On a recent customer engagement the project team experienced issues getting acceptance from manufacturing teams for the proposed new planning processes. The reason: “The plan should be done in the factory”; “we have full visibility of current inventories, orders, production output” and so on. This however was primarily a language issue: Are we talking planning or scheduling? Once we explained the difference both teams calmed and agreement was reached. So, what’s the difference, you ask?
One way to differentiate is looking at an example. The daughter of a friend in Europe and her friend graduated from high school and were planning a multi-month USA road trip. She did her planning extensively: Continue reading
This month it’s exactly 20 years ago that I first traveled to the corporate headquarters in Houston to participate in a worldwide project to redefine the global planning process for Compaq Computer Corporation. At the time we did not call it S&OP, we called it supply chain planning. Our challenges then? We had 8 levels of judgment by sales, product managers, planners and procurement between the forecast in the sales offices and what we communicated to our suppliers as ‘the plan’. As you can imagine, with so many people making changes to the plan, the outcome was probably less reliable than rolling dice. When we started our journey towards a global S&OP process our suppliers awarded us the title of “least reliable in the industry”. Continue reading
In my years as Research Director at SCC it was pointed out many times to me that we (accidentally?) omitted “one of the most important metrics in supply chain: Forecast Accuracy”. Many people believe this “It’s all about forecast accuracy” to be true. In practice it is not however.
I agree that garbage-in, garbage-out does apply to S&OP just like every other process. Continue reading
Here’s the deal: You know your supply chain is special and using a one-size-fits-all approach like Sales & Operations Planning (“S&OP”) is not for you. Or you operate a process that is too complex. Or maybe it doesn’t require such a complex approach. And then when you tried it; the statistical forecast was inaccurate and executing the plan resulted in shortages and excess at the same time. You know you are right: S&OP is not for you. Or is it? Continue reading