Execution of S&OP through a sales and operations execution process is what sets top brands apart. 

Business planning is, of course, essential, but the real proof is in the execution. While sales and operations planning (S&OP) is critical to the creation of an overall business strategy to maintain a competitive edge, sales and operations execution (S&OE), along with a process to support it, should also be a top priority for your organization. 

S&OP Defined 

S&OP integrates plans for every department, combining the needs and opportunities facing customer support, sales, marketing, development, manufacturing, sourcing, and financial into one tactical strategy. Its intended purpose is to provide the information management needs to direct the business as well as create and sustain a competitive advantage.  

The goal of S&OP is to create an overall strategy that helps resource allocation and management meet customer needs while controlling costs. It operates at a high level to optimize supply and demand issues, product life cycles, and new product introductions, assigning a monetary value to each activity so they can be counted in the revenue goals.  

With S&OP, time horizons are relatively short – usually three months to a few years – and meetings are usually held no more than once a month.  

S&OE Bridges the Gap 

There’s an obvious day-to-day operational gap left by S&OP; you still need a way to deal with short-term issues for things like production, shipping, and equipment. The S&OE team has the primary goal of S&OP execution and solving problems to keep sales, supply, and production on target. This usually requires frequent as-needed meetings along with scheduled weekly gatherings. 

Sales and operations execution acts on any issues that affect supply and demand issues immediately, or that are foreseen in the next few months, forming the link between strategic and tactical activities defined in the S&OP process. With an effective S&OE process, your operation runs more smoothly and costs are better optimized because problems are quickly identified and solved.  

The Benefits of Integrating S&OP with S&OE 

Predictability is important. The implementation of an S&OP/S&OE process sets companies apart and offers tangible benefits. Best-in-class organizations report consistent, repeatable superior performance after implementing complementary S&OP/S&OE processes. 

Because S&OE supports the S&OP process by creating and disseminating an immediate plan that supports the overall strategy, the two processes together ensure clear and streamlined orders and a logical, achievable workflow. This keeps operational costs optimized. 

Additional benefits include: 

  • Improve forecast accuracy: Inaccuracies in a demand plan will cascade through the supply chain and increase costs, which makes it crucial to driving your plan using a valid market-driven forecast 
     
  • Inventory optimization: Implementing S&OE can reduce inventory and safety stock levels up to 45% 
     
  • Improve on-time delivery: S&OE can drive customer and brand loyalty by improving on-time delivery by 10% to 50% 
     
  • Align planning, budgets, and financial goals: Set departmental goals that will add up to your top-level goals across all departments, divisions, and locations 
     
  • Increase working capital: More working capital allows for more efficient inventory, payables, receivables, and cash conversion needed to run the organization 

Aligning S&OE with S&OP improves collaboration between departments and increases the involvement of middle management when making decisions. Companies can also build consensus between stakeholders on any changes to near-term plans and forecasts. This offers instant insight into the impact on revenue, manufacturing capacity, and inventory levels. 

Designing an S&OE Process 

The goal of a sales and operations execution process design is to create an end-to-end workflow that’s connected to the S&OP process. This means defining S&OE requirements, inputs and outputs, and data hierarchies. It’s also important to define the scope of S&OE – whether it begins immediately or with a specific use case. 

After defining requirements, the next step is to design the process. 

An effective S&OE process requires at least weekly meetings to review issues and decide on and perform the tasks to execute the tactical plan. This means including the right people, offering visibility where it’s needed, and using the right supply chain management solutions for both decision-making and data processing.  

It’s also important to identify deviations that trigger the S&OE process and require immediate action. This means having the flexibility to call an unscheduled meeting to deal with these issues without delay. It also means including individuals in the process who can make informed decisions. These could be people in strictly tactical roles or executives in planning and operational management.  

Essentially, S&OE requires data hierarchy granularity that isn’t necessary with S&OP. Mapping the S&OP plan to transactional data provides the visibility needed to understand if goals are being met and how deviations truly impact them.  

Use the Right Supply Chain Solution 

To effectively merge and implement S&OE with S&OP, you need a supply chain software solution to track forecast and inventory performance over time and allow you to visualize true rough-cut capacity and long-term capacity planning data.  

The right supply chain platform will greatly improve the success of your integrated S&OP and S&OE processes by explicitly showing what needs immediate focus to keep your supply chain running at peak performance.  
 
At Logility, we are committed to enabling our customers to operate the resilient and sustainable supply chain that will make them leaders in their industry year after year. 
 
Hear how Logility customer Red Wing Shoes leverages Logility solutions to meet its ever-changing business needs and rapidly expanding product portfolio. 

Know your vendors and apply consistent policies and procedures. 

Compliance is an ongoing challenge for businesses today. True corporate responsibility involves more than just your products and internal operations; it’s incumbent upon you to ensure compliance across the supply chain. Lack of supplier insight can result in your organization violating government regulations; working with providers who don’t share your company values; or getting caught up in trade embargoes, sanctions, and labor and social justice issues. 

As global supply chains and procurement scrutiny become more and more complex, risks increase and the range of stakeholders who demand a compliant supply chain has increased from simply regulators to investors, providers, partners, consumers, and the media. This means having a resilient supply chain strategy that includes visibility, transparency, clear communication, and collaboration.   

The Costs of Non-Compliance

It’s all about mitigating risk.  While the cost of compliance increases, non-compliance impacts finances as well as company reputation and ultimately your bottom line. 

Risks are dynamic, affected by everything from climate change to human trafficking to politics. For example, governments may enact new laws that affect worker rights. Supply chain disruptions such as these may force a business to find new inshore or offshore suppliers, all of whom must be thoroughly vetted for compliance with regulatory and corporate standards.  

Accurate data you can use to assess and mitigate risks up and down the supply chain is critical. Global businesses need complete supply chain visibility to fully understand activity and respond rapidly to risk and disruption. It’s important to remember that in today’s digital age, your company’s reputation can be undermined in mere minutes through negative social media activity.  

Here’s how to get a handle on your supply chain to safeguard against unintended harm and brand risk. 

Assess Your Current Process

Do you know how your current compliance process is working? 

Businesses have a responsibility to ensure their products not only move smoothly through the entire supply chain network, but also that all vendors are in alignment.  

software solution for managing compliance should be centralized to make sure that vendors comply with your standards, provide the information needed for good decision-making, and enforce accountability for all suppliers throughout the entire supply chain. It must also enable continuous improvement programs and Good Manufacturing Practices (GMP) by helping to identify areas that need improvement and create and manage corrective action plans. 

In addition, your supply chain processes should align with your customers’ expectations, and exception management should drive action to avoid fines and keep customer relationships positive. Your overall process should be efficient, with integration between trade compliances and supply chain processes. 

 If you do find gaps, inefficiencies, or negative impact in your supply chain processes, there are corrective actions that will go a long way to ensure compliance and mitigate risk.

Know Your Vendors to Ensure Supply Chain Compliance 

A digital platform for centralizing compliance management simplifies the complexities of both supplier compliance and management of corporate responsibility. Real-time data on vendor compliance means decision-makers have the information they need, when they need it, to mitigate risks to both corporate responsibility and regulatory compliance.  

Vendor scorecards based on performance metrics help ensure better sourcing decisions when used to assess and compare vendors and assist with onboarding. 

In addition, your supply chain teams should work to improve transparency and threat-detection skills: 

  1. Internally, it’s important to recognize and understand that the areas of compliance and procurement are converging. To gain efficiency and build resilience, collaboration between these departments should be encouraged.
  1. Accurate and up-to-date supplier data is required to verify all sources supplying raw materials, components or finished goods throughout all supply chain tiers.  
  1. Erroneous or out-of-date data costs time and money, as well as posing risk to your reputation. Make sure all your data is accurate and timely. 
  1. Verify your vendors are ethically and otherwise compliant by digging deep into reliable data to find vendors that fit your levels of certification. Maintain a vendor scorecard with profiles and performance statistics.  
  1. Use advanced analytics to manage risk while predicting possible areas of exposure; scenarios and simulations can help to assess the impact of disruptions and recommend optimal alternatives.

Maintaining supply chain compliance also means going beyond mere regulatory compliance. It’s important to know the expectations of customers, investors, and partners and to look at brand alignment. Your suppliers may meet all regulatory requirements but have undesirable attributes like a poor human rights record. Having a 365-degree view of every vendor in your supply chain is imperative. 

Watch this short video to quickly see how real-time vendor visibility enables full collaboration with the vendor ecosystem to promote discovery, evaluation and the communication of issues, thereby turning challenges into opportunities. 

Integrated business planning (IBP) is gaining traction as more companies look at refining their sales and operations planning (S&OP) process. It’s worth the effort to document what IBP means for your business, if for no other reason than you can’t implement what you can’t define. To that end, let’s reiterate the distinction between IBP and S&OP before we dive into some tips on how to make integrated business planning a success. 

The quick take: integrated business planning is long-range strategic business planning that combines volumetric and financial data into a single, highly visual comprehensive planning platform that delivers greater global visibility, more powerful multi-scenario analysis over longer planning horizons, tighter collaborative workflow, and a wider spectrum of alerts. 

Research firms, solution providers, and pundits have struggled to standardize the nomenclature. Some refer to it as sales and operations planning (S&OP or SOP). Some call it ‘sales, inventory and operations planning’ (SIOP). And then there’s ‘merchandising, inventory and operations execution’ (MIOE), for the retail sector.  

It’s useful to analyze these terms based on three overlapping planning horizons: executional, tactical, and strategic. 

Executional deals with balancing demand and supply over the near term, often within the span of the planning cycle. Tactical deals with the mid-term, which may mean anything from a few months to 18 months or more. Strategic deals with high-level alignment over longer horizons. Some call this Integrated Business Planning (IBP), while others also include tactical activities under the IBP umbrella. Here are some useful definitions: 

Sales and operations planning (S&OP or SOP) A traditional term whose definition doesn’t stretch far enough to cover all the bases including volumetric balancing of supply and demand. 

Sales, inventory and operations planning (SIOP) An attempt to emphasize the importance of inventory. Part of the basic S&OP process is the optimization of inventory. 

Merchandising, inventory and operations execution (MIOE) This is a retail industry synonym for S&OP. MIOE deals with the tactical level.  

Integrated business planning (IBP) Covers S&OP, SIOP and MIOE across all time frames. Whether you are in Sales, Inventory, Marketing, Purchasing, Production, or Finance, you are from the same business and are engaged in planning activities that are closely connected. 

The Power of Integrated Business Planning

According to industry research comparing the performance of companies that follow an IBP approach versus those that don’t, IBP users are:  

  • Better able to align supply and demand over the entire horizon  
  • More effective at collaborative planning and building real trust between stakeholders  
  • Able to reserve capacity at key suppliers earlier and more efficiently  
  • Faster to react to unexpected disruptions in the supply chain  
  • More likely to use alert-driven responses and adjustments  
  • Better at handling promotional demand. 
Tips for a Successful IBP Implementation 

From experience with thousands of customers, here’s Logility’s list of what the most effective IBP implementations have in common.  

The CEO owns the process. The CEO enables acceptance and delivery of IBP at all levels in the business, and must inspire the team to view IBP not as “another project laden with department-level redundancies” but simply how the organization operates. 

Sales contributes to the demand plan. Those closest to the customer have the best grasp of activity at the point of consumption, and therefore must be strongly involved and prepared to contribute to the demand plan.  

Finance is at the table, not a mere observer. The finance team’s participation is critical for testing different scenarios and protecting the integrity of financial projections. 

Think beyond the annual budget. IBP done correctly integrates the strategy with the business plan and ensures the delivery of both. In fact, you may find that IBP nudges your business toward a continuously updated two- or three-year financial plan.  

Don’t let details derail. Too many organizations make the mistake of plunging down rabbit holes and forming committees to explore minutiae. Looking at the bigger picture frees the organization to focus on higher-level planning needed for sustaining growth and improving margins. 

Get the culture right. Not surprisingly, IBP efforts often focus on process and data. However, the best deployment plans consider the cultural context and never lose sight of the following: 

  • A basic requirement for effective IBP is a culture that celebrates cross-functional collaboration not as a ‘nice-to-have’ but as a requirement for executing company strategy 
  • A culture accustomed to ‘delegating upward’ will bog down the executive review portion of IBP and reduce the speed of decision-making. IBP thrives when the lowest levels of the organization are empowered 
  • IBP places a premium on data-driven decision-making. But many challenging decisions will continue to rely on judgement. The culture should value seasoned judgment and not recast it as “guesses we made before we had all the data.” 

So get started on your journey to realizing the power of integrated business planning. Markets and competitors aren’t waiting for you. There are real insights and lasting business benefits to be had from managing strategic, tactical and operational planning with one platform.   

Take a look at this short video to see how Logility’s IBP solution supports accelerated planning and decision-making across the enterprise.  

The e-commerce boom has forced virtually every industry to rethink its customer experience. From groceries and clothing to raw materials and machine parts, customers expect to have their order fulfilled quickly, safely, and with products that are ethically sourced. And this demand is placing extraordinary pressure on supply chains to keep up. At Logility, we recognize supply chains all over the world have a lot at stake. We have listened to our customers, seen first-hand their challenges and triumphs, and watched obsessively how the future of commerce is unfolding. All that information inspired us to release an updated version of our digital supply chain platform to address the changes ahead. 

While the Logility® Digital Supply Chain Platform offers solutions to a diverse range of supply chain challenges, two recent supply chain capabilities come to mind when I consider the critical aspects of today’s customer experiences: automated order promising and traceability

Meeting demand with automated order promising 

Businesses that know exactly what’s in inventory, calculate accurate shipping times immediately, and deliver orders as promised are the ones that ultimately win customer confidence. Connecting the dots across the entire supply chain to achieve this edge requires complete inventory visibility and intelligent order orchestration. 

Logility’s latest platform release positions supply chains to quickly meet demand requirements with smart allocation and precise order fulfillment. With a combination of in-memory processing and robust analytics, our customers can respond to every sales opportunity with a delivery plan designed to optimize profitability, protect margins, and ensure customer satisfaction.  

Furthermore, the platform’s automated order promising solution dramatically reduces the time needed to calculate the delivery schedule through automation algorithms that tap into real-time intelligence on existing inventory levels, capacity constraints, and regulatory rules. Short-order change notices are handled with such efficiency that the supply chain feels little disruption, thanks to what-if analysis and modeling that preempt any unintended repercussions. 

Documenting the chain of custody with connected traceability 

When it comes to buying decisions, most customers across all demographics actively seek and advocate for brands that provide ethically sourced and environmentally friendly products and deliver them with safe and healthy labor practices. A recent Forrester study reported that 68% of highly empowered consumers plan to step up their efforts to identify brands that reduce environmental impact, while 61% currently look for energy-efficient labels and 47% regularly purchase organic products. 

The world of fast fashion has faced this “guilty until proven innocent” burden for years. But now, every industry is facing the same pressure from government regulations and changing public sentiment to reconsider its traceability capabilities. 

Logility updated this feature in the platform to document the chain of custody, from source to importer of record. The traceability solution centralizes supplier information across primary, secondary, and tertiary tiers and even further down the value chain. Proactive resolution of emerging risks is supported through anomaly detection, exception alerts, advanced analytics, and rules-based discovery of unauthorized or prohibited suppliers within the supply network. 

Most advantageous for our customers is the opportunity to be transparent with their customers. Logility users can document every transaction and create a compliance certificate that summarizes every point of exchange for products and materials and make the record easily accessible to customers who want it. 

Redefining the supply chain’s influence on the customer experience 

Staying flexible and agile, embracing the voice of the customer, and pivoting operations to meet their needs are challenging alone. But when you add the fast pace and easy access of digital channels, there’s no room for error. 

With the Logility® Digital Supply Chain Platform, businesses can rest assured that they have the supply chain capabilities and support to navigate today’s intensifying e-commerce landscape successfully. And with the added layer of automated order promising and traceability solutions, they can provide experiences that restore the trust of their customers and keep them coming back for more. 

Solve your complex supply chain challenges with automation, flexibility, traceability, and a multitude of other enhancements. Learn more about the Logility® Digital Supply Chain Platform. 

When a crisis hits, having the right advanced analytics to react to supply chain disruptions in food and beverage is your best defense. 

Supply chain disruptions in food and beverage (F&B) are many and varied: volatile commodity prices; safety and quality issues; high demand uncertainty and seasonality; constant promotional activity; perishability; frequent new product and brand extension introductions; exacting distribution requirements; complex manufacturing constraints; legal and regulatory restrictions, and fickle consumer tastes. 

In fact, here’s an excellent blog post listing the challenges and the foundational elements – people, process and technology – needed to build a strong and resilient supply chain in F&B. Drilling down, you’ll learn that demand planning, inventory, replenishment, manufacturing and Sales and Operations Planning (S&OP) capabilities are the building blocks of supply chain planning excellence. 

In the context of more normal times, we might use this space to talk about the planning and operational improvements available to F&B companies if they implement pre-built analytics solutions to manage, for example: 

  • Sales and operations planning (S&OP) 
  • Production efficiency 
  • Predictive maintenance 
  • Labor scheduling 
  • Demand planning 
  • Inventory and freight optimization
  • Traceability and compliance 

But these aren’t normal times, so let’s change the game, the tone, the degree of urgency. Let’s consider COVID-19, the Black Swan event that ended all Black Swan events – rare, highly impactful and, in hindsight, believed to be predictable. 

Quickly Changing Tack 

Imagine the following scenario: your boss arrives in your office and instead of saying, “Hey, let’s put advanced analytics on the supply chain improvement strategic roadmap,” she says, “The Board just met to talk about near-term steps we should take in response to the pandemic. Where can we see meaningful results in the next five business days?” 

Where would you start? 

First, you must assess your organization’s strengths and weaknesses. If your business has yet to embrace advanced analytics as a component of superior people, process and solutions, there is a silver lining. It will never be easier to convince company leaders that a resilient supply chain is critical. Begin by creating an advanced analytics roadmap. In short, don’t waste a good crisis. Here are five ways to get you started towards managing supply chain disruptions in food and beverage. 

5 Ways to Focus Your Analysis 

If your company has an advanced analytics practice in place, let the exploration begin. Comprehensive and configurable dashboards will help you see the potential for positive change across your entire supply chain. Remember, you have five days to make a meaningful impact. Here are some suggestions to help focus your analysis. 

1. First, know how your supply chain data influences your company’s financial performance. For example, if you know which suppliers are cash-constrained, you may have an opportunity to alter the discounting structure in your favor. 

2. Second – and this one is cultural – it’s a good time to tell analysts that for now there are no bad ideas. That said, your guidance should make it clear that reallocation of existing resources is preferred to numerous what-if exercises and lengthy trials, and that now is not the time to be developing new analytical capabilities. 

3. Speaking of reallocation, consider what it meant for your business as retail food demand reached unprecedented levels and spot shortages occurred. People weren’t necessarily eating more food; they were just eating it at home.  

Think about modeling the impact of diverting some products from certain vendors to others. Under the overarching goal of increasing consumer touchpoints, food destined for corporate and university cafeterias, cruise lines, airlines and restaurants could instead be sent to grocery stores, retailers and even direct-to-consumer. Maybe it’s time to revisit and revitalize the 10 least meaningful outlets in your current supply chain. Whatever the case, make sure you close the loop on the modeling exercise by looking at what has happened, for example, as restaurants have re-opened with limited but gradually increasing capacity and demand signals begin to return to normal. 

4. We are all familiar with the fact that consumers focused on the basics like bread, eggs, flour and toilet paper. This presents a perfect opportunity to simplify packaging and finally reduce SKUs, resulting in fewer set-ups. Some bakers have reported that they were once making 14 varieties of bread, and now they are making three.  

5. Finally, while companies must be careful about dramatically increasing production, it could be interesting to examine the effect of a pivot. Advanced analytics and an AI-powered digital twin help you do this. We’ve all read about breweries and distilleries retooling to produce hand sanitizer and other F&B companies helping their customers shift from a dine-in to a take-out model. 

Remember that all of you F&B supply chain planners have a distinct advantage: you’ve never known ‘normal’. Creativity, flexibility and resiliency are your normal. You’ve got this!

This blog post provides great insight into the value of a robust digital supply chain platform for the F&B industry in times of crisis. 

Descriptive, predictive and prescriptive analytics should be combined to optimize your demand planning processes. 

Some years ago, a 40-year-old Midwest process manufacturer with 40,000 SKUs finally completed implementing a new ERP system and quickly worked to combine all the new data with an array of other operational software, producing tons of new data daily. The company’s goal was to build a data-driven organization making fact-based decisions in near real time. Better forecasting and demand planning processes, which in the past had been beset by low accuracy and poor adoption, were a priority. 

Pulling data into a business intelligence tool in each department, the company started generating a new series of reports designed to meet the requirements of each department. But those reports soon generated disagreements across the sales, operations, marketing and finance teams. Data were inconsistent across groups, and despite endless graphs and tables, no one was clear on how to improve business using the information. After six months, the company still struggled to leverage any new insight and began reverting to Excel reports.  

Teams were disappointed. The spreadsheet reports took a month to produce and used all the capacity of two IT staff members. When the Finance Manager who had designed the reports resigned, the organization knew it had to figure out a better plan for using their data. 

New Beginnings 

With the evolution of the digital supply chain has come vast amounts of new data for every company. But there’s no guarantee you can use that data effectively. In fact, there can be as much risk in misusing data as there is in flying blind with no data.  Forecasting and demand planning can be a challenge because they require a significant amount of quantitative analysis and subjective management judgment.   

To really exploit your new data to gain an advantage, you need a clear analytical plan, specific metrics tailored to your situation, and an understanding of what analytics and reporting will help you to enhance your demand planning processes. This blog post outlines three types of inter-related analytical tools that you need to use in concert to get the best insight from your data. 

The Analytics to Boost your Demand Planning Processes

Sure, forecasting is the mainstay of demand planning. We generate a prediction from historic actuals, maybe bring in some external factors, allow management to edit the results, and publish new forecasts to drive planning, all of which works relatively well. But what we often miss is a good understanding of the market dynamics driving our predictions, and an understanding of whether our adjustments to the plan are optimal.  Integrating descriptive, predictive and prescriptive analytics will help you to improve your forecasting and demand planning processes. Here’s where they help. 

Descriptive Analytics in Demand Planning 

Descriptive analytics are the summary measures and metrics that provide insight. Why are our error metrics (MAPE, MAE, etc.) changing so much – or not getting any better? Often, we simply act on error measures. But we really want to know how forecastable our data is and what is causing any bias. Think of descriptive analytics as the means, medians and modes, the histograms and frequency distributions, and the variance measures that you learned in college. They are critical because they tell you the underlying structure of your data.  

The key descriptive measures for demand planning are the skewness and kurtosis of your sales data.  Skewness is the measure of lumpiness at a particular end of the distribution. If you have too much skew, you can’t use means effectively and should rely on medians. For example, you ran multiple promotions at different price points for different packages in the past quarter. If sales bumped up significantly below a certain price point, your forecast will be biased unless you keep the promotion going. Instead, you’ll need to segment products for your forecast or make statistical adjustments to dampen the effect.  Either way, you need a precise understanding of the bias and descriptive analytics will get you there. 

Predictive Analytics in Demand Planning 

Predictive analytics, practically, cover any effort to use the analysis of historical data points to anticipate what will most likely happen in the future. Time series forecasting is predictive – but that’s well documented. However, newer approaches like tree analysis can be used to segment or classify sales results and build predictions from resulting likelihood estimates. These methods are powerful in many situations. They overcome some of the big weaknesses of times series, such as an inability to deduce what factors are driving the forecast. These approaches work by identifying factors that differentiate high versus low sales and incorporate a time dimension in the results to determine future trends. 

Predictive analytics can also be used to assess risk around your forecast. Do you have very low accuracy levels compared to some reasonable benchmark? Why? In more than a few situations, we’ve built predictive models to understand the drivers of error versus the forecast. By targeting these drivers, we can reduce elements of error and ultimately improve the forecast. Regression methods are a good choice for building a model that can be translated into a decision tool. 

Prescriptive Analytics in Demand Planning 

Let’s say all our forecasting and market analysis is done and we’re reasonably happy with the results. We can increase inventory for spiking demand and clear our inventory for under-performers through pricing and promotion. But that’s reactive.  Prescriptive analytics are effectively recommendation engines that guide us to the best choice among multiple product actions – given the known situation. Collaboration filters in e-commerce are the most common tools. 

In demand planning, we can use prescriptive analysis at a strategic and tactical level.  Strategically, most organizations are continuously weighing the trade-offs between revenue growth, profit margins, market share, and service levels. Since most research shows that many new product launches can fail in their first year, it would be ideal to have better insight into whether to invest more, tolerate longer, or divest products based on the company’s goals. Prescriptive analytics include algorithms to make these trade-off analyses – then put them in a modeling and what-if calculator to enable business managers to make decisions quickly in terms that senior management will appreciate. 

Make your Organization Truly Data-Driven 

Overall, descriptive, predictive and prescriptive analytics mean different things – but their real value is combining them to make your organization data-driven. Use descriptive statistics to get a real feel for your business and understand the strengths and weaknesses of your data. Once you know your data, use predictive tools to enable the organization to understand likely future outcomes of your demand planning. And lastly, simplify and automate decision-making through prescriptive analytics. While it’s not yet time to turn the business over to the robots, we can frame up our decisions in a more structured fashion. We can then provide the quantitative information to get a demand consensus to best match supply and demand. 

To learn more about the different analytics options available today, check out Logility’s two-minute guide to understanding and selecting the right descriptive, predictive, and prescriptive analytics for your business.

This post has been prompted by conversations I’ve had recently with a client in the early stages of implementing a Sales and Operations Planning (S&OP) strategy. They had been relying on a phased approach and they knew that they needed an integrated set of business processes to go with their newly purchased technology. 

They understood that the focus needed to be on information, not just the volumes of data they had at hand. They knew that in order to implement a successful S&OP strategy, they needed clean, current, and accurate data. As with many organizations, time and effort was being wasted gathering data that had minimal importance to the overall project. But in this case, senior leadership was able to articulate the business problem they were trying to solve, and were able to help define, with some difficulty mind you, the minimum data necessary for the project. 

It all sounds wonderful on paper, and they were destined for success! But like other businesses, their attempts to implement S&OP were frustrated by internal tensions between departments. What followed was this seemingly innocent statement on my part: “Not everyone will be a convert immediately, so we watch for resistance and address it as part of our strategy. Push, but not too hard, or we will get resistance.” 

And that’s when the fireworks started. Or to be precise, my somewhat nonchalant mention of possible resistance sparked some great comments and questions. 

Dealing With the Resistance 

Classic best practice suggests that S&OP must ‘belong’ to the Chief Executive Officer. If that’s not possible then a strong, united coalition of department heads may be able to lead the process if they set clear ground rules and boundaries for working together. In this case, we had senior management buy-in and support, but what we really needed was their ‘ownership’ of the project. 

Some amount of resistance is inevitable, and it usually boils down to cultural or people issues, not in any way exclusive to S&OP implementations, but let’s go ahead and tackle them in the context of an S&OP project. Here are the two most prevalent issues: 

The internal obstructionist 
This is the presence of a few highly regarded and influential employees who either passively or actively undermine the changes in behavior that the new initiative requires. You know you have this problem if the water-cooler conversation sounds something like this: “That new analytics program won’t work for us…”; “We’ve always done it this way…”; or, “That new initiative will make us have to change.” (Basically, anything eluding to “change is bad”.) 

The dirty-data diversion 
This is the belief that there’s no use starting an analytics implementation until the company’s data is polished, scrubbed, cleaned, pressed and folded to perfection. It’s the same argument some use to avoid going to the gym: “I’ve got to get in shape first!” 

I’ll address the Internal Obstructionist in another post. Today, let’s grapple with #2. 

The evil genius of the dirty-data roadblock is its apparent logic and deceptive concern for company well-being. In an analytics context, artful proponents of this argument appear to have the best interests of the company in mind. “We don’t want the C-suite making decisions based on bad data; that’s bad for all of us. Let’s get it cleaned up first.” 

Of course what’s really at work here is what Seth Godin calls the assertiveness of the lizard brain, also known as ‘the resistance’, also known as fear. No one wants the bright light pointed at their bad data or poor processes. 

And since no data-scrubbing project has ever succeeded, there’s little risk in promising a thorough clean-up as a prelude to an S&OP kick-off. That’s the diversion. Confucius might say it like this: “If you think you need to finish before you can begin, you will never begin.” 

Here’s how to overcome this type of resistance in three steps: 

1. Inject some honesty. Everyone knows there are data quality issues. Yes, even management knows. In fact, they’ve known for a long time. That’s not news. The point is to work together to improve the speed and decision-making ability of the enterprise, not place blame. This gives everyone who needs it some ‘cover’ and puts the lizard back in its cage. 

2. As soon as possible, start reviewing some basic KPIs in the new S&OP system. 
Embrace the fact that the data isn’t where it needs to be. Make reliable data part of the project, not a prerequisite. Doing this will help everyone envision the desired future and will set the stage for some quick wins. And quick wins will unleash the dynamic duo of momentum and optimism. The system should be viewed as a catalyst for operational improvement, not a tyrant that demands operational perfection to function. 

3. Meet often, especially in the beginning. In fact, consider daily meetings. More importantly, set overall priorities in a way that gives the team the time and the freedom they need to make progress between meetings. This helps reinforce everyone’s commitment to a successful outcome. In every meeting talk about how awesome life will be when the system is trusted and providing accurate information. 

Nike got it right with its slogan, “Just do it”. Starting has its own virtues. 

For more information, check out this e-book: