Demand Driven S&OP: A Sharp Departure From The Traditional ERP Approach

DEMAND DRIVEN S&OP: A SHARP DEPARTURE FROM THE TRADITIONAL ERP APPROACH By Robert P. Burrows III Enterprise resource planning (ERP) systems, currently used, do not work well in a customer-centric economy … what is needed is a demand-based supply system that focuses not on minimizing costs and inventory, but on optimizing customer value … currently deployed ERP systems churn out thousands of schedule changes at the individual SKU level to deal with the volatile nature of the demand economy. W W ith the rapid emergence of the demand economy, appeals for better planning and forecasting are intensifying as customers require 100% on-time performance. Enterprise resource planning (ERP) systems universally have scheduling and inventory replenishment logic dating back to the 1960s. These push systems fail miserably in the emerging demand economy. New rate-based demand planning tools are the solution because they replace traditional sales and operations planning (S&OP) logic and deliver competitive advantage. Continued reliance on the traditional ERP systems will substantially erode service levels and make total cost quite prohibitive. This article delves into the fundamentals ...