Supply Chain Blog

To S&OP or not to S&OP - That is the question

Posted by Michael Thompson on Wed, Dec 22, 2010

S&OP process Our mailbag is expanding ...

Sire

To S&OP or not to S&OP: That is the question:

Whether ‘tis nobler in the mind to suffer

The claims and errors of outrageous sales forecasts

Or to make plans against a sea of market uncertainties,

And by opposing end them? 

“To lie?” think the Sales Department because they (the Planners) produce the wrong product;

“To sleep?” think the Planners; lets ignore the Sales Department because they always get it wrong;

“No more” says the CEO, I’ve had enough ...

Bard

 

Borrowed from Hamlet 3/1 by William Shakespeare

Let the debate continue ... check out the next instalment in a few days time

 

In this series:

  1. What has S&OP ever done for us?
  2. Is S&OP Really Necessary? Integrated Supply Chain Planning
  3. The Role of Integrated Supply Chain Planning
  4. Is S&OP Really Necessary? Forecasting & Supply Chain Responsiveness
  5. What has S&OP ever done for us? A great deal actually...
  6. What has S&OP ever done for us? The role of the CEO

 

      Tags: Michael Thompson, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning

      Exactly What Does An FMCG RTM Distribution Assessment Deliver?

      Posted by Dave Jordan on Tue, Dec 21, 2010

      In the past week I have met two Sales Directors from blue-chip FMCG companies to discuss an assessment review of their RTM network. Surprisingly, neither Director was interested and gave a remarkably aligned reason for this rejection. “All this does is raise Sales In and we know how to do that already”.

      No, Nein, La, Nu, He, Nem, Không có!!! Whatever language you choose, this understanding of RTM evaluation is incorrect. There is no doubt Sales Directors across the globe know how to increase Sales In. There is a plethora of techniques to get the Distribution network to take more stock, e.g. promotions, discounts, extended credit etc, etc. Unless you are regularly working with “out of stocks” at the Distributor pushing Sales In does not guarantee one single extra sale, not one.

      Without a focus on Sales Out any stock pushed into an RTM network is likely just to sit in warehouses as there is no obvious consumer demand for it. The Distributor is sitting on plenty of valuable stock but without a pull from the trade all this extra pushed stock is wasted. One of the key drivers for a push strategy is the alignment of Sales In targets with Sales Team bonus payments. Once the stock has moved out of Producer hands it is considered a “sale” and this is simply not true. Nothing is sold until a consumer has handed over their hard cash at the till.

      distribution assessment toolThe beauty of an RTM Assessment is that it addresses how to achieve a sales uplift and every assessment I have been involved with has achieved such an uplift! If you get close to your Distributors and develop a lasting relationship you will be able to get more out of the market – even in a recession.

      Partnership – treat them as equals as they are an integral part of your business. Hold regular meetings and ensure the discussion is a real two-way process.

      Planning & Logistics – do not assume they know how to aggregate demand by sku. If their forecast is more accurate then this ripples right back to you own factories and procurement activities.

      Sales/Order Management – provide training to ensure your face to the customer is professional and competent. Ensure orders are captured promptly AND that stock is available.

      Finance & Back Office – is the Distributor financially sound and capital efficient? Do they recruit and retain the right calibre of people and are they rewarded sensibly?

      This is just a snapshot of a comprehensive RTM assessment review and more can be found here.

      If you have struggled to make your 2010 numbers you might find that Q1 2011 presents an extremely difficult start to the year. A thorough review of your RTM Distribution network could be just what you need to make up ground in the following months.

      Uplift in real sales is there for the taking!

      Tags: Route to Market, Interim Management, Dave Jordan, Distribution, RTM Assessment Tool, Inventory Management & Stock Control

      What has S&OP ever done for us? A great deal actually ...

      Posted by Michael Thompson on Fri, Dec 17, 2010

      Is S&OP really necesarry?From Monty Python to S&OP via integrated supply chain planning to forecasting and related issues, and a conclusion shared by our two protagonists that S&OP is not really necessary, we received the following in our mailbag ...

      Dear Mike,

      I have been following your blog series “What has S&OP ever done for us” and the debate between your CEO Reginald and Head of Supply Chain Development, Jacek.

      How can this be a debate when both parties share the same view, albeit for entirely different reasons?  Furthermore I suspect that Reginald & Jacek do not share a common view of what S&OP actually is.

      I am a CEO who has implemented S&OP in several of the companies in which I have led.  S&OP works.  And it works well if, and only if, the boss drives it and is seen to drive it.  So to answer the question you have posed – What has S&OP ever done for us?  A great deal for the companies I have run.

      I accept some of the technical arguments that Jacek is using.  However, he also describes ‘supply chain life’ somewhat from an idealistic point of view.

      I am afraid that your blogs are in danger of dismissing S&OP as aged and irrelevant. It is not. 

      I wonder if you would allow me to share my views and join your debate.

      Yours sincerely

      Anne

      CEO (Brewing Multinational, name withheld by request)

      ------------------------------------------------------------------------------

      Dear Anne

      Many thanks for your letter.

      I agree with you.  Although Jacek makes a strong case, my experience of 100’s of S&OP implementations is that S&OP can have a dramatic impact on supply chain and overall company operations.

      You are most welcomed to join our next debate in the series.

      Yours sincerely

      Mike (Moderator)

      Does anyone else wish to contribute?  Please do share your thoughts & experiences regarding S&OP and Integrated Supply Chain Planning.

      More to come ....

       

      In this series:

      1. What has S&OP ever done for us?
      2. Is S&OP Really Necessary? Integrated Supply Chain Planning
      3. The Role of Integrated Supply Chain Planning
      4. Is S&OP Really Necessary? Forecasting & Supply Chain Responsiveness
      5. To S&OP or not to S&OP - That is the question
      6. What has S&OP ever done for us? The role of the CEO

       

       

        Tags: Michael Thompson, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning

        7 Reasons for Securing an Interim Supply Chain Manager in CEE

        Posted by Dave Jordan on Tue, Dec 14, 2010

         

        The recession rumbles on and on and on. Greece, then Ireland; who is next in line for a heavy duty IMF/EU bale out? Should Spain become the next country to hit the financial wall that would send a few shock waves around Europe.

        Interim Manager SoftedgeSo why is Interim Management an opportunity particularly in CEE at present? Mainly as a result of the economic conditions numerous companies have folded this year and a similar number have been taken over or merged with others. There is more of each to come, I fear. Obviously companies that go bust are too late to be helped although I am not sure too many actually sought professional help and guidance.

        Those companies and Private Equity players merging or buying in this period need to have their new businesses in good shape to ensure the ROI in the contract deal has a chance of coming to fruition. When the green shoots of recovery actually start looking like shrubs shareholders and PE owners will expect their pound of flesh.

        One route to accelerating and establishing integration and realignment is to use the services of an Interim Manager. Below are 7 reasons why hiring an Interim Manager (IM) can be of benefit to companies in CEE:

        1. Return On Investment. No, it is not more expensive than hiring full time (FTE) or temporary employees. Take all recruitment and employment costs into account and you will appreciate how efficient IM costs can be. You pay your employees for turning up for work whereas IM are paid against set objectives and delivery. (Consider the cost if you make the wrong choice of FTE and have to go through a lengthy, disruptive and expensive exit process.)
        2. Speed. Senior Interim Managers are readily available and located in CEE. You do not have to waste time going through a lengthy search and selection process with a fee-taking headhunter.
        3. Expertise. Interim Managers are often seasoned professionals with deep operational experience. A vast majority will have successfully held senior roles in blue-chip organisations for long periods.  No training is required; you get a “vertical start-up”.
        4. Objectivity. Interim Managers are able to look at a given situation with a fresh set of eyes and will not be afraid of “treading on toes” or telling the boss there is a better way!
        5. Accountability. Interim Managers are not there to advise. They are in place to handle a specific project or a department in transition. Unlike full time employees they are very comfortable at being rewarded (or not) based on black and white objective achievement.
        6. Effectiveness. Possibly the most obvious contribution of IM. Once the Board has given a mandate to carry out a task they will get on and do it without struggling through a bout of inertia. “Just Do It” sums this up nicely. 
        7. Commitment. Interim Managers remuneration means they have a direct financial stake in the assignment. They are not there to make friends or pave the way for recruitment. They wish to do the job well, get paid and move onto the next challenge.

        If you have a difficult job to be done within a defined timetable and you do not have the resources in-house you should consider the value an Interim Manager can bring both to yourself and your organisation. Gaze into the post-recession future and see what tough jobs need to be done now to ensure you are ahead of the game.

        Interim Management User's Guide

         

        Image credit : CELALTEBER

        Tags: Interim Management, Mergers & Acquisitions, Dave Jordan, CEE, Logistics Management

        Santa & Opening Presents - S&OP Putting the Elves in their place

        Posted by Dave Jordan on Mon, Dec 13, 2010

        Dear Mr. K Ite,

        Thank you for your very short note highlighting some minor points; I can see you are a little aggrieved. On behalf of Santa I will attempt to minimise your apparent unease with the S&OP process in the context of the small print in your members employment conditions.

        I think we have to manage expectations here. I know your members play an important role in the Christmas S&OP but as far as I am aware there are very few (if any) Christmas songs about Elves. Let me see now:

        Dashing through the snow in a one elf open sleigh….I think not!

        Good King Elf looked out of the feast of Stephen…..no, not there either.

        Rudolf the red nosed elf….not quite eh?

        You do not even get a mention in the 12 days of Supply Chain.

        Your members are lucky to have assured contracts which guarantee employment every year without fail. Unless the world runs out of children I think we can safely see continued employment into the future. The green hats were part of the 2009 collective bargaining agreement where we agreed to new hats every 5 years instead of the industry standard of every 10 years. You will recall we reversed out decision to change colour of the hats to pink at the same time.

        Santa and S&OP Planning Cylcle

        The employment market is currently very tough and I urge you to communicate to your members the difficulties you will cause should you withdraw your labour. We are unable to pay you for doing nothing for 46 weeks of the year and I am sure you would agree with this. Frankly, if this is what you and you members expect then I suggest you apply to join the Marketing Department.

        Finally, I address your comment on S&OP specifically. In our industry planning is everything to ensure we keep the children happy AND do not enter January with excess stock nobody wants. If you want to see what can happen when you get the planning wrong in our kind of business please check out Vuvuzelas and the Value of S&OP.

        I am sure you will communicate our position to your members.

        With chilly regards,

        Mr. I Cicle

        ***

        See previous correspondence:

        Other seasonal posts:

        Tags: Christmas, Dave Jordan, S&OP, Forecasting & Demand Planning

        Santa & Opening Presents, S&OP the Elves Respond

        Posted by Michael Thompson on Thu, Dec 09, 2010

        AngryElfDear Santa,

        I refer to the recent blog article, "Santa & Opening Presents; Why S&OP is Invaluable at Christmas".

        As I mentioned in the consultation process just prior to S&OP implementation, I was prepared on behalf of our members to support the programme, provided and only provided it did not affect our rights as elves.

        Incidentally I see that I am not alone in considering that S&OP is not really needed & refer you to Mike Thompson’s excellent series of blogs starting with “What has S&OP ever done for us”.

        We were prepared to concede certain rights under the Working Time Directivebut now things have gone too far. In particular I would like to draw your attention to our most serious grievances – there are more:
        1. Elves unemployed.  We cannot and will not accept that lack of work is a reason for redundancy.
        2. Season Bonus.  Pah.  When has a new green hat ever been proper recompense for 16 hour working days and such appalling shift patterns?  And let’s not forget that we only received the hats because of overstocking due to a poor sales forecast (see other blog).

        Unless our legitimate grievances are dealt with immediately, you will leave us with no choice other than to consider industrial action.

        In the meantime, and to demonstrate just how seriously we consider the current situation to be, we are no longer prepared to sing the Company Song.  “Yo ho ho” is old hat (excuse the pun). 

        I look forward to your reply.

        Yours sincerely,

        Fred K. Ite

        Shop Steward & Chief Elf (CEE Region)

         

        In this series:

        Other seasonal posts:

        Tags: Christmas, Michael Thompson, S&OP, Forecasting & Demand Planning

        Is S&OP Really Necessary? Forecasting & Supply Chain Responsiveness

        Posted by Michael Thompson on Wed, Dec 08, 2010

        Last time we started a debate entitled “Is S&OP really necessary?”. Our protagonists are REGINALD, the CEO of a multinational FMCG company and JACEK the new Head of Supply Chain Development at the same company.Both do not believe that S&OP is really necessary but we suspect for different reasons.  MIKE (that’s me) is the Moderator.

        Integrated Supply Chain PlanningMIKE (MODERATOR): Gentlemen, last time we started discussing S&OP and integrated supply chain planning.

        REGINALD (CEO): S&OP, yes. But did we really talk about integrated supply chain planning? And what is it anyway?

        JACEK (Head SC Dev): We started. I think we were about to discuss how to get an affective supply chain. I mentioned that it is all about converting incoming orders into flexible production and less about S&OP.

        REGINALD (CEO): I am all ears, Jacek.

        MIKE (MODERATOR): Jacek, one request. Please can we avoid too many technicalities.

        JACEK (Head SC Dev): OK. The main goal of a supply chain should be to convert incoming orders into finished good stock by a flexible production and/or deployment plan, that is capable of supporting sudden changes in demand – the reality is that most FMCG businesses need to respond quickly in the market. Do we agree?

        REGINALD (CEO): Yes but we need to have advanced warning of which orders or products and how much of each. In other words we need a sales forecast.

        JACEK (Head SC Dev): Yes, but it depends on what sort of sales forecast.  Let me continue.  ‘Real demand’ is only captured close to the point of sale.  Real demand, for example, is actually stock sold at a retail outlet or, less accurately, stock that moves out of a distributors warehouse. Agreed?

        REGINALD (CEO): Yes. Of course. But we don’t know that in advance.  That’s why we have a sales forecast.

        JACEK (Head SC Dev): OK, let’s deal with the sales forecast. Asdescribe the image I said, it depends on what type of sales forecast we are dealing with. A sales forecast is not, or should not be what the Sales Department wants to sell or even believes what can be sold. It is not even what sales believes it can sell with a seasonal trend analysis plus promotional campaigns included. I will call this a ‘traditional sales forecast’.

        REGINALD (CEO): What is it then?

        JACEK (Head SC Dev): It should be a continuously modified set of orders registered in the ERP system, converted into MTO (make-to-orders) and MTS (make to stock) that is analysed with modern multidimensional statistical tools for trends and exceptions.

        MIKE (MODERATOR): Jacek, watch the technicalities please.

        JACEK (Head SC Dev): Sorry. Anyway, any forecast can and should be converted to MTS in order to activate other supply chain processes such as Master Production Schedule (MPS), Materials Requirements Planning (MRP), etc.

        REGINALD (CEO): So assuming that we don’t have a proper sales forecast in your ideal world, Jacek, what should we do?

        JACEK (Head SC Dev): Well we have a couple of problems to deal with.  Firstly our ERP system. The logic of what I have described is often already included in ‘modern’ ERP systems. The well known ERP systems such as SAP, Oracle, Manugistics, etc., have already incorporated this process approach to supply chain configuration and even are following the Supply Chain Council SCOR standard of process classification and information flow. 

        REGINALD (CEO): So what?

        JACEK (Head SC Dev): A traditional sales forecast or sales expectation can and often does compromise a production plan within an ERP system that is designed as quick response with its links to the order capture process.

        REGINALD (CEO): And?

        JACEK (Head SC Dev): This means that the forecast may be saying one thing and the ordering system, that captures real demand, saying another.

        REGINALD (CEO): You mentioned a couple of problems?

        JACEK (Head SC Dev): Yes.  Its S&OP.

        REGINALD (CEO): I knew it. S&OP is the problem....

        MIKE (MODERATOR): Reginald, please let Jacek continue.

        JACEK (Head SC Dev): Yes S&OP can compound this problem.  If we accept that supply chain responsiveness is important. And we have a relatively modern ERP system configured to be responsive to demand via order capture, S&OP can actually slow everything down because of the consensus required in decision making.  And this can decrease the very supply chain responsiveness that we are seeking and that has been identified as key to our supply chain strategy.

        REGINALD (CEO): You see, S&OP is not needed.

        MIKE (MODERATOR): Anything else to add here Jacek.

        JACEK (Head SC Dev): Just to complete the picture for now.   You see the standard S&OP approach does not use and very often does not even ‘tolerate’ the dynamic, ‘fresh’ incoming data that promotes responsiveness.  The planning departments defend themselves to collect data with time horizons shorter than the S&OP planning horizon which is usually once a month.  In S&OP practice, the ERP system gets old data (maybe 5-7 weeks old) uploaded in the form of a forecast.  In this ‘S&OP way of thinking’, the internal logic of the ERP system is blocked as it freezes essential parts of the downstream processes of MRP and procurement. It thus negatively impacts processes responsible for resource planning such as Production Planning, Production Scheduling and Distribution Resources Planning (DRP).

        REGINALD (CEO): So we are all agreed, S&OP is not needed.

        MIKE (MODERATOR): Possibly, but I think for different reasons.

        REGINALD (CEO): What do you mean? 

        MIKE (MODERATOR): I would like to suggest that we leave that until later. In the meantime, I will invite Jacek to summarise his argument. Jacek?

        JACEK (Head SC Dev): Companies without S&OP can work better without ‘bad forecasting habits’ or without strong ‘production or production planning lobbies’.  As a consequence they are more flexible, and can respond more easily and quickly to customer demand.

        MIKE (MODERATOR): Provided these companies have an integrated ERP system, well defined supply chain processes including responsiveness to order capture, and people capable of using them without unnecessarily causing delays with arguments over turf wars ....

        Until the next time. 

        Do you agree?

        This series is based on nearly 20 years of supply chain experience as a consultant who has witnessed similar debates (a polite description) many times over.

        I’d welcome experience from other people.

        In this series:

        1. What has S&OP ever done for us?
        2. Is S&OP Really Necessary? Integrated Supply Chain Planning
        3. The Role of Integrated Supply Chain Planning
        4. What has S&OP ever done for us? A great deal actually...
        5. To S&OP or not to S&OP - That is the question
        6. What has S&OP ever done for us? The role of the CEO
        Oscar Supply Chain Blog

        Tags: Michael Thompson, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning

        Santa & Opening Presents - Why S&OP is Invaluable at Christmas

        Posted by Dave Jordan on Mon, Dec 06, 2010

        “Dashing through the snow
        In a one horse open sleigh…”

        How many of you actually started to sing then? Yes, the festive period is fast approaching and the biggest and best Supply Chain in the world is almost ready to activate. There is no way Santa Claus could achieve his annual success without sticking rigidly to an S&OP process, i.e. Santa & Opening Presents.

        The process starts every year on the 26th December just as all the children start to play with the empty packaging instead of their much sought after gifts. Their engorged parents lounge sleepily in front of the television watching The Great Escape – again! The loyal Elves are given their end of season bonus and packed off back to Eleveden Forest in Suffolk. Didn’t you know that is where they live for most of the year?

        Before January is over those lovely people who design toys and games quickly introduce new and more exiting models which will become must-haves for countless girls and boys. Toy shops are visited and millions of children quietly note those presents they would like Santa to bring them this year. The demand slowly builds until it is time to bring the Elves back from Suffolk on the eleventh day of the eleventh month – no coincidence there! The first job for the Elves is to get the factory ready to run once again.

        S&OP Planning Cycle

        In parallel with this, millions of children around the world unzip their pencil cases with a purpose. Using their best handwriting they tell Santa they have all been well behaved this year and then they list all the presents they would like to receive. This accumulated demand allows the Elf factory to start making production plans to meet a deadline that is set in stone.

        Money does not grow on trees so “Santa” has to quickly check what can be afforded from the budget. Remember, the wish lists are always too long and you do not want 100% Customer Service  – keep “em hungry” I say. The Pre-S&OP takes place with all stake holders involved to ensure everything is ready to go. You want to avoid stock-outs just as much as you need to avoid expensive write-offs.

        After necessary adjustments are made to the planned volumes by sku the final S&OP takes place. Santa is fully dressed in his best uniform and takes his seat. If Pre-S&OP actions have not been carried out then there is unlikely to be much “yo ho ho-ing”. Everyone is in agreement and the final set of child and present numbers is rubber-stamped. Everyone involved in the Christmas S&OP must operate on the same set of numbers or somebody will be disappointed.

        The big day comes and Rudolph leads the reindeers in pulling the sleigh across the world. Santa makes sure all the presents are delivered on time before little heads lift from pillows to wake parents at 4am! (Well, I did.)

        And before you know it there we are again on 26th December and the same robust and reliable S&OP cycle starts all over again. See you next year Santa.

        “Dashing through the snow
        In a one horse open sleigh
        O'er the fields we go
        Laughing all the way
        Bells on bob tails ring
        Making spirits bright
        What fun it is to laugh and sing
        A sleighing song tonight”

        In this series:

        Other seasonal posts:

        Oscar Supply Chain Blog

        Tags: Customer service, SKU, Christmas, Dave Jordan, S&OP, Forecasting & Demand Planning

        The Role of Integrated Supply Chain Planning

        Posted by Michael Thompson on Thu, Dec 02, 2010

        Having met the protagonists, let’s see if S&OP is really necessary.  First, let’s remind ourselves of the players:

        REGINALD is CEO of a multinational FMCG company.S&OP debateHe does not believe that S&OP is necessary for his business and expressed his views in a recent annual operational review meeting.  He has asked that the company’s identity remain confidential.

        JACEK is the new Head of Supply Chain Development at the same company.  A supply chain development expert, Jacek too believes that S&OP is not always necessary. 

        So what is there to debate?

        MIKE (yours truly) That’s where I come in. I suspect that Reginald and Jacek have come to a similar conclusion but for totally different reasons. I am the moderator of this debate.  Let’s get started.

        MIKE (MODERATOR):Gentlemen, thank you for agreeing to attend this debate. I would like to start with a reminder of the topic.  Is S&OP Really Necessary - the role of Integrated Supply Chain Planning.  Let me start by asking the question “Can companies operate effectively without S&OP?”

        REGINALD (CEO): Thank you. Of course they can. There was life and business before S&OP you know. When I first started out in the Sales Department, there was no such thing as S&OP.  There was Sales.  There was Marketing.  And then there was the factory ... And that’s where the problems started.  It didn’t matter what we did, the factory always managed to find an excuse for not producing it ... or producing the wrong thing ... usually lots of the wrong thing ... and then we had to sell it .... the wrong thing that is ....

        MIKE (Moderator) Thank you Reginald. Can I invite Jacek to join the discussion.  Jacek.

        JACEK (Head SC Dev) Thank you Mike.  S&OP has been around for many, many years.  There is no doubt that it has a value.  Or has had a value.  But times have changed.  And technology has changed.  We now have the technical capability to run most companies very effectively without S&OP.

        REGINALD (CEO) So we all agree.  S&OP is not needed.

        MIKE (Moderator) I do not think that you agree for the same reasons.  Jacek, please can you explain why companies can run very effectively without S&OP.

        JACEK (Head SC Dev) It’s all about sound supply chain process and integrated ERP systems. I would like to call it  - “Integrated Supply Chain Planning”.

        REGINALD (CEO) Oh process and IT is it?  Jacek, you sound like a consultant, not our Head of Supply Chain Development.

        MIKE (Moderator) Reginald ...

        JACEK (Head SC Dev) Let me explain with an example. Let’s say that a company can sell all that it produces.  Let’s assume that the company only operates in one country, although the same principle applies to above market planning.  Lets also assume that the company has a simple order fulfilment model, a make-to-stock supply chain model.  The company has an effective sales force with good trade contacts and importantly it has stock visibility at the Point of Sale (POS) via trade data exchange from their distribution partners and / or EPOS data.  Let’s assume that they have implemented an integrated ERP system.  Given the above, an effective demand capture process, supported by a sales forecast that does indeed capture trade data (POS or Regional Distribution Centres) and an effective order entry process & system, the supply chain can operate effectively. 

        MIKE (Moderator) That’s some example Jacek.

        REGINALD (CEO) In an ideal world of course.

        JACEK (Head SC Dev) Yes sir but ...

        REGINALD (CEO) Please call me Reginald.

        JACEK (Head SC Dev) Yes Reginald.  But you, sorry we, already have in place most of what I have described.

        REGINALD (CEO) So how can we get an effective supply chain, Jacek?  And what about S&OP?

        JACEK (Head SC Dev) Let me start with the first question – how to get an affective supply chain.  It’s all about converting incoming orders into flexible production. Its less about S&OP.

        MIKE (Moderator) Gentlemen, that is all we have time for today.  Thank you.

        Next time we will deal with supply chain responsiveness & how S&OP can get in the way.

        Any thoughts out there?  What is your experience with supply chain effectiveness & S&OP? 

        In this series:

        1. What has S&OP ever done for us?
        2. Is S&OP Really Necessary? Integrated Supply Chain Planning
        3. Is S&OP Really Necessary? Forecasting & Supply Chain Responsiveness
        4. What has S&OP ever done for us? A great deal actually...
        5. To S&OP or not to S&OP - That is the question
        6. What has S&OP ever done for us? The role of the CEO

        Tags: Michael Thompson, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning

        Supply Chain, What’s That All About?

        Posted by Dave Jordan on Wed, Dec 01, 2010

        Ok, I will admit to something. I started my career as an R&D type who helped bring FMCG products to the market. Nobody really knew how a product made the transition from bench top and pilot plant testing to the supermarket shelves. Somebody must have been involved somewhere but this was hardly a cohesive team with job descriptions let alone aligned roles and responsibilities. Even then “somebody” was not part of the project team so with hindsight it was inevitable delays and mistakes would occur. “Somebody” was to blame every time!

        Supply Chain Small resized 600Supply Chain departments stared to spring up in FMCG and Pharma companies as formal organisations around ERP deployment. Recruits were taken from other departments; commercial, manufacturing, sales and even R&D! Very few had any real understanding of Supply Chain requirements and they certainly did not have any formal qualifications or training. Qualifications and training are now widely available through many organisations such as CIPM and the Supply Chain Council.

        I am not sure who coined the term Supply Chain though, do you know?

        I have taken a few Supply Chain definitions from the internet and started with the individual word basics ex an Oxford English Dictionary

        “Supply noun 1. An amount of something that is available for use when needed. 2 the action of supplying something.”

        “Chain noun 1. A row of metal rings fastened together. 2 a connected series of things e.g. a chain of events.”

        Seems reasonable but what about a more technical definition ex the Council of Supply Chain Management Professionals (CSCMP)

         “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

        Wikipedia chips in with “A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier and customer. Supply chain activities transform natural resources, row materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.

        Who can resist asking the people at the aptly named Supplychaindefinitions.com?

        “… the movement of materials as they flow from their source to the end customer. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service, demand planning, supply planning and Supply Chain management.  It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer.
        Although this Supply Chain definition sounds very simple, effective management of a Supply Chain can be a real challenge.”

        Investopedia.com offers up this definition which I particularly like as it highlights Supply Chain as a “crucial process”.

        “The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, the supply chain encompasses the steps it takes to get a good or service from the supplier to the customer. Supply chain management is a crucial process for many companies, and many companies strive to have the most optimized supply chain because it usually translates to lower costs for the company. Quite often, many people confuse the term logistics with supply chain. In general, logistics refers to the distribution process within the company whereas the supply chain includes multiple companies such as suppliers, manufacturers, and the retailers.”

        Rightly, Supply Chain is now part of every company aiming to put a product in front of consumers whether this is FMCG, Pharma, Telecoms etc. However, is it seen as “crucial”? Even today I feel some companies still underestimate the value a “storming” Supply Chain team brings. In some companies Supply Chain does not have a discrete representative at the “top table” If you delegate Supply Chain management to your Sales Director then you should reconsider that decision. One way of ensuring sustainable sales uplift is NOT to report the Supply Chain community into another non-specific company director.

        Tags: FMCG, Dave Jordan, Pharma, Supply Chain, Forecasting & Demand Planning