The 70% Enigma
I recently read a roundup of all the research Gartner Group has published around sales and operations planning. I’m struck by the fact the research points to 70% of companies are at a maturity level of 2 or lower even after 30 years of S&OP chest beating by the supply chain industry.
The supply chain and software industries have several high-profile awards and distinctions. We, along with our customers, have been fortunate to win many over the years. There is another award program that is very special to us, our SAILS Award.
Estimating future demand is one of the most fundamentally valuable, but frustratingly difficult, challenges in supply chain optimization. By “Demand Forecasting,” I mean the effort to increase forecast accuracy and customer service levels through better perceiving, predicting and shaping the full range of factors that determine how well your product portfolio satisfies market needs. No other aspect of supply chain optimization has greater impact on profitability.
Today’s product portfolios can contain hundreds of thousands SKUs. In some cases a company must manage several million. This is not to say a company will have this many product families. In fact, many of these SKUs are based on product configurations within a product family. For example a style of shoe can have a SKU for each gender, color, size and width. A family of sofas can have individual SKUs for fabric, color, pillows, and legs. A USB memory stick can have variations for memory size, color and indicator light.
Interest in inventory optimization continues to increase as companies seek a more efficient way to reduce excess inventory while maintaining or improving customer service levels. Multi-echelon inventory optimization (MEIO) is also playing a larger role in the sales and operations planning process (S&OP). Recently I sat down with Sean Willems, Ph.D., associate professor of Operations Management at Boston University's School of Management and Chief Scientist at Logility, to get his thoughts on inventory optimization misperceptions, S&OP, and centralized vs. decentralized initiatives.
What do you want to achieve? Where does your company want to be in 12, 18, 24 months? Do you know? If you don’t know where you are headed, any road will take you there. How will you know what success looks like? In today’s uncertain times, a clear vision and strategy of where you need to be is the key to rally the company and propel your business forward; forward into new markets, new geographies and ahead of your competition. Success lies in the ability for your company’s stakeholders to tie your goals, strategy and execution into a single, measurable plan.
CFOs strongly believe good supply chain performance is vital to financial success and studies have shown a majority of CFOs believe the supply chain is directly linked to their ability to meet corporate objectives.
For these reasons, the supply chain is a natural focus for CFOs. It determines how cash will flow through the business and where capital will be invested to fuel the company.
ChainLink Research and SupplyChainBrain just released “Business Priorities 2012 – Research and Results” which takes a look at where companies will invest in the coming year. The report provides a cautionary, optimistic view of the coming months saying, “Many unsettled issues are still outstanding […]. And yet, our respondents do expect business expansion and intend to invest to make it happen in 2012.”
While the economic climate may be uncertain, many companies realize they have to invest in areas such as supply chain management software to be competitive and profitably grow. [...] [..]
Consumer Goods Technology recently released its 2012 Consumer Goods Technology Reader’s Choice survey results. In Supply Chain Planning, Logility was voted highest in customer experience of all solution providers. This recognition highlights our dedication to developing supply chain software that exceeds expectations and drives tangible results for our customers.
In addition, Logility was named a top supply chain solution provider in both supply chain planning and supply chain execution for the 12th consecutive year.
The article features Lee Dame, vice president of supply chain at CooperVision on his thoughts of Logility. "Logility's robust product functionality and great customer support allows us to effectively manage Cooper Vision’s complex supply chain, improve customer service and become more sophisticated in our supply chain approaches."[..]
Dennis Berman at the Wall Street Journal recently said analytics will change your day-to-day world more than you know. In his article, So, What’s Your Algorithm, he points out that computer systems are now so powerful they can harvest vast stores of data in real-time to make the decisions (or recommendations) for you to act upon. The article provides examples such as analyzing the credit worthiness of tens of millions of homeowners as well as how, by analyzing traffic flows, the system can tell a driver the most efficient route to take on any given day.
How far is this from reality?