5 Critical Issues that can hamper your S&OE Process
Martin Pahulje - May 13, 2021
Sales and Operations Execution (S&OE) is a highly beneficial process in optimizing how you strategize supply chains. This process primarily serves to keep S&OP goals on track, integrating with the planning process to drive daily and weekly supply and demand fluctuations. Fueling the success of Sales and Operations Planning (S&OP), effective S&OE implementation results in fewer inventory adjustments, less sales cost on incentives, and fewer adjustments in the supply chain. The integration of both processes will provide you with clear business plans outlining the allocation of critical resources needed to fulfill the supply and demand needs of your customers and company. With that being said, implementing S&OE is not necessarily a simple task. Customer and market demands are constantly changing, so your S&OE process must be agile and efficient to translate into a clear and valuable business plan. We will walk through the five most critical issues that could hamper your S&OE process so that you know how to handle and overcome them, optimizing your supply chain through effective S&OE.
Lack of Differentiation
S&OE is extremely useful in optimizing S&OP, but there are some crucial facets of the two that need to be differentiated and often are not. Many planners believe that because so many aspects of these processes overlap, they can be combined entirely in the planning process, but that is not the case. It is crucial that these processes be organized in separate meetings to ensure that the individual aspects of each are appropriately addressed. It is easy to get stuck on S&OE because it focuses on critical short-term operational issues while S&OP is long-term focused. These matters are crucial and should work with one another, but they need to be addressed separately. If planners focus solely on S&OE, they may end up with short-term goals that do not contribute to their long-term goals, ultimately leaving the daily operations ineffective. The opposite could occur too, where immediate operations are overlooked for larger S&OP goals.
It is essential that operational management focuses on immediate issues rather than tactical ones. It is necessary to be informed of S&OP decisions in order to adjust plans as needed, but their primary responsibilities should remain with managing day-to-day operations. Similarly, executive management should focus on the tactical side of the business and not involve themselves with day-to-day operations on a regular basis. While the two processes need to work together to meet the same goals, it is important to note that these goals are separate but related and should be managed separately.
Wrong Data Sources
S&OP requires intricate planning, connecting dataflows from every touchpoint in the supply chain. These flows ensure integration from production planning all the way to sourcing and order creation. As a result, robust forecasts and plans for meeting demand are made. S&OE is slightly different in that scope is much more focused, primarily on inventory levels and transport plans. Because this directly impacts daily operations, it is imperative that your S&OE dashboard delivers accurate information from the right sources. Through your dashboard, you should be able to visualize current S&OP plans, existing inventory levels and warehouse capacity, and everyday transport plans. To gain visibility through these sources, you need to ensure that they are receiving the correct data as well. This is best done through a single data model, ensuring that information stays in sync and aligned.
Lack of Real-Time Technology
Because S&OE deals with daily, weekly, and monthly goals, real-time planning is a must. To efficiently conduct daily tasks, it is crucial that you have accurate information as quickly as possible. Furthermore, if changes are made but the information is not communicated, a day of work could be left futile, realizing too late that operations should have been adjusted. With real-time planning, these problems are solved. Technology such as IoT and monitors are critical in tracking operations and delivering that information to planners. Real-time tracking and analysis ensure that disruptions can be identified immediately and thus corrected as soon as possible. Without real-time data, it is highly challenging for S&OE to maximize its value and be efficient. To be one step ahead of your supply chain at all times, you need real-time technology.
Speaking of real-time technology, this is not the only tool you need to implement for an effective S&OE. While the planners behind S&OE are critical to its success, it isn't easy to manage on their own. With the help of advanced analytics that can predict and prescribe supply chain operations, planners have the capability to analyze market trends in real-time. This is a significant advantage in performing quick re-planning and inventory adjustments in accordance with demand. Using historical market data, in addition to tracking weather conditions and traffic patterns, advanced analytics will provide you with a holistic view of your supply chain network, ensuring that you are prepared and resilient. It can be easy to view your supply chain as an island, but it is dependent on countless external factors that will impact your operations and the decisions you make. With advanced analytics, you can see these factors at all times and ensure that the plans you make will succeed on a daily, weekly, and monthly basis. Real-time technology is a must, but it cannot live up to its potential without advanced analytics.
The final issue that you should be aware of in your S&OE process is over-expansion. Ideally, your S&OE planning workflows will provide you with fast and accurate information, optimizing your decisions and operations. While this is the goal, it can lead planners to try and expand these processes into other departments. While the core values behind S&OE are great for any department or project, the process as a whole is not designed that way. The primary value from S&OE is rooted in its definition as a function. If it begins to get mixed in with operations such as process planning, it may no longer be able to provide the specific clarity and insights that it could before. Additionally, overloading your system with too many workflows could reduce its ability to optimize them. Remember, it's about quality – not quantity. The best practice is to clearly define your S&OE process and stick to it.
S&OE is an important and helpful process to any supply chain, especially if you are looking to optimize S&OP in your organization. Maximizing the value of S&OE through real-time technology and advanced analytics, coupled with a clear strategy and definition, will significantly increase success in short-term goals. By enhancing this, your long-term goals will be more successful as a result. Overall, S&OE closes the gap between sales planning and operations, addressing short-term operations that impact the entire supply chain network. By acknowledging critical challenges that can hold back the success of your S&OE, you will significantly improve supply chain operations. Utilizing these tips, you will see significant benefits in managed inventory levels, asset utilization, and adherence to production schedules. This process is crucial to the success of today’s supply chains.
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