Predict, Not Just Respond

Supply Chain Digital Blueprint©—Path to Stage 5 Maturity

Path to Gartner stage 5 Maturity

If you are still using spreadsheets to run your supply chain you are in good company. No pun intended! Also, if you are thinking of an S&OP solution to upgrade then you are still in good company! According to Gartner, 70% or so of companies with a heavy use of spreadsheets for planning are in stage 2 of maturity. Implementing a S&OP solution would get you to stage 3. A big step but S&OP solution alone can only get you so far. After a few years your ambitions and business requirements as well as competitive pressures would compel you to upgrade to higher maturity levels of 4 and 5. Where in the latter, the highest stage of maturity, you can perform digital and touchless planning. Digital planning, is not just a mere automation, a repetitive and predictable action. It is a solution that can get better over time and can change itself to adapt to the changes in the supply chain (you can read more on this at self-improving-and-self-repairing-supply-chains) But it requires to have a Digital Mirror© of your supply chain.  Read more on touchless-supply-chain-planning.

In order to get to the highest stage, you need to have a digital blueprint© that can guide you step by step to get there. You also need to have the technology that can transform from a simple S&OP to  S&OE, i.e. Sales and Operation Execution. With the exception of very few, all S&OP solutions that are currently available lack the technology to perform S&OE. In other words, they are throw-away solutions.

Why is S&OP not the Whole Answer?

If you look closely, S&OP solutions are designed to model the supply chain almost exactly the same way as spreadsheets are. This means they use bucketed capacities, fixed leadtimes and pre-defined bottleneck resources. As we all know the bottleneck resources change depending on the mix of products made. The same is true with manufacturing leadtimes. Furthermore, having a bucket of orders adding up to the capacity does not mean that they can be executed within that bucket. It depends a lot on change-over times and how the orders may be scheduled in actual execution. Such inaccuracies lead to plans which are at best 60% or so accurate. That means a lot of manual work and manual planning needed to follow as well as back and forth with the execution team to make it work. Not a very efficient system. This is not what we call a Digital Mirror© of the supply chain. S&OE allows you to build models that are accurate enough to get near perfect plans. In addition, with the use of attributes in the supply chain, the system can be made smart enough so that it constantly corrects itself, both the model as well as the algorithms to return optimal plans as the environment changes.

In conclusion, when you are ready for S&OP, simply ask your technology partner how they can provide the next level, i.e. S&OE, to get to the highest level of maturity in your supply chain. S&OP may provide some level of visibility, what-if capability and so-called control tower but just identifying the problems as such only implies you have to spend a lot of time trying to solve them. With a Digital Mirror© of the supply chain and prescriptive techniques, the system provides not just a solution but the optimal solution, to lower cost and deliver on-time. Learn more at Innovations.



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