IT in Manufacturing


S&OP planning

December 2010 IT in Manufacturing

Sales and operations planning can yield a competitive edge.

Sales and operations planning (S&OP) is a critical set of business activities that lies at the centre of business planning. S&OP addresses planning at several levels: strategic, tactical, operational and execution. The scope of S&OP therefore ranges from yearly (including budget), monthly, weekly and down to hourly planning and scheduling. It is fundamental to manufacturing, and every business that makes widgets needs to have some form of S&OP in place. Yet, surprisingly, despite manufacturing companies often having invested heavily in transactional systems to support manufacturing processes, the S&OP process is frequently run on spreadsheets.

There are many reasons for this: for example, formal S&OP training is based on spreadsheet models to help students build up a conceptual understanding of the subject. Another reason is that there are no silver bullet S&OP applications available, and if you happen not to be running the all-singing, dancing ERP, then bad luck. Fortunately, this environment is changing and with the increase in collaboration between business process automation, performance management and event management technologies, this is all changing.

So what is the problem?

S&OP planning is generally based on a model of the business that matches supply, finite production capacity and demand, sets operational and financial targets and monitors execution and tactics to adhere to the plan. Yet, those in manufacturing will agree, these plans are useful to set objectives, but a large degree of tactical decision-making is required when things change, as they tend to do in reality. Suppliers fail to deliver raw materials on time, production plants break down, customer orders hardly ever adhere to forecast, exchange rates (and prices) fluctuate and more.

It is possible to manage the tactical decision-making on spreadsheets, but this will not achieve an optimal result. A good S&OP system should facilitate collaboration with suppliers and customers, react to variations in plan, constantly optimise production and distribution networks, be able to compare multiple what-if scenarios against a baseline and keep historical records of decisions that can be used to improve future tactics. Anyone who has used a spreadsheet beyond the ‘breaking point’, where the complexity of the model is beyond the understanding of the creator, will understand the limitations of a spreadsheet-based approach.

The ease with which spreadsheets are changed and multiple versions created has a further downside – it leads to an entrenched culture in the business that is resistant to growing the level of maturity necessary for maintaining global competitiveness – after all “if my spreadsheet works, why should I support the new disciplines required of a collaborative S&OP system that takes control away from me?”

S&OP redefined

A good S&OP application requires both strategic and tactical elements that present metrics in a relevant and simple way to decision-makers. Dashboards and KPIs that can react to real-world events and provide management with simple indicators on which to base tactical decisions are essential. Strong collaboration capabilities that allow customers, suppliers and production to agree on a ‘single demand number’ are critical. Event management and associated defined workflows are necessary to make any response to unexpected events resilient and coordinated across multiple departments.

Several vendors already have the building blocks of a good S&OP system in their technology stacks. However, coupling these components together to meet the requirements of a business is not a standard configuration process. Existing systems need not be ripped and replaced: an S&OP system is a new technology layer that binds these systems together to enable better decisions, faster reactions and improved collaboration.

This is unlikely to be a one-off process, but rather a series of incremental projects that start, for example, with a collaborative demand forecast, followed by tactical optimisation of production and distribution using a mixed integer linear programming model, then the implementation of event management capabilities and a performance management system that reports against strategic and tactical KPIs.

Each business is different, and this may not fit all. It is, however, important to recognise that the process is one of simultaneously maturing the business together with implementing a technology solution as an enabler. This is the same philosophy used when implementing ERP or any other complex system. In principle S&OP is no different, but rather a new frontier of manufacturing systems evolution. If ignored, however, the business stands to lose competitiveness to those which do execute S&OP effectively with the best tools available.

Gavin Halse
Gavin Halse

For more information contact Gavin Halse, ApplyIT, +27 (0)31 514 7300, [email protected], <a href="http://www.applyit.com" target"_blank"> www.applyit.com</a>





Share this article:
Share via emailShare via LinkedInPrint this page

Further reading:

Prefabricated data centres for an AI-focused future at the edge
Schneider Electric South Africa IT in Manufacturing
As AI technologies continue to advance, data centres are being pushed to the edge, reshaping their operations to meet daily demands. To meet the relentless demands of AI workloads at the edge, prefabricated data centre solutions offer a scalable, efficient and fast alternative to traditional builds.

Read more...
Quantum computing and its impact on data security: a double-edged sword for the digital age
IT in Manufacturing
Quantum computing is poised to redefine the boundaries of data security, offering groundbreaking solutions while threatening modern encryption’s foundations. For third-party IT providers, this duality presents both a challenge and an opportunity to lead organisations through one of the most significant technological transitions in decades.

Read more...
Next-generation road-legal race car.
Siemens South Africa IT in Manufacturing
Siemens Digital Industries Software has announced that Briggs Automotive Company (BAC) will move to the Siemens Xcelerator portfolio of industry software and use it to develop the next generation of its single-seater road-legal race car, Mono.

Read more...
Cybersecurity at a crossroads
IT in Manufacturing
here’s a growing unease in boardrooms, data centres and cabinet offices across South Africa. It’s not just about economic headwinds or political uncertainty, it’s about something quieter, more technical and yet just as dangerous - the rising tide of cyber threats.

Read more...
Enabling a sustainable industrial organisation
IT in Manufacturing
This article explains the top sustainability trends and key actions that you can leverage to become a more sustainable organisation.

Read more...
Navigating discrete manufacturing in South Africa through digitalisation
IT in Manufacturing
South Africa’s discrete manufacturing sector faces mounting pressure from global competition, fragmented supply chains and outdated infrastructure. In this complex environment, digitalisation is a critical lever for survival, resilience and growth.

Read more...
Africa’s pragmatic approach to AI and how data centres are enabling it
Schneider Electric South Africa IT in Manufacturing
In Africa, the current AI momentum is driven by a fundamental need, building a resilient digital infrastructure that addresses the real-world challenges of the continent’s communities.

Read more...
World first simulation of error-correctable quantum computers
IT in Manufacturing
Quantum computers still face a major hurdle on their pathway to practical use cases, their limited ability to correct the arising computational errors. In a world first, researchers from Chalmers University of Technology in Sweden have unveiled a method for simulating specific types of error-corrected quantum computations.

Read more...
Platform to accelerate supply chain decarbonisation
Schneider Electric South Africa IT in Manufacturing
Schneider Electric has launched Zeigo Hub by Schneider Electric, a powerful new digital platform designed to help organisations decarbonise their supply chains at scale.

Read more...
Future-ready data centres
IT in Manufacturing
The white paper ‘Future-Ready Data Centres’ by Black & Veatch outlines how integrating sustainable design principles not only helps meet ESG goals but also ensures reliability, operational efficiency and business continuity in the face of climate change and growing digital demand.

Read more...









While every effort has been made to ensure the accuracy of the information contained herein, the publisher and its agents cannot be held responsible for any errors contained, or any loss incurred as a result. Articles published do not necessarily reflect the views of the publishers. The editor reserves the right to alter or cut copy. Articles submitted are deemed to have been cleared for publication. Advertisements and company contact details are published as provided by the advertiser. Technews Publishing (Pty) Ltd cannot be held responsible for the accuracy or veracity of supplied material.




© Technews Publishing (Pty) Ltd | All Rights Reserved