Daily Archives: October 20, 2011

The Next Practices Xchange Is Only Two Weeks Away!

The Mpower Group‘s next Next Practices Xchange (NPX) is two weeks from tomorrow, Friday, November 4, which means that if you are a Supply Management VP or CPO that wants to discuss pressing issues relating to next practice identification and adoption, you should be on a plane in fourteen days time.

And yes, the doctor will be there. As most of my regular readers know, I’m not that big on conferences. Most of the regular conferences in this space have become, or have always been, fairly mediocre from a Supply Management improvement perspective as they are focussed on appealing to the lowest common denominator to maximize their potential audience, attendance, and $$$’s in their pockets. Just like the now-defunct Purchasing, the content has been watered down like a soda at the KWIK-E-MART to the point where you really don’t want to drink it if your goal is to be a leader in that top 20%, 10%, or 8% (however you want to define it). Given that SI’s goal is education and innovation, they just don’t fit.

However, there are still a few shining lights in the darkness, and the NPX has repeatedly proven itself to be one of those shining lights. In the same league of leading Supply Management consulting firms like Greybeard Advisors (led by Bob Rudzki who recently published Next Level Supply Management Excellence) and Archstone (who were recently acquired by The Hackett Group), The Mpower Group has been trying to take Supply Management into the teens in a big way by defining what the Next Level is and what Supply Management organizations need to do to get there. And while it is a work in progress, a number of the issues they have hit upon in the last couple of years are dead on.

For example, the second last NPX focussed on Training and Transition and the last one focussed on Value. In between, The MPower group has been defining a new methodology for improving performance based on AEIOU: Adoption, Execution, Implementation, Optimization, and Utilization — noting that many of the benefits of new processes and technologies go unrealized because of lack of adoption or proper execution.

For full details, check out the NPX website or contact Theodore Brown at 1-888-5-Mpower or theodoreb <at> thempowergroup <dot> com.

See you there.

JDA and Oliver Wight’s Myths and Realities of S&OP – The Verdict Part II (IV of IV)

In Monday’s post, we presented JDA and Oliver Wight’s 10 myths of S&OP planning, as laid out in recent white paper. Tuesday, we presented their 10 realities of S&OP planning. Yesterday we reviewed the first five myths and realities and offered our own verdict. Today we tackle the final five.

  1. Myth: S&OP is just another executive meeting.

    Reality: When executives take control of the process, they define the information that they need. Graphical views of aggregate information (both qualitative and quantitative) are crucial to an effective S&OP process.

    Verdict: Yes and no. Graphical views of aggregate information are crucial to identify overall trends, historical and projected future, and to quickly identify where reality is diverging from prediction, but hard numbers are going to be needed when it comes time to determine how much a plan is off and how much it needs to be corrected. And executives will define what they want to see, not necessarily what they need to make a good decision. That’s why supply chain needs to lead the process, and why supply chain analysts need to dive in and figure out how to present the executives not only with what they want, but the critical information that is needed to make a good decision.
  2. Myth: S&OP relies on a fixed demand plan or statistical forecast.

    Reality: Demand-shaping strategies and scenarios are evaluated through the monthly S&OP cycle. Executives need to evaluate different scenarios to identify and compare
    the effects on Key Performance Indicators (KPIs).

    Verdict: This is dead-on. Good S&OP uses good modelling and analysis tools to come up with good projections and good plans for presentation, discussion, nudging, and acceptance.
  3. Myth: S&OP processes are too complex and difficult to manage.

    Reality: Winning companies are collaborating with their trading partners.

    Verdict: Yes, but it’s not trading partner data, but POS data that is the most critical. This gives the most accurate view of historical and current demand that can be used to analyze the current plan. It’s only relevant that your supplier can only supply 30,000 units if you actually need 50,000. If you only need 20,000, your need can be met, and how many more units your supplier can supply is irrelevant.
  4. Myth: The finance team is just going to override any S&OP plan that we create.

    Reality: The new paradigm for S&OP incorporates financial analysis into each key step.

    Verdict: Not sure where this myth came from, as it’s usually marketing, sales or manufacturing that tries to override the number. Finance just wants a seat at the table. They will accept whatever plan is accurate, as that will allow cash flow to be optimized in such a way that the greatest benefit to the company is achieved.
  5. Myth: S&OP can be solved with the implementation of a tool.

    Reality: S&OP must have a combination of people, processes and tools working collectively.

    Verdict: Correctemundo.

So what’s the final verdict? Three realities were dead-on. Two were completely whacked. SI couldn’t make sense of one. Three more were only half right. And the last one was ok. SI gives it a C-. While there was obviously some thought and effort put into this paper, and it is worth a read, it would appear that it fails to remember that supply chain is central to successful S&OP (execution), data- and numbers-based analysis is critical to success, and one-size does not fit all, especially for certain categories of fast-moving consumer goods.