Is your ERP working for you? Or against you? Sometimes businesses can get so entrenched in “how we’ve always done things” that they don’t see how the old ways are actually hindering their forward progress. And when it comes to a smoothly functioning sales & operations planning (S&OP) process, this hinderance can become fatal. S&OP is a constantly evolving, cross-departmental, high-level set of processes that are deeply entwined in and around multiple business units. It focuses on developing a future outlook, using historical data as its source material. Being locked into an archaic ERP system can throw up a brick wall in front of that future vision. To be sure we’re all on the same page as we get started, here are brief summaries of the major terms we’re working with today, ERP and S&OP.
Is your boss starting to ask uncomfortable questions? Like what your average order cycle time is? Or what the latest shrinkage numbers are? Sounds like it’s time to line up your metrics and develop a solid plan for tracking and reporting to management.
It’s a story one hears surprisingly frequently: a mid-sized enterprise company adopts a new mega-ERP solution, and they’re almost immediately mired in constant disruptions. Of course, changing out your entire IT infrastructure all at once (instead of piecemeal) is bound to cause some short-term disruption, especially if the process is long overdue—but that doesn’t account for all of the late or missed orders, the expensive IT support requirements, and other issues that we see in these scenarios.
Topics: Postmodern ERP
How are you using your ERP software? Strictly for resource planning, as intended? Or are you stretching that definition to include aspects of your supply chain management needs as well? ERP solutions are an offshoot of financial software, and most of it functions as such and can be clunky when pressed into alternative uses. A dedicated SCM software solution, on the other hand, is as flexible and multifunctional as your supply chain itself. Think of it like this: would you rather build your personal daily calendar out of an Excel spreadsheet, which is totally doable, or just use a ready-made calendar tool like Google Calendar? Yes, both are workable solutions, but only one is actually made to help you keep track of lunch dates and offer reminders for those important meetings you just can’t miss.
Demand forecasting plays an important role in manufacturing. That fact isn’t changing; what is changing is how it’s done. Whereas in the past, forecasting had an aura of magic about it, relying heavily on the intuition and experience of the planner doing the forecasting, today it’s largely a data-driven practice. Before Industry 4.0, historical data was combined with gut feelings to produce a sort of crystal ball-like prediction of what the future held for the company in terms of demand and buyer behavior, and by extension what the company should focus on producing. Everyone basically crossed their fingers and hoped for the best. Post-Industry 4.0, this has changed dramatically, with a heavy reliance on advanced predictive analytics being fed data from IoT sensors deployed throughout the supply chain.
In the past few years, supply chain digitization has evolved from a hypothetical into a reality for many manufacturing businesses. The digital supply chain has become in many ways a key component of the rise of Industry 4.0, pushing businesses to adopt increasingly digitized planning and reporting solutions cross-operationally in order to stay competitive. Going forward, digitization’s importance is likely to continue increasing as companies strive to build more integrated and transparent operations. Here are a few fascinating facts about digitization in the supply chain.
No matter how sophisticated your methods, or how intimate your knowledge of the field, no demand or sales forecast will ever be 100% accurate. Just as supply chain disruptions are simply a fact of life in the world of manufacturing, deviation from a your expected outcomes are unavoidable. Given this state of affairs, you may be wondering if it’s worth expending resources on improving forecast quality. This feeling is understandable, but while there will always be a gap between expectations and reality, the rise of Industry 4.0 has improved our ability to predict future outcomes. With modern IT solutions and business processes, it’s possible to escape the past-oriented planning models of yesteryear (which fail to account for future developments) and drive towards a more future-oriented approach.
With a name like “intelligent planning,” it’s hard to imagine that many companies would express a strong preference to do the opposite. And yet, despite intelligent planning’s status as a potential value-added proposition with the ability to smooth out production and transport workflows, many businesses have been slow to implement smarter scheduling and operational planning processes. The reason for this is simple: many modern manufacturers are stuck in the past when it comes to data visibility and planning workflows. Production plans created with pen and ink or Excel spreadsheets can never provide the level of agility, flexibility, or transparency that a lean supply chain requires, but many companies’ planning workflows are unable to evolve do to widespread planning silos and shadow IT.
Although automotive manufacturers have been hearing for years that Big Data is the next big thing, studies often show that executives, not just in automotive but across many different industries, fear that their organizations aren’t ready to take advantage of the new advancements in analytics. Big Data analytics can and will be a huge value-added proposition for companies hoping to stay competitive in the world of Industry 4.0, but it’s true that reaping the benefits of new technological insights often requires significant changes in workflows and IT infrastructure. Luckily, these changes are often not as daunting as they first appear. Here are a few suggestions for getting the most out of your advanced analytics.
Imagine you’re playing musical chairs. The music starts and stops and your instinct is to rush to the nearest seat before your competitors beat to you to it—but instead of a circle or a row of chairs, the chairs are scattered and hidden around the building at random. No one knows how many chairs there are, and no one is sure how to reset them before the next round begins. Surely this would be a confusing way to play the game, just as it would be a confusing way to run a business. And yet, many companies do just that, keeping real resource allocation hidden within planning siloes and mission critical data obscured by layers of disconnected IT infrastructure. The result is that long term cross-operational planning becomes impossible, with planners stuck in a reactive loop of constantly responding to roadblocks without the ability to be proactive. Integrated planning has long been touted as cost saving solution for complex businesses, one that specifically addresses the break-fix mentality that mires companies in minute-to-minute logistical snafus, but what is it, exactly, and how does it work?