Aligning Supply and Demand with Sales & Operations Planning

Kamal D Soni, Sr Presales Consultant

Business Analytics Software, IBM India/SA

Business Challenges

• Customer service pressures– Customers are more demanding

– Demand changes and fluctuations

• Driving profitable, highly efficient supply chains– Must manage extended lead times

– Reduce cost of goods sold without sacrificing servicelevels

• Managing supplier relationships– Outsourced production leads to greater reliance on suppliers

– Communication and synchronization challenges

• Difficult to achieve both flexibility and predictability – Consistent performance is key to success

– Must remain flexible enough to adjust to changing demands

Sell Fulfill DistributeProduceProcure

SUPPLIER MANUFACTURERDISTRIBUTION

CENTER RETAILER

Materials

Information& Funds

Materials

Information& Funds

Materials

Information& Funds

Breakdown identification point

Root cause is upstream

Customer Service Requires Total Supply Chain Visibility

Sell Fulfill DistributeProduceProcure

SUPPLIER MANUFACTURERDISTRIBUTION

CENTER POINT OF SALE POINT OF CONSUMTION

RETAILER

Materials

Information& Funds

Materials

Information& Funds

Materials

Information& Funds

Customer Service Requires Total Supply Chain Visibility

Monitoring Demand Forecast Accuracy

Monitoring Supply and Deployment

PlanMonitoring

Inventory Levels & Balance

Your supply chain impacts profitability, customer service and resource utilization

The IBM Cognos S&OP Blueprint

Manufacturing Performance Management

6

SCOR Metrics

S&OP Executive Review

Operational Planning & Execution

Integrated Financial Plan

Plan, Operational& Financial Data

AnalyticInfrastructure

• ERP

• Inventory

• Supply Chain

• Logistics / 3PL

• Customer Sales

• MES

• Syndicated Data

• POS Data

P&L Balance Sheet Cash Flow

Business Results

Go! Mobile

Scorecards

Dashboards

Reports & Analysis

Event Notification

DistributionDistribution

Sales & Marketing

Production

Sales & Operations Planning

• Supply chains becoming more sophisticated & decentralized

• Changing market conditions require near real-time visibility, and constant plan review

• An effective S&OP process:– Links day-to-day operations with business goals,

operational planning, and financial planning

– Unites disparate sales, marketing, operations, and finance functions

– Helps management model the effect of meeting demand on the company’s supply capabilities and financial goals

– Provides visibility into the P&L impact of plans

– Becomes the tool for senior executives to manage the business

S&OP Process Enabled by Cognos

Demand PlannersSalesMarketingProduct Management

Fulfillment &Distribution

Planning

Forecast Supply

Forecast Demand

Demand

Supply

Consensus

EXECUTIVEREVIEW

Resolve IssuesSet Direction

DetermineStrategic Impact

Use IBM Cognos 8 BI to Analyze ResultsCognos S&OP Blueprint

Re-ForecastBalance Production Plan to Fulfillment

& Distribution PlanConsensus Meeting

Executive Review & Linkage toFinancial Objectives

Supply ChainOperationsEngineeringLogistics

Sales and Operations Planning (S&OP) Blueprint

• Reconcile sales and demand forecasts with supply plans

• Identifies capacity, labor, supplier, material and financial obstacles to meeting the demand plan

• Allows capacity, cost, and throughput modeling of multiple products across multiple plants, to determine the right combinations

• Helps plan product mix among various plant and contract suppliers

• Evaluates supplier capabilities when creating the supply plan

• Provide the views and detail appropriate to each role

– Units, revenue dollars, labor hours, machine hours, etc.

• Monitor the plan on an ongoing basis using scorecarding and analytics, making ‘right-time’ adjustments as needed

• Model and assess the financial impact of supply/demand scenarios to create a multi-plant S&OP view

S&OP BlueprintBaseline Module

• Considers sales volume and promotions to drive revenue and demand volume plans

• Helps plan product mix among various plant and contract suppliers

• Allows capacity, cost, and throughput modeling of multiple products across multiple plants, to determine the right combinations

• Evaluates supplier capabilities when creating the supply plan

• Identifies capacity, labor, supplier, material and financial obstacles to meeting the demand plan

S&OP BlueprintFulfillment and Distribution Module

• Compare S&OP supply plan to fulfillment and distribution capability

• Mid-level master planning exercise– Production receipts to supply chain constraints

• Inventory Targets

• Distribution Center (DCs) space constraints

• Determine load versus capacity

• Determine need for supply chain outsourcing – 3PL, WH/DC capacity

– DC and Transportation Costs –based on variable and fixed cost drivers

– Allocation of demand to warehouses based on historical analysis and assumptions of movement from production facilities to DCs

• Analysis by business unit and product category

• Multiple scenario analysis and comparison

S&OP BlueprintExecutive Review Module

• Conduct “what-if” analysis to simulate the effect of S&OP scenarios on Balance Sheet and P&L performance

• Measure plan versus actual performance for sales, revenue, cost of goods sold (COGS), inventory, customer delivery metrics, and gross margin

• Easily analyze and drive performance by category, division, geography, channel or for the entire enterprise

• Deliver consistent plan performance visibility across all functional units, improving collaboration and consensus planning across the organization

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