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Demand & Supply Chain Management Evolution

28 Nov 2019
Is S&OE the new S&OP?

Jeff Stabell - Manufacturing, Retail, Supply Chain

During a recent dialog with a Vice President of Supply Chain for a major U.S. retailer, I had the opportunity to ask an important question. I asked how much of that Vice President’s time was spent on truly strategic supply chain planning projects vs tactical firefighting of supply chain disruptions. By the look on his face it was clear that I had touched a nerve.

This is a sensitive topic for many supply chain practitioners. JDA’s own research among planners tells us that they tend to spend 70% of their time fire-fighting supply chain disruptions. This Supply Chain VP was certainly no exception to the rule as those daily and weekly supply chain fires tended to bubble up to his desk.

The question remains, why can’t most supply chain practitioners break loose from firefighting and focus on delivering against their Sales and Operational Plan?

As a wise person once said, the long-term is a series of short terms. Delivering against your Sales & Operations Plan is easier when you put together a series of strong short-term performances in a row. If you can find ways to smooth the short-term noise in your supply chain network, the long-term outlook starts to look pretty good.

Of course, it’s easier said than done, but the stakes are high. Short term disruptions tend to amplify noise in our supply chain networks causing ripples and the dreaded bullwhip effect. When we borrow next week’s inventory to serve this week’s demand surge, we start toward a slippery slope.

person pointing to a computer screenWhile we cannot always control the disruptions to our supply chain, we can improve the way we deal with them. For example, new solutions using machine learning (ML) can help prioritize short term fires and even predict them before they have a chance to impact our business. That’s an important foundation for successful Sales and Operations Execution. If your company is conducting Sales and Operations Plans on a quarterly or monthly basis, then Sales and Operations Execution (S&OE) becomes the weekly measurement of how you are proceeding against that longer-term plan, comparing short demand to forecast to determine how best to deliver against commitments.

To answer a basic question, S&OE is not the new S&OP, but instead, an important and separate planning process designed to address the much-needed frequent cadence. Supply chain practitioners who put together a structured approach to S&OE, separate but equal to their S&OP processes, improve their outlook of winning in the short term and achieving predictable long-term business outcomes. Moreover, they are likely to spend a lot less time fighting fires and more time focused on the strategic aspects of their roles that can benefit their company most.

I would encourage you to not blur the lines between S&OP and S&OE, or the value of long-term planning and short-term execution becomes diluted and neither will offer the benefits you are looking for.






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