Executives at CSCO Summit Agree: There Is No “One-Size-Fits-All” Model for S&OP

Day one of Chief Supply Chain Officer Summit 2012 packs an informative punch on business planning functions


For Milwaukee Electric Tool—a 90-year old company which most recently experienced a resurgence over the past five-to-six years with the introduction of two new business lines (hand tools; and test & measurement tools)—some components of traditional S&OP processes also work a bit differently.

For example, while some manufacturers who have manufacturing points in the U.S. can meet inventory goals in a short time-frame, for Milwaukee Electric, the lead time tends to be longer because a lot of their work starts largely overseas, explained James Merwin, Director of Supply Chain Planning for Milwaukee Electric Tool.

“The S&OP process is mainly to drive collaboration and manage gaps, such as those in the SKU level,” said Merwin. “This is a 90-year-old company. Predominantly, all of our business was in the U.S. and if forecasting was done, it was done at the quarter level. Five years ago when I joined the company, there were those who did the demand planning but then handed that off to the supply chain planners. We transitioned away from that plan to move to a supply/demand plan. Now, we tell our staff, ‘get up out of your seats. Go walk around and talk to other departments. Talk to the engineers and understand what is in their heads and what they foresee for the year ahead to better understand how it affects the production and supply chain,” Merwin continued. “Connecting the product managers with finance and the sales managers with finance—it’s not a simple thing to do but it gives all the stakeholders a point of contact across all horizons. And the consensus across shareholders on strategy and approach is critical.”

Examining the retail scale

Other factors that supply chains must factor in to formulate planning strategies to achieve company growth include:

  • Connecting supply and demand
  • Upfront involvement—outside of S&OP—to help improve supply chain functions
  • Driving ownership of the company horizon across all business operations

 

For retail scenarios, some issues that S&OP helps to overcome can be in the realm of insufficient shipping history; a real-time view into store activity; and future retail inventory forecasting.

Kimberly-Clark, which utilizes solutions from Terra Technology, Promax and RSI, was able to establish demand cycles, improve predictive analytics, gain better visibility of gaps and drive execution at a faster pace as a result of implementing the providers’ technologies as part of its overall business strategy, according to Scott DeGroot, Director, Customer Supply Chain Strategy, Kimberly-Clark. In addition, Kimberly-Clark maintains a demand signal repository (DSR) to consolidate data from retail point of sale (POS) systems and distribution centers.

“We had 10 different ways that information and POS data moved throughout our enterprise,” said DeGroot. “It was very important for us—from an IT perspective and a supply chain perspective—to manage this information. And the demand sensing repository tool helped us. It drives better execution at the shelf. Now, we can easily see when we have a violation of the planogram and we can see if stores are not getting enough inventory based on their POS.”

But while the benefits of such technologies do exist, DeGroot confirmed that there are indeed educational challenges and some hesitancies in the space to adopt such technologies to improve S&OP, forecasting processes, supply chain collaboration and shelf-back replenishment.

“If a retailer is not willing to act on data, the situation can become frustrating very quickly,” said DeGroot. “The opportunity exists if we share a vision with our customer and trading partners to help them. But that opportunity exists only if customers are willing to do certain things and if they have certain capabilities. They have to have access to inventory data at the store—whether on a daily or weekly basis. Put all that together and we can come up with great analytics.”

At the end of the day, it all comes down to “business process synchronization,” confirmed Gaurang Pandya, Vice President, Industry Strategy, JDA Software. “It’s all about driving improvements within an enterprise. Typically, what happens is people create a plan but then forget about it. You need to make sure that once you execute a plan, it is working for you and if not, that you can figure out a way to get back on track if you experience any variants in the plan.”

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