Miller Magazine Issue: 154 October 2022

69 COVER STORY MILLER / OCTOBER 2022 S&OP and S&OE processes and many milling companies that run S&OP do not effectively utilize the data and infor- mation; therefore, they are not able to focus their discus- sions to long-term challenges and trade-offs effectively. Today, leading companies who already adopted S&OP and S&OE are putting their focus on digitalization of their S&OP and S&OE processes with data and analytics driven technologies. A digital S&OP and S&OE can bring much better long-term visibility, enables end-to-end dynamic business planning, and substantially increase the opera- tional efficiency and effectiveness. Successfully implemented Digital S&OP & S&OE reflects itself in business results as well. (see Figure 1) S&OP is all about long-term planning S&OP (Sales & Operations Planning) requires a step change in the way businesses think, plan, and make de- cisions. S&OP is a monthly process that gives a long-term view (from 3 to 18/24 months). S&OP takes place in 4 review sessions within the month: (1) demand, (2) supply, (3) recon- ciliation, and (4) executive review. In each of these review sessions, there are continuous fact-based discussions about the market, competition, and customers. Based on market expectations, supply plans are prepared consider- ing different scenarios to optimize what, when and where to produce. Comparing demand and supply, management teams make decisions on which product categories and customer segments to prioritize, how to plan actions to ad- dress the gaps and mitigate the risks in the future. S&OE prevents firefighting when there is a change in plans S&OE (Sales & Operations Execution) is a weekly pro- cess on short term (0-8 weeks) where cross-functional teams talk about the changes and variances in their sales forecast, customer orders, sourcing, production, and trans- portation plans. S&OE aims to identify short term challeng- es and plan proactively for those so that companies can be proactive rather than being in firefighting mode. Digital S&OP maximizes the value S&OP creates tangible benefits when it is digitally en- abled. Thinking and planning for long-term based on dif- ferent scenarios is challenging even in very mature and established industries. Every month, without necessary data and technology, going through the same process manually can be a long haul for the teams. While thinking long term, businesses need to be agile to respond to market needs. In a complex business environ- ment like today, only agile companies can succeed and still be effective in their operations. Agility can be achieved with real time visibility and decision support tools for planning. At minimum, a digitized S&OP should leverage technol- ogy for its 4 key components 1. Demand Forecasting: Companies need analytics ca- pabilities to analyze historical data, determine and quanti- fy impact of market drivers, and forecast demand for the long term. AI-driven algorithms will learn from historical data and enable data driven forecasts which are further enhanced with insights from sales teams. 2. Digitally Enabled Network Planning: For companies with multiple production facility and/or warehouses with different capabilities, it is almost impossible to identify the most optimum way of allocating demand with a manual ap- proach. Network planning tools enable businesses to dig- itally map their network capabilities and immediately see the results of their decisions with underlying assumptions and calculations prior to applying them. 3. Scenario Planning: Scenarios are the most valuable output of S&OP. Considering market conditions and supply availability, management teams need to see the profitability implications of their decisions. Different commercial deci- sions lead to different demand scenarios and each demand scenario has an individual supply response. Teams need technology supported scenario planning capabilities to sup- port the decision-making process and optimize the results. 4. Real-time Visibility and Supply Management: Plan- ning efforts need to be supported with actual results of KPIs. Without knowing how the business is performing, the teams will not be able to make informed decisions. In many companies, data availability, quality and transparen- cy are still major challenges that hinder S&OP value. Tools like end-to-end supply chain planning enables business- es to track actual results and collect relevant, high-quality data for analysis and planning. Figure 1: Business benefits of S&OP