How to Move S&OE Beyond the Spreadsheet
Nick Ostdick - April 27, 2017
In today’s modern manufacturing landscape, the last vestige of outdated or antiquated practices is the Excel spreadsheet. Once used as a way to organize, track, share, and analyze data, the spreadsheet has long outlived its usefulness in modern planning and production schemes. The manual input and human intervention needed to facilitate effective spreadsheet use has been replaced by real-time process automation in an effort to streamline planning and production processes and increase overall efficiency.
However, S&OE (sales and operations execution) is one strategy too many manufacturing companies deploy via the spreadsheet. Though a relatively new concept in supply chain planning and management, S&OE has, in large part due to its ability to glimpse the planning and production sequence on a micro, daily level, defaulted to the spreadsheet as the primary mode of operation.
But given the integrated nature of today’s manufacturing industry, and the power of S&OE to influence planning and production programs in the short, mid, and long-term, spreadsheets are perhaps the least effective method of working S&OE into a larger manufacturing and supply logistics scheme. With this in mind, let’s first examine a brief definition of S&OE and its importance in modern manufacturing, and then discuss how to effectively move S&OE beyond the spreadsheet.
What do we mean by S&OE?
Before we can explore how S&OE can help companies reduce supply chain costs, we must first operate under a fundamental understanding of S&OE and its place in a global supply chain management. As defined by Gartner, S&OE functions as a quick, short-term snapshot of the overall supply chain situation for planners and managers to make vital course corrections on a weekly basis to better create long-term strategies. S&OE acts as a demand planning supplement or safety net to detect the possibility of bottlenecks or breakdowns in larger-scale planning platforms.
In addition, whereas more traditional S&OP strategy and annual planning often deal in forecasting, simulations, and other hypothetical supply and production scenarios, S&OE tracks actual demand and production metrics in real-time for a more accurate picture of the demand and production stages. By monitoring actual demand and production data via real line items and data, S&OE provides planners and managers an early warning system that helps ensure smooth production cycles in the mid and long-term.
How to move S&OE beyond the spreadsheet
Now that we understand S&OE in theory, the next logical question becomes: How can planners and manager move S&OE into the future by ditching the traditional spreadsheet? What is the value proposition of undertaking such an initiative? What benefits can companies experience by pushing S&OE beyond the boundaries of the spreadsheet? For example, let’s take the following two modes of leveraging S&OE in a fully-integrated fashion:
Advanced analytics. While most supply chain leaders have already integrated diagnostic and descriptive analytics, the manufacturing industry has entered the era of advanced analytics. These analytics include technologies like automation, machine learning, and Big Data. They also build on Industry 4.0 functionality, which often includes an array of devices that interact with each other. Advanced analytics have multiple cost benefits, ranging from improved asset utilization to more successful product launches.
In addition, because advanced analytics relies heavily on intelligent solutions and software platforms, spreadsheets are no longer viable as a vehicle of organizing, tracking, and analyzing data. Incorporating advanced analytics not only gives planners and managers greater insight into their overall supply situation, but it forces them to deploy more digitized platforms across the entire value chain.
Alignment with S&OP (sales and operations planning) for strategic value. Though conventionally regarded as part of the same process, S&OP and S&OE are actually two discrete processes with a symbiotic relationship. While S&OP should focus on the tactical horizon (usually the next three to 18 months), the S&OE process addresses short-term operations (generally zero to three months). By carving out S&OE from S&OP, supply chain leaders allow their S&OP team to look ahead again. The S&OE team can respond proactively to supply chain volatility, limiting the need to expedite raw material orders and reschedule production. Meanwhile, the S&OP team can work closely with business leadership to align the supply chain with overall business goals.
However, in order to align these two processes for maximum growth and efficiency, planners and managers can no longer rely on a silo-based method of planning like the excel spreadsheet. To foster cross-organizational communication, collaboration, and goal synchronization, manufacturing companies must reject the spreadsheet and embrace more integrated planning and production programs to facilitate enhanced sales, procurement, resource and job allocation, and transportation.
Value of moving S&OE beyond the spreadsheet
As you can see, relying on the spreadsheet to successfully deploy an S&OE strategy is similar to using a payphone in today’s smartphone-based world. Spreadsheets simply don’t provide the enhanced visibility, agility, and transparency in planning and production programs necessary to leverage the most out of S&OE. At the end of the day, spreadsheets or other manual data inputs are essentially holding companies hostage when it comes to deploying a S&OE strategy designed to help manufacturing companies operate more smoothly, with greater levels of responsiveness, and a deeper understanding of how their value chains function.
- The Vital Role of Advanced Planning and Scheduling in Manufacturing Excellence
- Logistics Success Story: Building a Better TMS in the Cloud
- Retaining Top Talent: The Strategic Role of Supply Chain Planning
- Rising Competition in the Automotive Industry: How Chinese EV Carmakers are Forcing Traditionals to Innovate
- How Can Cloud Platforms Support Supply Chain Management