Managing Automation - March 2008 - (Page 34)

[MARCH 2008] Transformation Integration TechWatch [ TRANSFORMATION ] Back to Manufacturers forging ahead with sales and operations planning would do well to remember that a realistic view of the business goes a long way. BY CHRIS CHIAPPINELLI REALITY he concept of realism has had its share of champions and skeptics across the centuries, in arenas as wide-ranging as philosophy, literature, and physics. But for manufacturers intent on perfecting their sales and operations planning, it is essential. The sales and operations planning (S&OP) concept has been around for more than two decades and has won much attention in recent years. At the crux of the discipline is a series of activities that allow a manufacturer to say, “Based on our sense of market demand, we expect to sell X amount of product, and we will set our operations plan based on that expectation.” Ideally, it is a realistic assessment of future activities. But it seldom turns out that way, experts say. Salespeople forecast a great quarter, ignoring the fact that orders have been trending downward. Or a plant manager predicts that operations can make a certain quantity of product, even though he knows a machine is down and won’t be fixed on schedule. Reality sits somewhere in the middle, and it is manufacturing management’s job to play the two ends off against the middle. The stakes are high. A manufacturer that sets pie-in-the-sky sales goals will overproduce, expending precious capital and leaving warehouses with costly inventory and the P&L littered with chargebacks. Likewise, a company that overestimates its ability to make product could end up with orders it can’t fill and angry customers it may never see again. S&OP inserts a dose of reality into the process. The consultant firm Oliver Wight has stood at the vanguard of S&OP since it mapped the process’ early blueprint in the 1980s. The Oliver Wight methodology promulgates five crucial steps to an effective S&OP process: demand planning/forecasting at the product family level; Illustration: Jacqui Oquendo ma March 34 2008 Industries

Table of Contents Feed for the Digital Edition of Managing Automation - March 2008

Managing Automation - March 2008 Contents Take 1 Mailbox Mitsubishi, IBM, and ILS Team Up to Make Integration Easy for Automakers Former Agile Exec Takes the Reins at Arena Solutions The Next Phase for 2006’s PM Award Winner Integration Firm Boomi Redesigns for On-Demand Ex-Wonderware Chief Takes Helm at Apprion Notes Cover Story: A Rare Breed Special Report: Where are Control Architectures Heading? Transformation: Back to Reality Integration: Getting Standards Under One Roof Industries: The Quest for the Perfect Order Product Scan Advertiser Index Next

Managing Automation - March 2008

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