Obviously, everyone wants to have accurate plans but when it comes to taking the steps needed to produce them, then they hesitate and opt for an inferior solution that is generally only 60% accurate. This is what the accuracy of a typical S&OP solution is. The reason being the way the supply side is modeled: bucketed capacities, pre-defined bottleneck resources and fixed lead-times. So, what does it take to have plans which are upwards of 95% accurate? The ingredients are listed below.
- True representation of resource capacities (good modeling capability)
- Real-time and valid data
- Continuous and event-driven planning capability
- Ability to constantly correct (learn and modify) the underlying model of the supply chain
Accurate planning is a prerequisite to digitalization of your supply chain. It is the ability to go from Gartner’s Stage 2 maturity level to Stage 5. It is what enables you to run autonomous supply chains. Many companies already have their S&OP system, or are planning to implement their S&OP solution. However, the main question they face is: what is the path from S&OP to Stage 5 maturity level? Implementing S&OE is one way to approach this. But, simply adding S&OE to an existing S&OP solution is not as effective path and requires building a “bridge” between planning and execution of the plans.
Planning and execution are a continuum, not separate entities. Much like autonomous cars where shock absorbers and sensors are constantly monitoring road conditions and surroundings while at the same time, the GPS is looking ahead and planning the route. As the vehicle comes across traffic jams and uncomfortable road conditions then it switches (plans) to different routes while learning and remembering the problems for future reference.