Why you want to avoid “best practice” advice with S&OP ?

Posted on September 8, 2016

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Why you want to avoid “best practice” advice with S&OP and think strategic advantage !

When we founded DCRA Inc. in 2001 it was to blend best in class approaches from management consulting with enabling technologies to provide out clients strategic advantage.  At the time software wold had never heard of S&OP but shrewd operational consultants had been using for a couple of decades.   We saw simply the ability to compress the lead time to net demand and supply as a big win for our clients.  It required both best in class tools and a strong S&OP process.

Having spent the previous 25 years deploying supply chain solutions for strategic advantage we focused on two key concepts.

  1. Fulfillment focused on customer.  We call it Total Order Fulfilment often using transportation to gain quick cost wins and lead time wins and
  2. Introduction of an S&OP culture and enablers with focus on  dynamic S&OP and even a patented real time S&OP process to improve profitability and working capital utilization

All of our clients started with a weekly S&OP plan and we then found ways to use the S&OP plans and culture to drive exception planning and eventually a real time planning Order Commit solution and patent.   This is almost instant savings and profit enhancement often even before any “tool” is fully deployed !  Imagine that ?  In addition our tools were developed to be non intrusive, low cost and highly flexible to work with any source of execution data.

Even today you will find consultants who will say “best practice is a monthly S&OP plan”.   “That is the best you can hope for”… really ?   At least in last couple of years you see a broader awareness that S&OP is not a tool but a culture and YES the more often and more scientifically enabled your demand supply netting the more value.

As the graphic above illustrates it is averages that kill business, give financial engineers license to mislead and kill cash flow.   Conversely it is the agility to counter constraints or enable competitive levers that creates sustainable profits with nimble operations.

I found the graphic  a terrific visual of why compressing planning cycle time especially with S&OP can produce profits, avoid sustained losses and improve synchronization with suppliers especially contract manufacturing partners.   Business is not linear and if you plan linear if you think straight line you will surely miss opportunities.   If something major happens in  your macro economic world or micro world it could get much worse !

For more detailed S&OP example contact us 214 352 0868, info@dcrasolutions.com or visit sopbook.com for our knowledgebase and description of DCRA Inc. unique methdology, tools and track record of deploying S&OP for profits

 

 

 

 

 

 

 

 

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