A new Sales & Operations Planning cycle kicks off today – but there’s a problem. Upon reviewing last month’s performance, red flags emerge: Sales were underestimated but logistics costs were higher than planned. The team alerts the sales rep (who ups his growth predictions), logistics manager (who thinks it’s too low, and raises it again) and financial controller.
Sound familiar? Hundreds of companies go through something similar. Most companies have an S&OP process, but what about the right solution to support it?
The team reconvenes at a demand meeting. A new consensus unconstrained forecast is published and sent to the supply planners. Based on the forecast, the system generates an optimized supply plan. The team compares it to last month’s plan ― there’s a 5% drop in fulfillment. The logistics manager is alerted. “It’s our carrier,” he replies. “We need to replace it.”
Solving one problem can easily create, or expose, more problems. There’s always something that comes up.
The team goes through a number of hypotheses: Should they hire a spot carrier, increase capacity of another carrier, or reroute demand to another site? The system models the cost, revenue and supply chain constraints of each option. It picks the one that best maximizes margins and meets KPIs, and then simulates growth of 20%, 40% and 60% for the top customer that was underestimated. The potential impact that each scenario will have on business KPIs is reviewed, and a decision is made.
Thanks to what-if scenario planning, you’ll be able to plot a safe course through the available options, to find the one that best suits your business. It’s faster (and a lot less costly) than learning the hard way.
At the S&OP executive meeting, the team presents their proposal and compares it against the budget. Instead of a 5% drop in fulfillment and failing to meet the budget, the proposal puts them back on track to achieve revenue and margins that will exceed the budget by end of the financial year. The team can now confidently publish the plan, and use it as input for the next cycle.
Does this come close to the reality of your company’s S&OP process – or was there a point at which this story began to differ from your own? If so, consider the benefits of implementing an S&OP solution that is fully capable of supporting your business goals.
You will benefit from the flexibility to adapt to customer processes and business rules, along with optimized what-if scenario support, with the DELMIA Quintiq S&OP system. It’s the advanced decision support necessary to have a clear, tangible impact on your bottom line.
You’ll be able to learn more about the DELMIA Quintiq S&OP solution in the video below. Keep an eye out for a series of three more videos – featuring workflow, ROI and scenarios – coming soon!