In our Part One commentary, we outlined some grounding on how business and supply chain cross-functional teams can context the need for augmenting sales and operations planning (S&OP) with considerations for advanced technology. We provided four levers of process capability in which to evaluate the need for dedicated S&OP technology.

Once teams have determined that advanced technology is the path forward, we would like to offer some guidelines to help these teams evaluate technology offerings, along with some guidance on weighting criteria.

First and foremost, we recommend that you spend time to define the desired S&OP end state, the ‘should-be’ vs. the current ‘what-is’, but we also hasten to add that teams should breakdown the end-state into phased, incremental stepping-stones to the end state.  Each phase should include the process, people, and technology enablement changes required to complete that phase.  Ideally, each phase should be divided into 6 to 9 month increments on a continuous journey of change, where each step builds the foundation for the next step change.

When evaluating dedicated S&OP technology, teams should evaluate overall functionality needs in reference to the end-state, which addresses which technology vendors have the capabilities and resources that can support the achievement of the final objective.  This also helps in the evaluation of overall cost vs. quantitative benefits desired. That stated, another important consideration will be the vendor’s resources, flexibility, implementation and partner ecosystem capabilities to support each of the phases of transformation, without major disruption to existing processes. S&OP is not the sole purview of the major ERP vendors, and in many cases today, more of the technology innovation in this area has come from specialty vendors.

Certainly, individual firms will have varying needs for desired functionality, but it is rather important for implementation teams to consider both technology and vendor capabilities that have a track record of reliability and responsiveness to business and process needs.  In the overall laundry list of desired functionality, we would submit that the most important criteria to weigh, aside to overall cost, will be application ease-of-use.  We state that for a number of reasons.  The S&OP process by its nature, involves a multitude of participants representing internal, and increasingly, external trading partners.  Participants will not embrace technology if they perceive it is too difficult to use, too rigid and inflexible, or if they do not understand what the information represents.  Each of the S&OP team participants, spanning cross-functional to executive level, will have their desired level of ‘useability’ criteria, and it is important for evaluation teams to weigh these criteria in the ultimate selection. Another trend to factor is that there can be a constant level of turnover or change of S&OP participants over time, and each should be able to quickly ramp-up on adoption and use of the technology tool supporting the process.

The above stated, we recommended that evaluation also include some of the following important criteria in their technology evaluation:

  • Role-based useability features, with the ability of a process participant to easily configure the application to their specific role or involvement within the S&OP process. It is rather important that the application include visualization tools to summarize large amounts of information or key-in on significant root-cause trends. Easily configurable dashboards or user screens are important.
  • Bring multiple externally based data and information, such as demand, financial, supply, production, procurement and capacity, into the process, coupled with the ability of S&OP decisions to be executed within external systems. Information transfer should also include user-friendly means to transfer information among spreadsheets, files and databases, which is often required when including smaller trading partners in the process. Many S&OP decisions will involve specific products and/or customers and it is important that the application has the ability to support analysis, drill-down, drill-up, and decision actions at the item or SKU level.
  • Perform scenario or what-if planning across a singular database of integrated information, along with the ability to create or track multiple scenarios helps S&OP teams to weigh and determine viable options to rapidly changing business conditions. These capabilities must be able to be performed in a near real-time speed, since teams will lose creditability if analysis takes multiple hours to complete.
  • Assess and evaluate supply chain wide risk considerations, such as a major disruption in production, supply, or failure of a key supplier. Ability to asses a decisional impact on a firm’s financial and asset performance goals, or the ability to perform ‘cost-to-serve’ or profitability analysis related to key customers is another important criteria.
  • Documenting and tracking the audit trail of decisions, along with the assumptions related to certain decisions, helps teams to determine a context for prior actions or a trend in supplier, customer, facility or trading partner actions.

Current advances in information technology can well serve the needs for a broader, more integrative and externally focused S&OP process.  Take the time to assess your long-term process needs, and context some of the considerations we have outlined.  As many industries begin to transition through post-recession recovery and new business models, now is the time to position senior management for investment in the process.

A final and perhaps parochial note, bringing in an objective perspective from other industries who have matured their S&OP process, or a third-party consultant, can also help in forming the change management and future framework for S&OP.

Bob Ferrari

©Copyright 2011, The Ferrari Consulting and Research Group and Supply Chain Matters Blog.

Editorial Note: This series of S&OP commentary will also be available in a research report available for purchase and distribution.  Please email info <at> supply-chain-matters dot com for additional information.