Three Key S&OE Trends for 2017

The manufacturing industry is changing: with the advent of Industry 4.0, an isolated supply chain is no longer sufficient for maintaining a competitive presence in the global market. In 2017 and beyond, Sales and Operations Planning (S&OP) will continue to move to a Sales and Operations Execution (S&OE) mindset, with a deeper focus on integrated processes, big data and transparent communication. S&OE represents a new frontier, one that industry leaders like Gartner are just diving into. Here's a look at how it will change the manufacturing industry. 

1. Seamless, Transparent Data Integration

Data is the backbone of Industry 4.0, which is why savvy supply chain leaders have already turned to data to revolutionize their manufacturing processes. While most supply chain managers have already begun collecting data, 2017 will see a further push to share and use that data in novel ways:

• S&OE leaders will focus on identifying and developing business-relevant analytics that can be put to use across the whole organization. 
• Supply chain analytics will be embedded in business function, informing both strategic decisions and tactical ones. 
• The concept of Big Data will influence the data collection and synthesis process, empowering leadership to better identify key performance indicators and forecast performance. 

Furthermore, industry leaders will continue to look for new ways to integrate predictive analytics, that is, using data proactively rather than merely reactively:

• Data will be available in real time, promoting more nimble and accurate predictive forecasting capabilities. The conventional approach to S&OP requires an occasional look back at the data whenever it's time to set new goals fo the coming year. But as data continues to make its way into every link in the supply chain, we can truly use it for S&OE, to respond in real time based on what's actually happening, rather than potentially outdated strategic predictions. 
• Predictive analytics models  become a key driver of strategic decision making. The integrated supply chain will be only one source of data; with input from sales, marketing and even product development, predictive models will be much more robust, and therefore more reliable, than ever before.

2.  An Emphasis on Collaborative Insights, Forecasting and Communication

There's often a gap between the "strategic horizon" and actual execution in the supply chain, where many things change without much warning. That's why S&OE represents such a promising approach; it creates a continuous feedback loop that closes that gap between strategic forecast and reality.  The availability of transparent data across (and even beyond) an organization can dramatically change that in several meaningful ways: 

• Enterprise resource (re)allocation: The ability to reallocate resources at the enterprise level is a prime example. According to Supply Chain Trend, about 90% of companies allocate resources only once a year as they create their budget. Yet companies that reallocate in response to market changes generate 30% more revenue on average. In the coming years, S&OE leaders will certainly be called to lead ongoing discussions about enterprise resource allocation based on data from the supply chain and the rest of the organization. 
• Rolling forecasts: Like resource allocation, forecasting frequently occurs only once a year in conjunction with budget creation. This makes it more difficult to make adaptive and adroit decisions, especially once the long-term forecast has proven inaccurate. S&OE leaders will move toward providing rolling forecasts as key communication tools for identifying gaps and opportunities throughout the year.
• Strategic alignment: It should come as little surprise that companies very experienced in S&OP are about 58% more likely to list strategic alignment as a key activity.  Achieving true strategic alignment is a process, just like the integration of Industry 4.0 capabilities. We predict that in the coming years, the manufacturing industry will collectively move toward a model of strategic alignment, powered by the implementation of new S&OE principles. 

3. Continued Transition to a Consumer-Driven Supply Chain

The supply chain of the future is exceptionally nimble, relying on people, devices and machines to interact with and respond to one another in real time. For the S&OE professional, that should signal new opportunity. Even if your manufacturing enterprise doesn't deliver directly to consumers, the principles of the consumer-driven supply chain still apply — and can still benefit your organization. 

The perfect example: building the capacity for customization. By building a responsive, integrated supply chain, you increase the supply chain's ability to offer more individualized products. Contrary to conventional wisdom, these products can actually yield higher margins. The key is to build manufacturing functionality around desired outcomes, which may be a relatively new challenge for many S&OE leaders. 

These three trends will undoubtedly continue to earn attention from the manufacturing industry. What trends have you spotted in S&OE, and how will they impact your supply chain operations?