In this post, we shall discuss about the 5 stages of S&OP maturity and how DELMIA Quintiq can help the companies to achieve the highest level of S&OP maturity.
In the diagram attached, The 5 Stages of S&OP Maturity (The 5 Stages of S&OP Maturity - Diagnose the maturity of your S&OP process and identify the steps to improve it., n.d.) has outlined that there are 5 Maturity Levels of S&OP starting with Level 1 – No shared goals to Level 5 – Coordinated enterprise and network decision making to create value.
For the benefits of readers, this post will elaborate each level and how DELMIA Quintiq can help the companies to achieve the highest of level of S&OP maturity.
Maturity Level 1 – No shared goals
As the name suggested, this is the stage where companies don’t have a formal S&OP process and are working in silo with different spreadsheets in different departments. The communication and coordination between the departments are manual and lacking.
Most commonly, there are complicated formula within the Excel spreadsheets that can only be understood within a department. The Excel spreadsheets are shared through emails, local server. Hardcopies sharing are common too. The files sharing is usually within the function, rarely between different departments.
The lack of communication and coordination between the departments cause the lack of shared goals within the company.
Sales Department might not have visibility into marketing events, production capability and purchasing constraint, resulting inaccurate demand forecast and imbalance supply to meet the demand.
As the company begins to grow in size and volume, very soon the management will realize better planning process will need to be implemented to achieve the shared goals.
Maturity Level 2 – Create an operational volume plan
One key step to achieve a shared goal in a company is to create operational volume-based planning to balance the supply and demand.
Most commonly, the basic features from ERP demand planning and supply planning will be used together with Excel spreadsheets for volume-based planning.
The goal is shared within the company. The access and understanding of the data is made simpler with an ERP system. Each department understands the improvements needed within their departments. However, the communication and the collaboration among the departments are still lacking.
The plans are not designed to be proactive, but more, to be reactive to the disruptions in the supply chain.
Maturity Level 3 – Balance supply and demand in end-to-end supply chain
As the name suggested, in Maturity Level 3, the planning is no longer by departments but it is an end-to-end supply chain planning with the goal to balance the supply and demand.
Most commonly, a Supply Chain Planning solution is in place (such as DELMIA Quintiq) to provide a single source of truth.
DELMIA Quintiq solutions, specifically DELMIA Quintiq Demand Planning analyzes historical demand and market intelligence to help you accurately predict demand and determine how to profit from it. Anticipate demand through improved statistical forecasting, collaborate more effectively with internal sales teams and external customers, and explore demand scenarios to increase sales. Revise forecasts immediately whenever market conditions change or new intelligence becomes available. (DELMIA Quintiq Demand Planning – Increase Accuracy of Forecasts, n.d.)
While DELMIA Quintiq Supply Planning integrates and connects demand and supply chain planning to close the gap between what should be produced and what can be produced. Planners from both sides can work together to create and compare demand and supply scenarios. They can make key decisions collaboratively, whether to hire more people, create more shifts, add promotional activities or explore additional supply sources. The solution also lets you take it one step further – to move from capacity to capability by seamlessly integrating your supply plan with your operational plan. (DELMIA Quintiq Supply Planning – Retrieve Hidden Capacities and Sales Opportunities, n.d.).
Through DELMIA Quintiq workflow capability, the S&OP activities with due dates are created to ensure all the departments are aware of their contributions in the S&OP cycle. The workflow also provides the continuation from one activity to another, with data flow that will provide full visibility into the supply chain planning.
Demand Planners will experience the assistance from automated forecasting from many forecast models that meant to analyze the historical sales data to provide a higher level of accuracy in Statistical Forecast.
The forecast changes resulting from marketing campaigns, product life cycle events (such as phase in & phase out) and sales opportunities can be managed within the DELMIA Quintiq.
The Consensus Forecast will be generated from the DELMIA Quintiq based on the rules set, taking into consideration the different forecasts required, such as Statistical Forecast, Events, Customers Forecast, Sales Forecast and etc.
Through DELMIA Quintiq virtual twin, the company’s real-life supply chain is mapped into the solution together with their business rules and constraints which allows the Optimizer to take into account all these mapping during the supply planning.
With an end-to-end supply chain planning, the company will be able to close the gap between demand and supply.
Maturity Level 4 – Create a demand-driven, profitable supply response
As the goal of balancing the supply and demand has been achieved, the next level of maturity of S&OP planning is to be profitable.
To be able to create plans that are profitable, the financial data will need to be taken into account. From the sourcing cost, operation cost, inventory holding cost and etc. to the selling price of the finished goods.
DELMIA Quintiq enables the planners to map the financial data into the solution, so that the optimizer can take the financial mapping into account while optimizing the supply plans.
Other KPI that is critical for a company to maintain the profitability such as Fulfilment is calculated and displayed in the real-time KPI dashboard as it has direct impact into the customers’ satisfaction.
DELMIA Quintiq provides the flexibility and without the programming complexity to determine the optimizer strategy based on business situation, business needs and business KPIs that the company would like to achieve.
The optimizer strategy can be configured to focus or prioritize on several KPIs such as fulfilment, cost-savings, increase customer service level, sales, margin and etc., depending on the business needs.
The optimized supply planning result will be displayed in the real-time KPI Dashboard to provide the decision support system for the planners to further make adjustments to the plans if needed.
Maturity Level 5 – Coordinated enterprise and network decision making to create value
In the highest maturity level in S&OP planning, the departments in a company are having seamless collaboration and managing the S&OP plans that able to balance the supply and demand while achieving the desired KPIs.
The departments strive to bring further values to the company, i.e., by further reducing the costs, further improving the sales and fulfilment with eventual goal to further increase the profit margin.
These cannot be easily done without the capability for the planners to perform What-if scenarios and scenarios comparison based on different KPIs.
Through DELMIA Quintiq What-if scenarios capability, planners able to make changes to the supply chain, experiment with long term ideas such as opening a new plant, increasing the work-shifts, changing to alternative transporters, all with the goal to increase the company’s profit margin in mind.
The scenarios developed by the planners will be compared financially through the sales, costs and margin, so that the insights and tradeoffs can be obtained.
These comparisons will be able to help the company’s management to make better informed decisions.
As a reference, the diagram below shows the benefits obtained by some of the DELMIA Quintiq customers that achieved the highest level of S&OP maturity.
References:
- The 5 Stages of S&OP Maturity - Diagnose the maturity of your S&OP process and identify the steps to improve it. (n.d.). Gartner. https://www.gartner.com/en/supply-chain/trends/sales-operations-planning-sop-maturity
- DELMIA Quintiq Demand Planning – Increase Accuracy of Forecasts (n.d.). Dassault Systemes. https://www.3ds.com/products-services/delmia/products/delmia-quintiq/sales-operations-planning/demand-planning/
- DELMIA Quintiq Supply Planning – Retrieve Hidden Capacities and Sales Opportunities (n.d.). Dassault Systemes. https://www.3ds.com/products-services/delmia/products/delmia-quintiq/sales-operations-planning/supply-planning/
