14 SCS:PLANNING SYSTEMS
So S&OP is back
as a hot topic, but
now it’s about the
technology more
than the process.
A lot of effort
has gone into
implementing
S&OP processes
and the
technology is
now catching up.
Planning for
survival
Under these testing economic circumstances, detailed planning and supply
chain optimisation are going to be crucial factors in maintaining
commercial and financial performance. But now, with global supply
chains comes complexity and risk. Can technology offer the
sophisticated planning solutions required? NICK ALLEN
Good supply chain planning is fundamental to
every successful organisation. In fact, without
good planning it’s hard to understand how any
commercial enterprise can operate profitably.
Until fairly recently simple spreadsheets proved
sufficient to run sales and operations planning (S&OP)
on a monthly basis, but with the emergence of
globalisation and outsourced manufacturing to distant
locations, complexity has clouded the issue and now
planning needs to be far more frequent, detailed and
sophisticated. In addition, as economic conditions
continue to deteriorate, a renewed focus on cost is
placing an emphasis on supply chain optimisation and
the software tools that facilitate this.
David Platt, senior managing consultant within supply
chain management at IBM, sees three hot themes in
planning centred around S&OP, supply chain strategy
and supply chain optimisation.
According to Platt, S&OP has been around for some
time but simple spreadsheets are no longer able to cope
with the complexity and levels of sophistication required
by practitioners. “So S&OP is back as a hot topic, but now
it’s about the technology more than the process. A lot of
effort has gone into implementing S&OP processes and
the technology is now catching up,” says Platt.
It appears to be the larger global organisations that
are looking for more sophisticated planning tools, those
that have that level of complexity where SKUs are
supplied on a worldwide basis. “When you’ve got a
monthly process, to some extent you can live with
[spreadsheets], because you can absorb that data
management within a month, but when it becomes so
complex that it starts to lack integrity, then you need to
move on to something more able to cope with volume
data from multiple sources,” says Platt.
The traditional APS (advanced planning and
scheduling) vendors all have offerings in this space. Then
there are a number of niche vendors.
“These niche players take a slightly
different approach,” says Platt.
“Traditionally, the APS vendors work
on the basis that you implement
demand and supply network planning
across the organisation and then you
have an S&OP reporting layer that sits
above that. Whereas the S&OP niche
players tend to integrate with multiple
solutions – whatever the planning
solution, be it an Excel spreadsheet to
advanced planning solutions – and
essentially it’s about data mining that
relevant information and presenting it
in an S&OP format.”
NOVEMBER 2008 SUPPLY CHAIN STANDARD
www.supplychainstandard.com
Integration
What the niche players are saying is,
solve S&OP first and if you still need
demand and supply planning and an
operational planning perspective then you
can continue on that journey, but it can take
many years to implement APS across an
organisation. “The two can work together, and it’s easier
from an integration perspective if you do have that layer,
but it’s not a prerequisite for having S&OP,” adds Platt. The
other two areas where Platt sees changes emerging are
interlinked: supply chain strategy and supply chain
optimisation.
The one size fits all approach to planning, that looks
very simple on paper, can often lead to greater complexity
later on when it becomes operational. “If you do
everything the same way for all different types of product,
in all different types of location, it may be very simple to
describe and to articulate what you’re doing and what
your strategy is. However, in reality that may not be
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