Predictability vs. Agility: You no longer have to choose

While I was preparing for an executive meeting at a very large, very complex and dynamic food & beverage company, I was told of an internal conflict between Sales and Operations.  From the viewpoint of the team in charge of outbound logistics, this conflict – fortunately collaborative – emanated from two conflicting demands – both in the S&OP process as well as in day-to-day fulfilment. Essentially, the sales director wanted and insisted on agility at all times, while the operations director emphasized stability and predictability.

image001Turns out, Sales wanted to have the flexibility and capability to take advantage of market and client opportunities. This would enable them to respond quickly to new promotions, requests and opportunities to sell excess inventory or more product at a favourable price.  On the other hand, Operations needed predictability in order to ensure that the right products were produced and available to fulfil existing orders, while at the same ensuring that short shelf-life products were not thrown out due to exceeding their sell-by date. Seems like the classic (and natural) tension between Sales and Operations that any S&OP process (and hopefully tools) should be able to handle.

And yet, the conflict was ongoing and seemingly unresolvable. It was a constant balancing act, exacerbated by the huge volume and potential variety of products that they were producing at their many plants. Getting the production mix right – given the constraints of supply and production and logistics – was a complex puzzle indeed.

But as I dug deeper, an interesting paradox emerged: It turns out that in reality, both the sales and operations directors wanted both predictability and agility… just in different ways and at different times. The sales director confirmed that while he wanted agility to take advantage of market opportunities, he also wanted stability and predictability of product supply to meet demand. He needed to know that when for each promise his salespeople made, operations could deliver on those promises. Visibility of supply and demand meant he wanted and needed both agility and predictability.

Meanwhile, the operations director also confirmed the need for agility to be able to respond to supply and demand variation. Yes, his team needed predictable demand signals, but they also needed significant agility to respond to the daily variations in operations and demand: Varying quantity and quality of raw materials, production and logistics variability and disruptions, daily requests from sales and significant variation in orders from customers, often asking for quick delivery.

While these two executives emphasized one side of the balance over the other, in reality they both wanted and needed a supply chain that was both highly responsive and constantly predictable. This is where DELMIA Quintiq’s integrated business planning approach and capability is changing the dialogue and their thinking. By being able to accurately model and integrate the entire supply and demand components of their value chain – both in the S&OP tool as well as the planning of production and logistics – the conversation has shifted. It no longer focuses on how to resolve the conflict of predictability vs. agility but looks at how to collaborate to empower both predictability and agility for both sales and operations across multiple time horizons. Both Sales and Operations needed a no-compromise solution.  This is where DELMIA Quintiq’s 100% fit methodology offers a powerful resolution.

image003Also taken into consideration is the type of data needed and when in order to clarify market demand and opportunities as well as synchronize those demand signals and forecasts with production, distribution and logistics planning and scheduling.  DELMIA Quintiq’s ability to model, integrate, visualize and optimize their demand forecasting and planning in a single platform is turning their supply, production, warehousing, distribution and production processes into a truly visible and collaborative S&OP process. It’s permitting Sales and Operations to work together to achieve predictability and agility at every step. Every person involved is empowered with the same knowledge to make informed decisions across multiple time horizons – a true no-compromise solution.

Are there still conflicts?  Of course. Production does not have infinite capacity and capability. Sales cannot make false promises without damaging customer confidence.  But with DELMIA Quintiq’s powerful suite of integrated supply chain planning and optimization tools, both predictability and agility are firmly in their grasp.  Additionally, they can use the tool to project future scenarios to determine how and when to make strategic organizational decisions to respond – not react – to market changes, customer trends and new market opportunities.

What conflicts could be resolved in your organization from implementing a no-compromise supply chain planning and optimization platform?

Lee Hochberg

Senior Advisor - Supply Chain Planning & Optimization, DELMIA Quintiq, Dassault Systèmes