SAS recently commissioned the Wall Street Journal to conduct a survey of top manufacturing executives. In this study, we were interested to know what were the top of mind issues or initiatives that they were considering. Nearly ninety percent of the respondents are employed in a managerial position or higher. Twenty-eight percent are members of higher management (vice-president or higher). Here are the top eight issues that emerged:
- Improve sales and operations planning.
- Improve inventory management.
- Improve customer experience .
- Improve management of production assets.
- Improve cost of service and after-market profitability.
- Improve demand forecasting and planning.
- Implement sustainability/green initiatives.
- Improve product quality.
There are some interesting connections between these topics. For example, sales and operations planning (S&OP) impacts many other issues. After all, a well formed S&OP process produces a sales plan, a production plan, an inventory plan, an order fulfillment plan, a new product development plan, a strategic initiative plan and all of these drive a resulting financial plan. A good plan well executed delivers better customer experience, lowers the cost of service, optimizes inventory and increases profitability thus touching other top-of-mind concerns. Another connection is between production asset utilization and sustainability. Efficient and effective operations produce a smaller carbon footprint and save energy costs.
Twenty-five years ago with longer product lifecycles and relatively low-demand volatility, the S&OP process was a labor- and time-intensive process completed relatively infrequently, maybe even quarterly. The plans were developed, the course was set and the ship was launched. These days of globalized supply chains, production operations and localized market demands combined with broad product portfolios and thin margins means precision tuning and execution. The lumbering tanker ship of an old school S&OP process has been replaced with the need for a fast and nimble cigarette boat. Big data and far-flung constituents mean automation and web-enabled collaboration. The sheer volume of data compounds the challenge of getting all relevant information assembled, analyzed and reported in a way that leads to fact-based decisions quickly.
What do you need to bring your S&OP process up to modern demands? First, manufacturers should harness all of the data available and make it easy to quickly aggregate, normalize, cleanse and otherwise prepare it for analysis. Seems like that should already be done but is it? How have mergers/acquisitions or reorganizations affected your data gathering? Is too much of it in unsecured spreadsheets? How near or real time is it?
Secondly, they need robust analytics, including model management, to glean intelligence from their S&OP process. For example, simply modeling historical shipment data is not sufficient when your competitors are combining historical data with point-of-sale (POS) data (sophisticated enough to account for latency) with causal data to create the most accurate forecasts possible.
Finally, a collaborative environment for the development of the plan and a comprehensive reporting system should deliver results to all levels of the organization. If dashboards and scorecards aligned to the overall strategic priorities of the enterprise by division and department give near real time feedback, all who impact the plan and its execution will be aligned. To have the biggest impact, all users, not just the power users, should be able to access the data they need, perform the analyses that pertain to them, collaborate on the plan development and track the interactions and have the power to deliver ad hoc reports as they deem necessary.
Is it any wonder that companies are finding it hard to realize the vision? Especially when you consider a recent Accenture survey that highlighted the scope of the problem. In their survey of more than 600 senior managers at more than 500 hundred top companies, they “found that more than half the respondents said their organizations are structured in a way that prevents data and analytical talent from generating enterprise-wide insight.”
This is why Accenture and SAS are joining forces. To really create significant improvement, manufacturers need qualified vendors to bring their strengths together in a planned and orchestrated way that quickly delivers value. Manufacturers need best-practice domain expertise, organizational size and scale combined with analytics and data integration know-how not only for S&OP transformation but for all areas of the business. Without it, the size and scope of getting the data and using the data is just too big and the timeframe just too short to win in the global marketplace.