Steelwedge Software

Steelwedge Software

Earthquakes, Oil Spikes, Peak Oil & Actuarial Analysis: Is it time to think about S&OP from a different perspective?

Posted: 14 Apr 2011 09:30 PM PDT

Do companies need to substantiate and quantify critical risk scenarios as part of their planning process? Financial analysts evaluate return and earnings potential on a risk-adjusted basis. In other words, analysts incorporate an understanding of the volatility associated with returns when evaluating the underlying value of a business. Today the only certainty is uncertainty.  How can one plan in a world seemingly dominated by unanticipated terrorist events, political upheaval in and around oil producing nations, natural disasters striking presumably well prepared, developed economies wreaking global havoc, and energy production disasters of all sorts? What does this mean for planners? Validated and informed risk management and risk-based decision making is more important than ever.  Quantitative support and innovative solutions can help measure and estimate impacts; facilitate key business, financial and operational scenario management, and reduce the uncertainty attached to strategic growth, budgeting, change, and macroeconomic volatility.  In this environment sales and operations planning must truly be transformed into some sort of risk-adjusted integrated business planning scenarios (IBP). What Will You Say When Shareholders Ask: "What Happened?" Accurate quantification and assessment of risk is paramount to an organization’s success.  Executives need to ensure that their organizations are undertaking an efficient and effective process of quantifying risk. Are key decisions made in the context of risk-adjusted scenarios?  Should we be doing some sort of actuarial analysis? Is there an understanding of the full range of financial outcomes associated with a particular S&OP scenario? Can we able to back up our scenarios with substantiated, sound, risk analysis? Do we know how much risk and/or volatility can be sustained? Does our organization have the right tools to navigate inevitable "Black Swan" events that will disrupt the best laid S&OP scenarios? Are we confident that we have posted liabilities to match the risks our organization faces?…

Volcanoes, Earthquakes, Radiation, Tsunamis, Freedom, Crude Oil and S&OP

Posted: 27 Mar 2011 08:57 PM PDT

What do volcanoes, earthquakes, radiation, freedom, and crude oil have in common? All of these forces have recently blended into a witch's brew of nightmares for the global executives and planners responsible for ensuring that food, clothing and goods reach hungry populations across the globe. In this context, Sales and Operations Planning (S&OP) has never been more prescient. When the now infamous "Eyjafjallajökull" (that's aya –full–a–yokol!) volcano in Iceland blew up just one year ago, global supply chains were disrupted in previously unimagined ways as air cargo routes across Europe were shut down. For example, one Steelwedge customer – a Silicon Valley-based high tech manufacturer – suddenly faced a shortage of a key chip that had been flown in twice a week from Switzerland. Fortunately, this company had a relatively mature, technology-enabled S&OP process (driven by Steelwedge of course!) that allowed them to analyze and develop contingency plans involving shifting demand to alternative products, adjusting prices, moving inventory, and changing safety stock levels. More recently, Tunisia became the first domino in the drive toward freedom across the Arab Middle East. We soon found our clients frantically making contingency plans in case the Suez Canal – a critical passage made by global shipping over 21,000 times per year – closed. Fortunately, while protests erupted along the Suez Canal, operations were not impacted and the people of Egypt's drive toward freedom proceeded as smoothly as could have ever been imagined. Next Libya erupted, and soon oil prices were spiking as concerns mounted about a potential shutdown of Libyan oil production coupled with more chaos and violence. Then just as everyone thought nothing more could possibly happen, the unimaginable happened.  A phenomenal earthquake, tsunami and nuclear crisis injured the world's most prosperous and efficient nation… and it keeps getting worse. Today, major…

Is there a battle between S&OP and IBP?

Posted: 25 Jan 2011 09:27 PM PST

In her post, "ENOUGH!", Lora Cecere states that Integrated Business Planning (IBP) and Sales and Operations Planning (S&OP) are in a "battle of acronyms" and that this "holy war cannot be won". I agree, let's not get stuck on names. At the same time, the S&OP/IBP debate is a happy consequence of the fact that S&OP remains a living organism that is maturing quickly. Firms like Oliver Wight and Aberdeen Group have lobbied for the adoption of the new term, IBP. The push to change the name is meant to highlight the importance of adding new elements to the S&OP equation such as demand sensing and steering, financial integration, robust modeling and scenario planning, and profitable demand and supply decision making. At Steelwedge, we agree that IBP developments are fast becoming imperatives and that S&OP must not be viewed as a mere supply chain activity but as a strategic management process that considers all elements of the business across a 24-month planning horizon. In fact, by its current definition, many of our S&OP customers are enjoying the full benefits of best-in-class IBP with the help of our technology. Although we see IBP as a logical next step for many companies practicing S&OP, we remain focused on helping our clients design, automate and support processes that are the "right fit" for their business. Adherence to best practices and industry norms is important, but we recognize that some companies can meet their goals with entry-level S&OP while others operating in highly complex and competitive markets may require much more. Despite the occasional confusion, we see the enthusiasm of business practitioners, consultants and technology providers as a hopeful indicator for long-term prospects of S&OP/IBP. Avoid the war and get on board with S&OP, IBP or whatever you want to call it!

Is the “Arnold Palmer of S&OP” on Your Sales Team?

Posted: 11 Jan 2011 10:06 PM PST

Are you struggling with motivating your sales people to invest the effort required to create accurate forecasts?  We reached into our archives to unearth a creative way that you can put the competitive sales spirit to work for the benefit of your S&OP process — and have fun along the way too.  Devised by Dr. Kenneth Kahn, professor of marketing and director of the da Vinci Center for Innovation at Virginia Commonwealth University, Forecasting Golf brings the fun of golf into the forecasting process, motivating team members to elevate their "game". The game's goal is for an individual player to score the lowest forecast error for the year. A year-long round consists of 12 monthly "holes" that are scored during each forecasting cycle. Attractive prizes are awarded at the end of the game to those who have achieved the lowest scores (i.e., the most accurate forecasts) to reward participation and focus attention on the importance of minimizing forecast error. Dr. Kahn stresses the benefits of translating statistical language into more understandable form. For instance, a forecast error of 15% does not readily convey if this error acceptable or not. However, when the same forecast is referred to as "par," then everyone in the company including other department and management levels can readily interpret that error as being acceptable. Monthly groupings of sales people into scrambles can further enhance the game by offering someone not doing very well year-to-date the chance to still win, and thus, stimulate players to continue their participation in the monthly forecasting effort. Rules of the Game True to the game of golf, Dr. Kahn uses the terms eagle, birdie, par and bogey to describe the possible scores for each hole or forecast period.  The terms describe a forecast's proximity to actual sales where eagle is extremely…

Has S&OP Evolved Beyond “S&OP”? – A Perspective on the S&OP vs. IBP Debate

Posted: 11 Jan 2011 09:43 PM PST

The rapid evolution of S&OP from best practice to standard practice has sparked a vigorous debate about how best to define and describe the process as it continues to mature. It's become apparent that although many companies have adopted S&OP generally, there are many different flavors in existence today. Meanwhile, some especially innovative companies have pushed S&OP beyond its traditional scope to support strategic decision making alongside operational planning. This reality has lead firms like Oliver Wight and Aberdeen Group among others to lobby for the adoption of a new term – Integrated Business Planning (IBP). The push to change the name is meant to highlight the importance of adding new elements to the S&OP equation such as demand sensing and steering, financial integration, robust modeling and scenario planning, and profitable demand and supply decision making. At Steelwedge, we agree that IBP developments are fast becoming imperatives and that S&OP must not be viewed as a mere supply chain activity but as a strategic management process that considers all elements of the business across a 24-month planning horizon. In fact, by its current definition, many of our S&OP customers are enjoying the full benefits of best-in-class IBP with the help of our technology. Although we see IBP as a logical next step for many companies practicing S&OP, we remain focused on helping our clients design, automate and support processes that are the "right fit" for their business.  Adherence to best practices and industry norms is important, but we recognize that some companies can meet their goals with entry-level S&OP while others operating in highly complex and competitive markets may require much more. The IBP debate is a happy consequence of the fact that S&OP remains a living organism that is maturing at the speed of business.  Despite the occasional confusion,…

New Year, New Appreciation for S&OP

Posted: 11 Jan 2011 09:24 PM PST

At the start of a New Year, I like to pause to recognize that turning the page in my calendar presents a rare chance to turn over a new leaf. Like many of you, I kicked off 2011 full of resolve to make simple changes that I expect will enhance my health, happiness and productivity. As the holiday season fades into memory however, it's easy to feel the zeal for making change slipping away as well. This year, knowing that personal and professional satisfaction can be closely linked, I figured a new approach was in order. Whether you want to get in shape or make more time for loved ones, good habits at work can go a long way toward setting you up for success in your personal life. Take for example the work that we all do with Sales and Operations Planning (S&OP). Yes, if you're not as obsessed with S&OP as us, it's easy to minimize it as simply a "work thing" with little bearing on who we are as individuals. But, my years working alongside our customers suggest otherwise. As far-fetched as it may sound, improving communication, collaboration and decision making is good medicine not only for the business but for the people involved too. Just think about how you feel leaving a meeting that was efficient and constructive versus one that was not. I've seen first-hand how a well-run business process like S&OP can create positive feelings about work that in turn send people home each day feeling energized. Personally, the enthusiasm that springs from job satisfaction makes it far easier for me to find my way to an elliptical machine or to make a special trip to the farmer's market for the fruits and vegetables that I know I should eat. So this year, as…

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