S&OP Maturity Comes Prior to

Advance Planning Software

Steven Hainey CPSM, CPIM, CPF, MCIPS, C.P.M.

What’s Needed to Advance S&OP Maturity?

And why do so many companies get stuck in the early maturity stages?

Row Labels

< $50M

USD

$50M to

$100M USD

$100M to

$250M USD

$250M to

$500M USD

$500M to

$1B USD

> $1B

USD

Grand

TotalAutomotive 1 2 3Chemicals 1 1 3 2 7 14Consumer Products 3 1 4 1 3 11 23Industrial Products 1 1 1 3 2 8Logistics/Transportation 1 1 2Manufacturer - Other 1 4 6 5 16Medical Device 2 2 4Pharmaceutical 3 3Telecommunications 1 2 1 410 Additional Industries 3 2 2 1 2 10Grand Total 10 11 16 9 7 34 87

To Get Some Answers a

Global S&OP Survey was Completed

S&OP B/U Respondent Size:

Africa 1 1 1 3Asia 1 1 1 4 7Australia 2 1 3Europe 2 5 6 3 2 8 26North America 5 3 8 3 1 17 37South America 2 1 1 2 2 3 11Grand Total 10 11 16 9 7 34 87

11% 13% 18% 10% 8% 39% 100%

The responses to the 35 questions were fascinating!

2016 Global Survey:

People

Processes

Technology

• Companies’ historical cultural practices are

the biggest barriers that need overcome

• Seen across company sizes, industries, and

geographic regions

Largest Limiting Elements for Progress

Is all the S&OP work actually worth it?!?!

77%

2016 Global Survey Results N = 87

48%

29%

23%

• Improve customer service

levels by 1–5%

• More agile with shorter

lead-times by 5–25%

• Increase inventory turns by 5–25%

• Reduce direct operations and distribution

labor spend by 5–25%

Returns When Progressing S&OP Maturity

What’s your company’s financial impact with a 5% improvement for the above?

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S&OP – Maturity Stages

Top Requirement to Advance the S&OP

Maturity for People

Businesses’ KPI 1-3 year changes with:

• Weak Knowledge & InvolvementDecline/Stagnate 32% & Strong Progress 12%

• Strong Knowledge & InvolvementDecline/Stagnate 3% & Strong Progress 31%

• Senior management’s time with S&OP has a high ROI !!!

• Alignment• Collaboration• Shared Duties• Accountability

Management Support

Some Decline Stagnate

Some Progress

Dramatic Progress % Per Level

Weak 19% 13% 56% 12% 18%

Medium 6% 28% 55% 11% 41%

Strong 0% 3% 66% 31% 41%

Total 5% 15% 60% 20% 100%

ROI on Management’s Knowledge & Involvement

2016 Global Survey Results N = 87

Profitability, Revenue & Other KPIs Improvements

32%

Focal Points for People

• Advocate senior management

training & active participation

• Transform company cultural

• Continuously develop staff at

all levels and positions

• Hold all sites, departments, and individuals

accountable for S&OP deliverables

Constantly educate & challenge members to contribute to company’s top objectives

What are the Process & Technology

Focus Areas During the

Early Stages of S&OP?!?!

Focal Points for Processes

• Center efforts around a

few common goals

• Implement standard

operating procedures and

training across functions and sites

• Assure alignment on system configuration,

data, and processing of transactions

Don’t procrastinate or become complacent with current methods

Focal Points for Technology

• Utilize single system of record

• Analyze system data for improvements with existing tools available

• Utilize system functional and automated processes where possible by questioning historical assumptions

Start with the basics and continue to build upon them

Reasons to Have a Coordinated S&OP

Commodity Price Changes

Is everyone in your boat rowing the “correct direction together”?

• Lack of creditability with team, customers & suppliers

• Costs of resources and working capital

• Need to develop a new plan to get out of the unanticipated situations

• Time to recover and get back to the previous state

• Small world with external individuals hearing worst case scenarios of what occurred

Potential Issues of a Siloed Organization

Timing for Advance Planning Software?

3) Collaborative Planning should be the earlieststage for Advanced Planning Software

Advance Planning Software Implementation

Confirm alignment on objectivesand requirements first!

• Creates a strong foundation for

both the S&OP and new software

• Improves business processes,

base system training and data integrity

• Permits cross-functional teams to better

understand S&OP requirements and process

gaps prior to buying new software

of Waiting to Stage 3 Prior to Purchasing

What happens to software implementations when these items aren’t done first?

• Bad business practices & data integrity

adversely impact software implementation

• Increased costs due to lack of internal

technical knowledge causing greater

external requirements

• Extended project time-lines when consultants have limited

guidance on how to configure and validate the setup

• Over estimating software capabilities which may not

address company’s shortfalls in historical cultural practices

When Purchasing Prior to Stage 3

Is your S&OP maturity at the right level for implementing 3rd party software?

Technology is the largest industry

disruptor today!

• Amazon, Uber, Netflix, Tesla, ……

• Quicker advancements every year

• Shorter response & lead-times

• Business and consumer data doubling every 2 years

• Required capabilities for companies & employees to

succeed in today’s market are quickly changing

Reasons to Strive for Stage 4

Is your company’s S&OP able to keeping up with the market?

• Who utilizes full automated

scheduling today?

• How long until software can handle

millions of strategic decision options

cost effectively?

• Today for free on your smartphone, you can get

chess and GPS navigation rule based programs.

These apps in the cloud can manage millions of

decisions in seconds.

Effects of Artificial Intelligence in Stage 4

It’s not if it going to happen, it’s when will it happen within your industry?

It’s already happening!!!

What S&OP Elements and Attributes do you

need to focus on today

to realize a Competitive Advantage?

A Closing Question for You……..

Row Labels

< $50M

USD

$50M to

$100M USD

$100M to

$250M USD

$250M to

$500M USD

$500M to

$1B USD > $1B USD Grand Total

Manual Analytics 7 3 6 3 3 7 29

Semi-Automated Analytics 1 6 6 6 2 13 34

In-house Automated Analytics 2 2 2 2 10 18

Advanced Automated Analytics 2 4 6

Grand Total 10 11 16 9 7 34 87

2016 Global S&OP Survey Analytics & Progress

S&OP B/U Respondent Size:

Some decline 2 1 2 5

Stagnate 1 3 1 4 1 3 13

Some progress 7 5 9 4 4 23 52

Dramatic progress 2 1 5 1 2 6 17

Grand Total 10 11 16 9 7 34 87

11% 13% 18% 10% 8% 39% 100%

Resources to Progress S&OP Maturity

• SAPICS, APICS, IBF and

consultant training

• 2016 Benchmarking

S&OP Survey

• Professionals networking on LinkedIn groups like

“Advancing S&OP / SIOP/ IBP through

Collaboration and Analytics”

• There are many good websites and podcasts that

cover these types of materials

Specific information supplied within the white paper

References

1. Dogan, C.A., Gjendem, F.H., & Rodysill, J. (2013). Fueling

Supply Chain Transformation / APICS Big Data Folio:

Exploring the Big Revolution, APICS The Association for

Operations Management ©, pp 21.