Why did the manufacturer choose to implement S&OP?
The reason the manufacturer wanted to implement S&OP is because the market demanded better planning methods after a turbulent time. The supply chain has a lead time of several months. It is essential that the planning horizon is longer than that. The huge demand during the Corona pandemic led to higher inventories that remained high when demand slumped. This put more emphasis on inventory management than before. 4Supplychain Consultant Olivier Berghuis: “But the company also wanted to be able to respond to new developments at the right time.”
Why choose an external party for implementation of S&OP?
The move to S&OP and the change from operational to tactical planning was ideal for a consulting firm. “Our client’s team was quite operationally involved. Then it’s beneficial to hire an external party who can step back and work on process improvements.”
What areas of improvement were implemented?
First, we created an interactive planning system that links sales planning, purchase planning, inventory projections and financial forecasting. It allows the company to proactively make planning decisions and choices. In addition, we added KPIs such as Forecast Accuracy, Bias and stock targets to this.
Because we had to act quickly, and remain pragmatic, we set up the system in Excel. Although it is not a permanent solution and has risks, it helps for now. Second, we placed ownership for the planning with one person. Finally, we started working with more visuals that allowed us to add focus, such as red flags for things that need attention.
The new planning process is something the company will benefit from in 2025, Olivier expects. For example, merging the data from the various sheets showed that one supplier had confirmed far more production than is feasible. “We started talking about that. As a result, we avoid missing out on potential sales opportunities and the possibility that insufficient deliveries could be made during the peak season.” Also, thanks to the S&OP approach, it is now easier to take promotions into account. “Risk analyses are now part of the process.” We now expect more control over inventory, better service levels and reduced logistics costs by implementing this S&OP process.
What part of S&OP adds the most value for the retailer?
The manufacturer has more insight that helps make decisions. “That’s really one of the gains for the organization. People can now make decisions based on facts and good forecasts. Really seizing opportunities comes a lot closer with that.”
Want to know more about 4Supplychain S&OP capabilities?
Check out our S&OP page: Link