Integrating Supply Chain Solutions
When oversimplified, Sales & Operation Planning (S&OP) is the iterative process behind optimizing Sales, Marketing, Product Management, Finance, Operations & Post Sales. It provides Executives from cross-functional organizations, a framework to collaborate and maximize utilization of its’ resource and ultimately optimize productivity across its’ entire value chain.
Why should this be of interest to you?
In a complex multi-matrix Enterprise environment, your goal may be to accurately measure current and future Demand variables across each node of your value chain, hopefully maintaining accuracy and consistency.
Or in an isolated functional organization, you find yourself responsible for improving any one of the following (or so you are told):
- Demand Generation
- Improve Sales
- Increase Revenue
- Reduce Cost (of Business Operations)
- Optimize Throughput (Plants, Production line, Time-to-market etc…) and the likes
I am assuming (and sincerely hope) you already leverage technology to optimize your specific business area or areas. If not, this blog can serve during your technology selection process.
Let’s step back…so we can move forward.
The Road so far for S&OP Technologies:
Since its conception in the 1980’s, by Richard Ling, S&OP Solutions has evolved to a significantly mature state. We also may know them of SCM Systems. SCM’s core strength is in its ability to tailor ad-hoc processes so to meet desired results; while accommodating varied levels of organization maturity. This allowed it to evolve continuously and iteratively (we call it agile now). However, when compared to other technology solutions, it’s evolution over last 25 years, appears dwarfed. Why?
Our flaws are often the mirror image of our strengths. And so it has been for SCM Solutions.
Through its evolution into Supply Chain Collaboration (SCC), S&OP has remained focused in hyper-optimizing specific functional areas with bare minimal process automation, limiting itself to critical business information. Although this selective bias allowed us an ability to measure only some of the core KPI’s (revenue, performance etc.), it made it impossible or cost prohibitive to measure the intangibles – Constraints, Channel Behaviors, and Cross-functional efficiencies.
Only a handful few, likely 20% of the Fortune 100, may have the capital to muscle up and create this custom visibility across isolated applications. The rest of us will have to looked into the future…
We can better understand this as we find S&OP’s drive to morph itself into Integrated Business Planning (IBP) through early-late 2000s. IBP (often touted as the Big brother of S&OP) is a term coined by OliverWight group and widely adopted by leading Solution Providers.
“The whole is greater than the sum of its parts” — Aristotle. And that’s how S&OP technologies will continue to evolve.
The differentiating factors:
1. Existing investments in isolation (ERP, CRM, APM etc.) CANNOT be scaled up efficiently to meet IBP needs. Need for an Integrated Ecosystem has driven this surge in API driven frameworks across all products.
2. Best-In-Class S&OP applications are already available, but they appear optimal in a silo and too difficult (or expensive) to be tightly integrated.
3. Internal Maturity alone will not determine success. Improve Maturity of your Partners, Suppliers, 3PLs etc. ecosystem as well.
4. Further, optimize the Speed & Cost of Doing Business? Choose products which allow: Rapid Deployment, Mobile-Enabled Enterprise, Omni-Channel Management, Private/Hybrid Cloud etc.
5. Real-time Demand Planning: Extend your core Application modules to mobile endpoints.
6. Data & Everything in between: With access to disposable (read relatively inexpensive) Cloud Storage, we can now track all Business-behavioral data. Mine them based on your own algorithms (iterative evolution) to pro-actively determine meaningful changes – like channel behaviors,
7. Leverage IOT: IOT will significantly improve Visibility of Goods across the Fulfillment, Transportation phases. Industrial IOT (IIOT) will disrupt and revolutionize the service levels which 3PLs are able to provide today (…a future article)
With the stabilization of Best-in-Class frameworks across isolated Applications (thanks to SaaS), we find a spike in the overall maturity curve for applications within a functional area. But these isolated SaaS Applications may provide the maximum intrinsic value because of the issues we discussed above.
It is not a surprise that SCM Applications demonstrated a 10.8 percent annual growth accumulating a $9.9B in 2014. While the SCM Cloud demonstrated an above-market growth of 17 percent.
Companies who are positioned with a Technology Stack, instead of isolated applications, can provide exponential value. Primarily from leveraging its eco-system and in tightly coupled process integrations, pre-baked into the environment. Hence, the top 3 market leaders – SAP, Oracle & JDA Software, controls a whopping 44.8% market share in 2014.
By Sourin Paul