We all know that S&OP requires the involvement of Finance but in many organizations this function can feel detached from the core S&OP functions of demand and supply. Make no mistake, though, the financial context of a company underpins the entire planning process and is key to keeping demand and supply planning aligned with financial constraints, company goals, and strategy. In this article, I invite planning professionals to walk a mile in Finance’s shoes, revealing the priorities and core responsibilities of this function, including how they must represent the voices of management, ownership and, if applicable, the bank, in the S&OP process. I also discuss how Finance can add value to the S&OP process (and the enterprise as whole) by revealing the impacts of planning activities on cash flow, margin, and P&L, and more.
Don Clark
Fall 2022
4
COVID, with its massive disruptions to both demand and supply, revealed critical shortcomings in supply chains. What is often overlooked is that while we couldn’t necessarily have predicted the pandemic, we had engineered our supply chains in such a way that COVID’s impact was far more severe that it needed to be. Overly lean inventory policies, over-optimized supply chains, SKU proliferation, inflexible production, and BOM complexity meant that we had no slack in our supply chain and operations to handle major demand or supply disruptions. In this article I describe how we as a discipline were already primed for failure and that COVID merely lit the fuse. I intend for this article to document the failings of our discipline in reaction to this event so that we may better prepare for the next, inevitable disruption.
Patrick Bower
Fall 2022
8
During the COVID-19 pandemic too many supply chains — predicated on lean inventories — broke down sooner than they should have. Meanwhile, since the pandemic’s impacts are now easing, product companies are now stuck with surplus inventories of items that sold well during the pandemic but are no longer. In this column I discuss how the Just-in-Time mindset and overly-focusing on Return of Assets fosters an unfairly negative view of inventories. I argue that this mindset needs to be revisited in light of the lessons taught to us by COVID. I also distinguish between ‘good’ inventory and ‘bad’ inventory and the many reasons to hold the former.
Larry Lapide
Fall 2022
4
The most difficult thing in forecasting is to forecast new products because they have no direct history to go by. In this article, I describe an approach to focus consensus team forecasting, called ‘trial and repeat.’ It is used to forecast demand and success indicators for new products. The article explains step-by-step how it works to forecast and how it is used to measure and adjust expectations during the first year of sales. I also describe how I got how he got the approval of senior management as well as of others involved in embedding this model in the process.
Rich Gordon
Fall 2022
5
The unprecedented supply constraints and demand shifts that emerged during COVID and are being exacerbated by the war in Ukraine and rising inflation, have highlighted the criticality of shortterm, tactical planning. In this article I discuss how Sales & Operations Execution (S&OE), when integrated into Sales & Operations Planning (S&OP), can effectively identify and address gaps in the S&OP/IBP plans and AOP. Far from being yet another business planning acronym, this process is a valuable addition to existing S&OP/IBP processes and helps mitigate the risks and volatility we are currently experiencing, facilitates adherence to enterprise goals, and enable companies to fully leverage their competitive advantages.
Steven Hainey, CPF
Fall 2022
4
How did you get into demand planning and supply chain? When I was with Baxter I relocated from Yugoslavia to Belgium and was given responsibility for the surgical gloves supply chain which included some 80 SKUs. I inherited a system whereby sales forecasts would be provided each month from the 20 affiliates who sold the gloves. Instead, I decided to run statistical forecasting models on total European demand. The resulting fore ast accuracy was outstanding, and I used the forecasts for production planning in our Malaysia facility and also calculated reorder points for each affiliate/SKU combination and used them for distribution planning. I fell in love with supply chain and never turned back.
Allen Jacques
Fall 2022
3
Mature forms of integrated planning enable businesses to manage customer expectations while optimizing cost and profit. While Integrated Business Planning (IBP) and Financial Planning and Analysis (FP&A) processes often meet the needs of smaller manufacturers, this is not always the case for global manufacturing organizations. In this article I discuss how four critical capability gaps are falling between the cracks of IBP and FP&A processes and technologies, ones that prevent GMOs from optimizing enterprise costs, profit, cash flow, working capital and enterprise value.
Dean Sorensen
Fall 2022
5
Peter Zeihan’s World is Just the Beginning presents a vision of the The End of the future where the USA steps away from its role as world policeman, with countries across Europe, Asia and the Middle East left to fend for themselves, both in terms of trade and militarily. Whether it’s the Strait of Hormuz or the South China Sea, without the US securing supply routes, international trade is a thing of the past. In this dystopian paradigm, just a small handful of countries will survive.
Andrew Scuoler, CPF
Fall 2022
3
Expectations for the U. S. economy in the fourth quarter of 2022 point to slim growth. Consensus anticipates the nation’s GDP growth rate to remain at around 0.4% well into third quarter of 2023. According to Dr. Ray Perryman of the Perryman Group, the solid job growth in recent months (August unemployment stood at 3.7%) suggests that recessionary fears are overblown, even considering the two-quarter decline in GDP (much of which is attributable to rising exports, which indicates progress on supply chain issues).
Nur M. Onvural
Fall 2022
6
Digital tools and artificial intelligence can be your best ally for engaging all the functions of your company into a single Integrated Business Planning process and, therefore, for breaking down silos. Artificial Intelligence-based forecasting allows you to decrease human bias, boost end-to-end automation and maximize business impact. However, on this digital journey you must not underestimate the crucial importance of having empowered people and robust processes. In this article, we explain our recent experience of implementing a digital-based Integrated Business Planning process at Sandoz, a multi-billion dollar pharmaceuticals company, and share some change management tips that facilitate successful outcomes.
Begum Tellibayraktar
Natalia Rinaldi-Montes
Lorenz Hierl
Ignasi Brufau
Summer 2022
4
Over 4 years ago I wrote a column with Eric Wilson to start a dialogue about a new concept called Quick Response Forecasting (QRF). The column discussed speeding up responses to downstream and social media predictive demand signals. It also discussed rapid response to catastrophic events such as hurricanes and earthquakes. My research during COVID-19 has led me to believe that QR can play an important role in forecasting and planning following catastrophic events, because managers are faced with having to plan under uncertainty. This column discusses lessons learned during the pandemic and introduces a Hierarchy Demand-Supply Planning Framework that includes QR under uncertainty, separately run from the S&OP process.
Larry Lapide
Summer 2022
4
Forecast Value Added is a useful metric to identify which parts of the planning process are adding value and which are not. This is valuable in not only improving forecasting and planning KPIs, but in illustrating the value of demand planning to senior leadership. Launching a metric in a large planning organization is challenging, however. In this article, we reveal Hilti’s journey in FVA implementation, detailing how we launched it across demand planning teams in multiple markets, and maximized successful adoption through the use of training, collecting feedback from planners, and setting clear expectations.
Bogusz Dworak, CPF
Ramin Sahamie
David Young, CPF
Summer 2022
4