Most FMCG manufacturers in South Africa have introduced some form of structured Sales and Operations Planning ("S&OP") process. The S&OP process facilitates a unified, cross-functional tactical plan linked to the business plan. Most importantly, this process provides an efficient bridge between the customer value chain and supply chain, while at the same time incentivising continuous improvement across the value chain.
S&OP is about organisational alignment - a key "people" element in the journey toward supply chain integration. This requires structured communication, which it turn, is only possible if performance measures, tactical alternatives and agreements are based on credible information. Unfortunately, many companies have difficulty in assembling credible information for S&OP purposes, thus compromising these objectives.
We have seen a rapid growth in the understanding of supply chain concepts in the FMCG industry; not only in the manufacturing sector; but in retail, with material suppliers and service providers. That is encouraging. We also see a rapid enhancement in technology capabilities and the use of transactional systems. Unfortunately, many companies still have difficulty in consolidating information to support cross-functional processes such as S&OP. The following model provides some insight on potential focus:
* Transactional systems should provide accurate data. Accuracy encompasses reliability and consistency, thus requiring focus on master data and the execution of processes as intended.
* Reporting suites should provide sustainable information to support supply chain decisions. Sustainability requires a focus on relevancy (right content, right time) and accessibility (easily obtainable in the correct format).
* Integration tools should enable understanding of performance which includes tracking, but most importantly structured, repeatable root cause analyses.
* Advanced planning systems provide the ability to automate decision support and planning processes through complex optimisation algorithms.
Business intelligence ("BI") is the gathering, management and analysis of data for the purpose of turning it into information, which is then distributed through the enterprise and used to improve decision-making.
By this definition, BI is primarily focused on the reporting and integration levels described above:
* Extraction of appropriate data from transactional systems, translation into a defined framework and presentation of alternatives for decision making is keys to the success of S&OP.
* Consistent performance measurement and root cause analysis, with specific understanding of the extent to which different processes contribute to availability or excess inventory failure. Understanding this in a structured way facilitates an unemotional S&OP process.
Role of Business Intelligence in Sales and Operations Planning (January 2006)
Often too much focus is place on transactional systems (layer 1) or advanced planned systems (layer 4), with too little focus on the reporting and integration layers. Business intelligence is thus neglected in favor of core transactional systems and sexy optimization systems. In the FMCG Manufacturing industry, BI is particularly relevant as a result of various business imperatives, including:
* The need to translate marketing, sales, production and procurement information into common "family"-based denominators to facilitate cross-functional decision-making.
* The increasing need to consider customer expectations and supplier commitments in the tactical planning within the organisation.
* Supply chain complexities including the length of the supply chain, global logistics considerations, the push-pull effect of particularly agricultural material supply and multi-year tactical planning horizons.
Appropriate use of business intelligence technologies in the S&OP environment can assist FMCG manufacturers to fact-track implementation success.
It is a concerning and growing trend that the commercial boundaries created by outsourcing are fragmenting the supply chain. Clearly, an unintended consequence in the world of passionate supply chain professionals. Care should be taken to avoid this
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