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.
Today’s global manufacturing supply chain is rapidly evolving and maturing thanks in large part to globalization and the advancements in technology and supply chain theory. As a result, manufacturing companies are tasked with competing in new and emerging markets often times with the same or limited amount of resources and manpower.
This is where S&OE (sales and operations execution) can be an extremely important value proposition for companies in reducing costs associated with their supply chain management. In alignment with lean manufacturing and supply principles, S&OE provides companies a method of checking the pulse of their overall supply situation in order to make critical adjustments for short, mid, and long-term success and viability. And because much of S&OE relies heavily on core industry drivers such as Industry 4.0, digitization, and other technological platforms, companies who embrace S&OE can often see significant enhancements of processes across other touch points of their value chain.
It was the Scottish poet Robert Burns who said it best: “The best laid plans of mice and men often go awry.” This sentiment is perhaps no more true than 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.
But to cut the complexity of mid and long-term planning and supply chain management, planners and managers have a relatively 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.
In today’s global, interconnected automotive supply chain, the technology and software solutions a manufacturer deploys are just as important - if not more so - as a company’s supply logistics and management strategies. Because so many of the critical actions and decisions in the supply stream take place in a digital environment, the right technology can either propel a manufactuer toward robust growth and productivity or relegate them to a static position of efficiency. In short, identifying the right supply chain technology for a specific supply network model can be a make or break decision for companies competing on a global stage.
What further complicates this crucial decision is the sheer number of available technology platforms and software solutions automotive manufacturers have at their disposal. The volume of choice and variance between software solutions can be a significant pain point for planners and managers, especially as they search for the most effective technology with the greatest level of integrations and enhancements to leverage lean supply chain principles.
For companies in the automotive industry, growth in large part depends on the success or failure of your supply chain. In a global, volatile, and variant-rich industry, the ability to seamlessly move products from the production floor to your customer’s door is top priority for supply chain planners and managers, and companies that achieve this desired result are able to leverage significant advantages over competitors when it comes to growing profits, revenues, and customer bases.