S&OP is becoming increasingly important to a company’s success. However, many organizations are still having trouble integrating and calibrating supply and demand to a high level. Companies must know everything that can impact on demand, and be able to adjust their supply accordingly in order to limit costs and save on wastage - vital as growth slows and margins become even tighter.
As organizations become more complex and their process matures, there becomes a greater need for technology. Many firms are still powering their S&OP using manual methods, and those that aren’t are often using Excel or multiple Enterprise Resource Planning systems - often between five and 30. Good communication is central to S&OP, and having a number of different ERP systems does not facilitate this, it simply adds layers of confusion where there needn’t be. And while Excel is a powerful tool, and without meaning to diminish its functionality, it is not capable of coping with the complexity of the modern supply chain. Trying to use Excel to power through maturity is like having an elephant put in your contact lenses for you. When it comes time to drive collaboration and scale in S&OP, there needs to be a unified platform that enables an holistic approach.
The higher stages of S&OP require a coordinated enterprise and network decision-making capability, which is only really optimized by the Cloud. According to a report on Supply Chain Shaman, 95% of the solution providers now offer hosted solutions and some version of SaaS. The Cloud enables partners across the board to access information in real time, and collaborate to ensure that processes are run efficiently.
Big Data is another facet of working at the higher stages of S&OP. S&OP processes are generating vastly more data than they once did, and this data has become far more granular as a means to define problems. Companies are now managing in excess of one billion TPPs, compared to just a couple of hundred a few years ago. Data visualization is key if all partners - of all skill sets when it comes to analytics - are to interpret the data and leverage actionable insights.
S&OP leaders face a number of challenges, but they are not insurmountable. Indeed many are easily solved, and stem from unnecessary complexity brought about by a reluctance to move to new technology. It is important to remember, however, that S&OP is not all about technology. It primarily requires the creation of a change management/organizational culture. Technology enables this to happen, but without the right people in place and the right encouragement for them to work, it will mean little.