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Next Generation Sales &

Operations Planning
Concurrent / nonlinear S&OP in the evolving environment of big data, faster
learning of market trends and customer expectations and advanced IT
capabilities

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Table of Contents

Introduction 2

Challenges in Today’s Environment 3

Inefficiencies in Traditional S&OP 4

Next Generation S&OP 5

How Deloitte Helps Clients to Win 9

Conclusion 10

Appendix 11

Contacts 12

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Introduction
At a global automaker, the current processes for managing demand
and capacity across multiple markets and regions was under stress due to
lack of the ability to aggregate, and hence optimize, the global demand and
supply leading to delays in making timely and effective trade-offs. The
automaker went ahead of the curve and implemented technology and
“Unpredictability has led to
overhauled its current processes to predict future customer needs through
predictive and prescriptive analytics, recommended dealer ordering, track
evolution of Supply Chain
and trace systems and centralization of local and global planning. This from the traditional linear,
enabled the automaker to sync its business and operational sufficiency static models to the current
requirements. This effort reinforces the fact that in order to operate highly dynamic networks”
effectively in a competitive market, there is a need to think ahead and be an
early adopter to the paradigm shift happening around the new concepts of
concurrent planning and enabling technologies.

Continuously Changing External Landscape


In today’s age of advanced tech and connected networks things are getting
complex.

 Changing environment, rapid growth of technology and customers’


willingness to spend more for quality and satisfaction have given rise
to more product variety
 Product differentiation, non-linear relationships, unstructured
feedback loops and a few unknown interactions are making the
market hard to predict and control

This unpredictability has led to evolution of Supply Chain from the traditional
linear, static models to the current highly dynamic networks.

The market trends have led to a few challenges; however the technological
innovations do present plethora of opportunities to take advantage of these
trends.

Trends in Global Supply Chain

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Challenges in Today’s
Environment
S&OP has always been a demanding and
challenging process for planners within
organizations. But in today’s age of information
and connected networks, these challenges have
become even more daunting
Complex Global Supply Chains
Globalization has led to organizations having a very complex, multi-tiered “Increasingly complex
network of suppliers, facilities and customers across geographies. The supply chains, complex
number of product flow paths in such a vast network is mind-boggling which, products, rapidly changing
along with distances and time zones, poses a very big challenge to effective demand, present a
planning and collaboration required for successful planning.
challenge to effectively
align supply and demand”
Volatile Customer Demand
Increased customer choices, product customization, rapid technological
improvements, global competition and upstream supply fluctuations are all
contributing factors to ever increasing demand fluctuations. Managing volatile
demand efficiently is still a major challenge for organizations.

Customized Products
In their quest to offer customers with new features, products are getting
more complex with large number of raw materials and components being
used. To accurately model the demand and supply for these products at a
global level requires significant resources and analytical capabilities.
Consequently, organizations generally plan at an aggregate level and use
approximations which yields inaccurate results.

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Inefficiencies in
Traditional S&OP
While few leading companies have matured to an
integrated business planning model, majority
companies still rely on traditional operational
models to meet their business requirements
The traditional S&OP process involves a 5 step linear process:
Case Study

Slow, sequential and manual process


Current S&OP depends on regular monthly meetings, and follows a sequential
approach to supply and demand planning. In today’s dynamic environment,
this rigid structure is ineffective to accurately respond to sudden changes in
demand and supply. The globalization of the business environment and
increasing complexity in the value chain, has made accurate forecasting even
more difficult and thus reducing the effectiveness of traditional S&OP.

Information Silos
Most companies conduct their S&OP processes in discrete functions. It may
be possible that sales & marketing, finance, and operations departments are
acting as separate profit centers with their own interests and goals. This
creates artificial silos which results in significant inefficiencies such as limited
communication, process bottlenecks, data duplication and functional
prioritizations. Without seamless sharing of data and forecasts between
functions, the true potential of sales and operational planning can never be
realized.

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Next Generation S&OP
The key challenges faced by the organizations
are just going to get more complex in the future.
In order to be able to meet today’s challenges
effectively and mitigate future risks, companies
need to shift to a radically new S&OP process.
Single Unified Data Capture Model
Successful S&OP must be reinforced by solid and complete information from
across all the components of supply chain assisted by robust advanced
planning analytics. To achieve that, all demand data needs to be captured
into single unified information bank from disruptive technologies like Internet
of things, point of sales, social media portals and also rely on past events.
The Information Bank should be able integrate data from every division,
location, department, test assumptions of the plan, view data at multiple
hierarchies, make changes at volume level and effectively align volume and “The next generation of
mix, as well as Operations and Finance. S&OP will be a truly
collaborative effort
involving real time data
Single, Integrated Cloud based platform gathering and analysis,
improved decision making
and will move away from
inflexible ERP systems to
highly flexible and
customizable cloud based
platforms”

With a cloud based system, planners have the ability to access and share
data from anywhere in the world, via one standard platform, across any
device. This gives them increased visibility into the entire supply chain.
Planners would be able to work together on the same piece of information.
This single, standardized cloud based solution will be the single source of
truth.

Customizability
Each company is unique and has its own set of processes and ways of
working. The S&OP system should hence be highly customizable and
configurable to support different user requirements across different markets
and geographies.

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Process Orchestration and Collaboration
Collaboration is clearly about people and process. But technology has a key
role to play in enabling collaboration. The role of technology goes well beyond
simply sharing data. S&OP technology must also help to:

 Capture assumptions, inputs, and opinions of stakeholders in a


meaningful, organized fashion
 Identify and proactively bring together teams of people who are
widely dispersed (and may not even know each other) for both
planned and spontaneous interactions
 Enable stakeholders to share and evaluate scenarios in an interactive
way
 Document and track any commitments made and actions taken

Rapid Simulation and Scenario Planning Capabilities


Scenario capabilities are required to support decision making under
uncertainty. Scenario planning is a great discipline for supporting the dialogue
and decision-making at S&OP meetings in a complex and volatile
environment where emerging markets and long supply lead time continue to
be an increasingly important factor. Scenario planning provides a structured
approach to identifying drivers, scenarios and possible outcomes.

Continuous Monitoring of KPIs through Dashboards


Next Gen S&OP system is capable of generating a graphical dashboard
showing key KPIs across sales, planning, working capital, customer
satisfaction, and so on. This kind of dashboard makes it far faster and easier
to understand the current state of affairs, spot trends, and notice developing
issues.

S&OP dashboards should be role-based, so that they show the data that
matters most to the person looking at them and should include the ability to
drill drown as desired, going from high level summaries to the smallest of
executional details without ever leaving the system.

Cognitive Computing – a key technology


enabler of the next generation S&OP will provide
an effective solution to many decision challenges
faced by planners today

Cognitive technology encompasses machine learning, reasoning, natural


language processing, speech and visio and mimics the functioning of the
human brain and helps to improve human decision making. These system
can be trained to execute judgement intensive tasks and reduce human
errors and variations.

Enables better visibility


Manual processes are simply incapable of monitoring all of the sources of
data required to achieve good visibility. Armed with the right information, a
cognitive planning system will manage routine processes and decisions and
will only need to alert decision makers when anomalies are detected. With

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better visibility, forecasts can be improved, out of stock situations can be
avoided, chargebacks can be reduced, and productive inventory can be
increased.

Enables better prediction


 Cognitive computing can analyze many more variables than current
systems and are, therefore, able to make predictions with greater
accuracy than the forecasts many businesses now use.
 Better predictions can help eliminate things like the dreaded Bullwhip
effect
 Predictions generated from data will help improve decision-making
and reduce the reliance on tribal knowledge to a very large extent

The future requires more Decision “Better predictions can


Scientists instead of Data Scientists help eliminate things like
the dreaded Bullwhip
S&OP is all about taking the right decision at the right place at the right time. effect”
With real time data analytics, organizations need to take decisions more
frequently. Decision Scientists have the capability to incorporate business,
math, technology and behavioral science to help businesses make informed,
and meaningful decisions.

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In order to effectively deploy the Next Gen S&OP
system, a cadence of key business meetings
should be a part of every planning organization.
All key business functions should be a part of
these meetings
“The key to these
Quarterly Strategy Meetings meetings is that they are
Quarterly meeting of top executives to review current business situation and aligned in terms of
identify focus areas moving forward. The key outcome of this process is to strategy, focus and
identify a series of strategic measures and next steps required to win. approach. The same value
Periodic / Monthly Planning Meetings chains are analysed, by
This meeting develops the plan required to ensure that the strategy is different teams, at
executed. This meeting may have feedback loops to the Strategy Meetings, different levels of
if the planning team feels that the strategy is unrealistic or to the granularity and over
Management Meetings, if more focus on execution is required. different time horizons”

Weekly Management Meetings


This weekly process effectively needs to ensure that supply and demand is in
balance for the forthcoming weeks, and analyses any issues that occurred in
the previous week so that the root cause is known and appropriate action is
taken to resolve it.

Daily Execution Meetings


A daily stand-up meeting should be undertaken to ensure that everything is
in place and that any unforeseen surprises that occurred over the last 24
hours are understood, and an agreement as to what actions are taken.

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How Deloitte Helps
Clients to Win
Deloitte helped a large global automobile
manufacturer to transform their planning process
by deploying a standardized, integrated system
worldwide resulting in improved margins,
revenues and customer delight
Situation
Tool Spotlight
 Client was a major player ($147B in annual sales) in an industry with
high capital investment and low margins
 The firm wanted to operate more efficiently at a global level.
However, the client was struggling with:
 Visibility to global demand and constraints
 Ability to plan supply and utilize cross-region supply sources
 Ability to develop an accurate financial forecast and better predict
cash flows in the mid – long term horizon
 Each region performed its own IBP process at different planning levels
and buckets (week / month); aggregated demand – supply picture
was impossible to determine
 All planning was completely regional in terms of data management,
tools, spreadsheets, levels and integration

Approach
 Selected Kinaxis rapid response as a global heuristic based planning
engine to replace the plethora of custom applications
 Used global constraints to manage the supply plan to meet total
aggregated demand
 Provided ability for each region to still manage and allocate supply to
individual markets
 Rationalized planning levels and buckets across regions

Impact
 Ability to visualize and address demand globally across 4 regions and
scores of customer markets
 Central constraints management to increase capacity utilization and
indirectly lower capital needs
 Ability to develop an accurate global financial forecast and drive consistent
month-on-month reconciliation process

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Conclusion
The need to shift reduce complexity of global supply chains is the need of the hour. To compete
effectively in a changing and evolving environment, organisations must adopt a more concurrent
approach towards S&OP leveraging opportunitites posed by advancements in big data and connectivity.

Sales & Operational Planning must be powered by a single integrated platform which enables end to end
supply chain visibility and collaboration. It must support real time simulation of various scenarios,
enabling the all the planner across various functions to collaborate effectively together to develop a
single unified plan. And it must alert appropriate audiences when significant misalignment or unplanned
events occur that impact the execution of the plan.

Spreadsheets, ERP systems and other manual optimization models are not capable to handle the
requirements of the future. It requires the most latest and advanced technology to power the next
generation of sales & operational planning systems.

In the near future, organisations who are early adopters of change & technology, and who quickly
implement the next generation of sales & operation planning systems and processes will take the lead
in unlocking the next source of competitive advantage.

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Appendix
References
1. What is Integrated Business Planning and Why the Fuss?, Riverlogic -
May 2010

2. Using Big Data to Enhance Demand-Driven Forecasting and Planning, The


Journal of Business Forecasting, 2013

3. Big Data is becoming a Big Deal for Agile S&OP – Steelwedge, 2013

4. Moving from Descriptive to Cognitive Analytics on your Big Data Projects,


IBM , 2014

5. An Integrated Approach to Global Capacity Management for Automotive


Manufacturers, Kinaxis, 2014

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Contacts
The authors welcome your comments and
questions
Rajeev Rao
rajrao@deloitte.com

Akash Deep Choudhury


akchoudhury@deloitte.com

Mudit Kshatriya
mukshatriya@deloitte.com

Ranjeet Wadatkar
rwadatkar@deloitte.com

Sriparna Sarkar
sripsarkar@deloitte.com

Subject Matter Advisor – Aamer Rehman


aarehman@deloitte.com

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