit Point’s President. “Our S&OP solution solves this problem with a combination of effective processes and a shared planning tool that provides one set of numbers for the key stakeholders across the entire supply chain.”
Using Profit Point’s S&OP solution, manufacturers can coordinate with their supply chain planners across the globe to build accurate, detailed manufacturing and distribution plans quickly and integrate with point-of-sale demand tracking systems. And, the software connects with existing ERP systems, such as SAP® and Oracle®, so analysis and decisions are up to date across the entire organization.
“Improved planning can help any large manufacturer reduce inventory excess and capital risk.” said Jim Piermarini, Profit Point’s CEO. “But the key to successful planning includes the right technology and the right process to align employees with the company’s strategic objectives.”
Profit S&OP has an integrated optimization engine that seamlessly drives the best scenarios to the forefront of a tactical planning sessions. Throughout the process, decision makers are able to visualize and test multiple future scenarios to achieve a collaborative, cross discipline decision making process. Key features in the software include the ability to automatically generate an optimal tactical plan down to the bill of materials (BOM) level, integration with existing ERP data warehouse, multi-period planning horizon, scenario analyzer to systematically assess multiple future scenarios, complex BOM exploration and the ability to visualize plans, timelines and bill of materials to correct bottlenecks and reduce excesses.
To learn more about Profit Point’s sales and operations planning software and services, call us at (866) 347-1130 or contact us here.
About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Dow Chemical, Coca-Cola, Toys “R” Us, Logitech and Toyota.
At Profit Point, we often repeat the mantra “People, Process, Technology.” All three are important for the kinds of projects we work on. You have to have good systems (the technology part) that support good work processes and people that follow the process and use the systems. If your people are not committed to following the process and using the systems, you are going nowhere fast.
Recently we were discussing with a senior manager at one of our clients what makes for a good Sales and Operations Planning Process (S&OP Process). Being someone who is more of a process and technology guy I was thinking that he might say something like “You have to have a well thought out work process that is clearly communicated to everyone involved” or “You have to have a system that is easy to work with that supports the work process well.” WRONG!
The first thing he mentioned was that senior management needed to be openly committed to the process and systems. He illustrated this for us by recounting what another senior manager at this same client said during an S&OP meeting with a large group. The group was going back and forth discussing a “potential” order from a customer and this particular senior manager said “If it’s not in the system then it’s a rumor and we don’t plan and schedule for rumors.”
As you can imagine, this cut down on the chatter in the room quite quickly. This client had spent a lot of time and money developing processes and systems that worked well and those two things are necessary but not sufficient. You have to have leadership that says “We have a work process to follow and a system to use to support executing that process. Follow the process and use the system.”
Next you have to have people who do exactly that! If this is not happening then as I heard from another executive “Either the people will change or the people will change!”
You have to be able to trust the data in the system but really at its root this boils down to trusting the people who entered the data in the system. As I was reminded, this starts at the top!