Imagine for a moment that you’re on a flight from London to New York. You probably take It for granted that someone has charted an appropriate route at an appropriate altitude based on weather and air traffic patterns, and that departure, arrival, and flight time have all been carefully calculated based on past flights and current conditions. At the same time, no matter how much planning has gone into a flight, you probably also take it for granted that there is a pilot in the cockpit, measuring real-time information with her instruments and communicating with air traffic control to make necessary adjustments and course corrections as new scenarios emerge.
If you had walked onto a factory floor during the second or third industrial revolution, it would have been immediately obvious what was so modern about what you were witnessing. You would have seen raw parts being turned into complex products on a moving assembly line, or newly automated processes making use of modern industrial machinery and early computer networks. In the world of Industry 4.0, the so-called “fourth industrial revolution,” the differences in appearance might be more subtle. You might still see a mix of manual labor and automated, computerized systems carrying out various production tasks, while many of important innovation brought about by Industry 4.0 might remain invisible to you. You might even be prompted to ask, “what’s so modern about modern manufacturing?”
Imagine for a moment that you’re an employee at an automotive manufacturing company. Every year of two, the owners create and share a strategic vision for the long-term future with management. Managers, in turn, create shorter-term plans of several months to put the longer-term vision into practice with Sales and Operations Planning (S&OP). As an employee, you manage your day-to-day tasks in accordance with those plans, responding the small crises of the workday with whatever resources and insights are available to you. Perhaps in responding to these situations, you find yourself wishing that there was something to bridge the gap between S&OP and those day-to-day processes. Sales and Operations Execution (S&OE) is that bridge, and it represents the path to the most responsive possible supply chain.
Ask anyone in the manufacturing industry: No matter how hard you try, disruptions, exceptions, and bottlenecks are just part of the business. In today’s global, complex automotive supply chain where demand planning and production programs often shift and change depending on a wide range of variables and elements - everything from the availability of component parts to labor to facility capacity and job scheduling - the ability of manufacturing companies to respond and weather these variables is critical to remain competitive in an increasingly crowded landscape.
But to help mitigate the risks associated with global manufacturing, companies have a new tool at their disposal: sales and operations execution (S&OE). Coined in the last few years by supply chain industry publication Gartner, S&OE acts as a demand planning supplement or safety net to detect the possibility of bottlenecks or breakdowns in larger-scale planning platforms. This in turn allows planners and managers to create and deploy solutions to these disruptions to enhance each touchpoint of a company’s overall value chain.
Administering an integrated supply chain in today’s manufacturing industry is a tricky proposition. No matter how carefully and thoroughly planners and managers work to reduce volatility and uncertainty in any number of variant-rich industries, the complexity of a global manufacturing and supply stream means companies must work harder than ever to ensure their value streams are responsive enough to weather potential breakdowns, disruptions, shortages, and other obstacles in facilitating effective supply chain management.
We’ve talked in a great length on this blog about the elements of effective global supply chain management and the implications thereof. But while these are important discussions to have as manufacturing companies work to expand their footprint and growth their customer base, at the end of the day the developments in supply chain management only really matter insofar as they add business value for these manufacturing companies. Advancements in procurement, production planning, job allocation, and transportation management must equal enhanced business value for each partner stage in a production network or else these aspects are simply window dressing designed to give the appearance of lean production principles.
One of the most valuable assets manufacturing companies can utilize to increase business value is the idea of sales and operations execution (S&OE). Though something of a recent concept in global supply chain logistics, S&OE is a powerful piece of planning capability planners and managers can deploy to increase the efficacy of their planning and production programs, as well as enhance a number of other critical functions across the value stream such as resource and material procurement, optimized inventory management, and even job shop scheduling and job allocation.
Understanding the relationship between S&OP and S&OE is akin to the novel versus the short story. With the novel, an author more often than not takes the long view of the narrative, spanning large swatches of time with a multitude of characters in order to tell a fully-realized, fleshed-out, and satisfying story. On the other hand, a short story is a much more compressed form of narrative where the author focuses on one, two, or maybe three characters in a more narrow window of time with a specific set of themes, tropes, or conceits in order to give the reader a mere glimpse into the lives of those inhabiting the story.
Both of these narrative modes rely on similar principles of storytelling, but they deploy those principles in slightly different ways for a desired impact - the novel a more long-term, wide-ranging look at a world, and the short story a more compact, micro view of characters, situations, and contexts. The similarities and differences between the novel and the short story mirrors essentially the relationship between S&OP and S&OE in today’s global manufacturing and supply chain. S&OP allows manufacturing companies to create integrated demand planning between sales and production teams for the short to mid-term (the novel game) while S&OE gives planners and managers the capacity to examine their supply situation on a more micro level (the short story).
Flash back 10 to 15 years ago in supply chain management and you’ll find pretty fine divide between the planning and execution stages of production programs. At one time, long before the advent and proliferation of lean manufacturing principles, real-time data and reporting, and sophisticated technology platforms, planning and execution were viewed as two distinct processes where the impact each had on the other was far from realized.
To understand where S&OE (sales and operations execution) and S&OP (sales and operations planning) differ, let’s think about the game of golf. During a round of golf, you have to engage in two very different approaches to the game: the long game and the short game. The long game revolves around teeing off and how close or strategically you can position yourself with your first stroke. The short game, on the other hand, concerns how you engage each hole the closer you get to the green. While the long game requires strength and agility, the short game necessitates precision and discipline. Each approach, though fundamentally different, work hand-in-hand as a player works to drop the ball in the hole with the fewest strokes possible.
The difference between the long game and the short game is essentially the difference between S&OP and S&OE in today’s global manufacturing and supply chain. S&OP allows manufacturing companies to create integrated demand planning between sales and production teams for the short to mid-term (the long game) while S&OE gives planners and managers the capacity to examine their supply situation on a more micro level (the short game).
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.