According to Gartner, organizations spent in the region of $10 billion in 2014 on supply chain planning technology. Despite this, poor forecast accuracy and demand variability are still the top obstacles to meeting supply chain goals.
This implies that S&OP leaders are not spending their money wisely, and are still not 100% as to what technology can truly benefit them, and how. There are still a number of myths prevalent in the sector, and with technology keeping apace and many supply chain leaders keen to simply adopt ‘what’s new’, rather than ‘what’s right for their organization’, taking a step back and considering what’s going wrong is vital.
We’ve taken a look at 5 of the most common myths around technology in S&OP that should be always be kept in the back of operational leaders minds when they’re considering whether to invest their money.
1. Data analytics tools must be real-time
The key word in ‘Sales and Operations Planning’ is Planning. Big data analytics tools are all the rage for every department, and they are often incredibly useful. When forming a long term plan, however, it is more important to carefully evaluate the events of the next next year than it is to try and react to every tiny change in the data, or you risk losing focus.
2. S&OP Technology does not need to be perfect
Supply chains are prone to a butterfly effect should one small thing be amiss. If technology is only 70 or 80 percent right, there is a high chance that it will cause delays that will knock on down the chain and extrapolate out.
3. Integrating with the financial budget is necessary
Financial budgets quickly go out of date, despite moves by many finance functions to introduce rolling forecasts. The S&OP process should never be constrained by the budget as things are constantly changing, budgets often cannot keep up with events, and must adapt to suit S&OP’s needs rather than the other way round.
4. One solution provider is all one company needs
It may seem like a single platform is necessary, and there are many advantages to using one - cost effectiveness, easier communication, etc. However, many organizations have grown exponentially in size over the last decade. They also have many departments, all of whose supply chains have different needs. Supply chain modeling needs to be carefully tailored based on business modeling to drive the value, as a one-size-fits-all approach will often not cut it.
5. S&OP is dead, long live Integrated Business Planning (IBP)
IBP pulls together an organization cross-functionally, enabling it to move faster so it can maximize opportunity and mitigate risk. However, it is a stage in maturity, not the end state, and S&OP is still vital for planning.