Managing Automation - March 2008 - (Page 37)

ERP or another transactional system, fed it into an Access database, and used Excel spreadsheets to look at the past and the future of the business. Manufacturers interested in S&OP shouldn’t let the software equation trip them up, Dougherty and other experts say. “S&OP is too important a process to delay until everything is perfect on the systems front,” Dittmann says. “We invariably prioritize systems last. Not to say it’s not important; it’s very impor tant. It’s just more impor tant to get the process right, to get the organization right, to get the metrics right.” THE ICONOCLAST Getting the metrics right is what Mark Payne is paid to do. Payne has made a career of conducting S&OP, with a twist. Payne is vice president of worldwide operations, systems, and processes at Cisco-owned Linksys, a maker of routers, switches, and storage devices. Linksys hired him in 2006 to bring more visibility into its planning process. Before that, he implemented his unique brand of S&OP at Polaroid and Compaq. Payne’s approach defies the advice of most experts, who say that when forecasting and planning, companies should dig no deeper than the product family level (routers, switches, and storage devices, in Linksys’ case). Payne dives deeper — the WRT 54G router, for example — and monitors the sales and inventory of each SKU. With that level of granularity, “we know that 10 SKUs are causing our miss or the 10 SKUs that are doing really well,” he says. To facilitate the process, Linksys uses Symphony RPM from Symphony Metreo. The tool rolls up all the SKU information — something that in most companies demands a manual ef- Customer satisfaction has gone up because Linksys is better able to identify what goods are available to ship. — Mark Payne fort to combine multiple Excel data sheets. In addition, Payne relies on his planning department to monitor each SKU within pre-set parameters. Each planner manages 500 to 700 SKUs, responding only to metrics for inventory, sales, or production that exceed the parameters. Since Payne implemented the system at Linksys, inventory has dropped 30% and the order backlog has shrunk. Payne says customer satisfaction has gone up because Linksys is better able to identify what goods are available to ship. Meanwhile, order expediting managingautomation.com has fallen 90%. According to Colin Snow, RELATED ARTICLES: vice president and research diSAP, Cognos to Offer New S&OP Software rector at Ventana Research, www.managingautomation.com/s&opsoftware Payne’s use of the Symphony Sales and Operations Planning: The New RPM tool and dedicated planCrystal Ball ners — a process Payne dewww.managingautomation.com/sop2 tails in his book, Make the Don’t Forget About the New Products Numbers, Don’t Chase the www.managingautomation.com/newproducts Numbers — has saved Linksys Islands of Automation and other companies “tons and www.managingautomation.com/trans5 tons of money.” The Art and Science of Demand-Driven Both Payne and Snow credit Supply Networks www.managingautomation.com/supplynetworks the software for its role in the process. “You need a good COMPANIES MENTIONED: technology to be able to do Cognos cross-functional planning and www.managingautomation.com/Cognos repor ting and per formance McConnell Chase Software management,” Snow says. www.managingautomation.com/McConnell Payne believes the process SAP promotes realism. “It’s all about www.managingautomation.com/SAP3 showing the business what’s Steelwedge Software real,” he says. If salespeople www.managingautomation.com/Steelwedge consistently inflate their foreSymphony Metreo casts, the system points out the www.managingautomation.com/Symphony disparity. “It’s a big spotlight,” Payne says. “And it shines it on the operational group, it shines it on the portfolio and it shines it on the production side.” Payne’s approach is not for beginners, but it does highlight the fact that a realistic view of the business — and what is to come — can produce substantial gains. For companies looking to realize those gains, Dittmann of the University of Tennessee has some advice. First, the CEO or a top-level executive must show “very obvious and visible support of the process. If you don’t have that kind of support, it’s virtually impossible to connect the dots by aligning the functions.” Second, “attendance at [S&OP] meetings has to be mandatory,” and the participants must remain focused on the decisions at hand, not the latest minicrisis. “Without that, we’ve seen them fall apart time after time,” he says. Further, those meetings must draw on good data, a hallmark of strong decision-making. And the executives in charge should spread objectives across functions, Dittmann says. “That’s not to say that sales guys are going to care as much about operations issues as operations guys do.” But each side, he says, “needs to really begin to appreciate, in a way that has some teeth in it, the issues on the other side.” Nobody said reality was simple. s maonline Photo courtesy: Linksys 37 March 2008 http://www.managingautomation.com http://www.managingautomation.com/s&opsoftware http://www.managingautomation.com/sop2 http://www.managingautomation.com/newproducts http://www.managingautomation.com/trans5 http://www.managingautomation.com/supplynetworks http://www.managingautomation.com/Cognos http://www.managingautomation.com/McConnell http://www.managingautomation.com/SAP3 http://www.managingautomation.com/Steelwedge http://www.managingautomation.com/Symphony

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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