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In this series, CEPHAS principal Fane Friberg highlights the interdependent elements of an effective S&OP process for leaders of supply chain management. While some companies tend to fall back on the status quo, Freiberg highlights why it’s critical to actually increase the frequency of the S&OP rather than decrease the operations. His first focus was to stay committed to the process. Today, he discusses strategic imperatives.
Focus #2: Strategic Imperatives
Your business is driven by your strategic imperatives, and there is a very high likelihood that they include some form of cost, quality, and value (delivery). Cost is determined by the market. Quality is expected and demanded by the customer. Value is the distinguishing element, both internally and externally, to the customer base. In this comparison, the customer experience includes price, delivery, quality, and relationship. Meanwhile, the total cost of ownership is linked to humans, machines, methods, and materials.
Utilize the S&OP collaborative process to determine that at any given time, under any given circumstances, your team expects/demands that leadership is aligned. They expect you to communicate a cohesive action plan aligned with your strategic imperatives and business philosophies that resonate with them intellectually and emotionally.
Your S&OP process may yield a recovery curve that is a U, V, W, or some modified logarithmic curve, and your revival may yield recovery that could take many different forms of combinations and/or permutations. Figure 1 illustrates the three mountain peaks within the supply chain experience.
Figure 1: Three mountain peaks within the supply chain experience.
Regardless of the turn, your businesses must not only look at the present crisis but also envision how it will affect your future predictive model process and competitive strategy in line with your strategic imperatives. You should also envision how the planning strategy will constantly provide awareness and solutions (second/third peaks) to review metrics and identify programs that are in trouble; then, you must allocate the correct resource(s) to solve. Here are some tips:
- Distribute timely, regular, accurate sales reports to manage inventory and generate useful insights to allow sales to communicate effectively with their buyers about how items are performing
- Identify opportunities for expansion and increased in-stock levels and maintain level order quantities
- Track sales metrics and keep the sales team up to date on how products are doing
- Assess key metrics to communicate the health of the program
- Identify issues and work to solve to avoid negative impact on the overall success of a program
- Provide proactive analyses to identify areas of growth
- Constantly look for ways to improve sales and the overall business
- Use the S&OP process to align the enterprise
Fane Friberg is principal of CEPHAS.
To read Part 1 of this series, click here.