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[285] Good discussion on real time S&OP    « Back to Category
Author: LCCMod1, Created on: May 16, 2013 7:44 PM
Keywords: assembly, finance, order commit, patent, S&OP
Categories: CEO
Language: English
Rating: Not Rated


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Does real time data (minute by minute integration with ERP) help or hinder the S&OP process?
I believe that real time integration can be too much of a good thing in the S&OP space. It leads to nervous plans and makes the planners more reactive. It seems to me that a reasonably high frequency (once or twice a day) of data integration is a more practical approach.

What are your thoughts?
1 month ago
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Donovan Childers, Dennis A. Daniel like this
28 comments
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Follow Dennis A.
Dennis A. Daniel • Hi Jon, I agree wholeheartedly that the execution piece within the approved S&OP plans need to occur frequently and with very real time data. I would see this as an integration step between demand control and Master scheduling that can and should occur on a weekly, daily and in some cases hourly basis.

My comments were that the executive process for which S&OP was originally intended should set boundary conditions and allow the execution to occur with little executive involvement. Demand and master scheduling should monitor the daily and weekly activity, and escalate if the execution deviates outside of allowable tolerances set by the executive plans.

In the example that you note, as long as the deviation can be handled between supply and demand, and does not violate a boundary condition set by the executive process, then execution should be permitted in support of the customer.

As computer aided planning has developed, there has been a tendency for S&Op to get into more detail than was the original design intent. It appears that is where Sanjit was originally coming from, and why IBP is now being used to describe the executive planning process.

Too much detail can distract the executive level process. If this occurs companies can fall right back into the trap where execution can not keep up because executive guidance was insufficient. Cheers Dennis
1 month ago• Like

Follow Derek
Derek Melville • So the clear messages here when putting together an S&OP reporting package is to design the reports in such a way that they don't go down to a too detailed level, ie stick to S&OP families, and secondly be clear that you are planning for the mid to long-term and don't get sucked into short term where the lines with execution are a little blurred
1 month ago• Like2

Jon Kirkegaard • Derek and Dennis:

Yes, you need to select a planning cycle time that you can accomplish coordinated / in-synch data and focus on "the goal". As disjoint data in a MPS / DPS / S&OP plan is disaster and garbage or worse dangerous.

Assume for most the goal is profitability, customer service, market share, employee satisfaction (etc. in nor particular order)

So the goals - to us - are business results not just a successful S&OP run as a goal. If you can use the S&OP "tool" or an abstract of the tool to help accomplish these goals between plans do you not think wise ? Do you not think help create support for "S&OP" ? This is not just "execution" it is using the same S&OP intelligence to better answer questions then "guessing".

Do you not think it is up to the management team based on size of company, expertise, preference, culture, etc. to select "how often" they resync demand and supply ? Some best practice defined in a 1960's MPS textbook in today's world of information and connectivity does not seem complete ?

In our Total Order Fulfillment methodology we define the full $ benefit from doing this S&OP and S&OP + capability and then define what is feasible and doable based on competition / culture etc. Then work to continually improve around paint points, customer needs etc.


Cheers

Jon
1 month ago

Follow Dennis A.
Dennis A. Daniel • Hi Jon,

No disagreement, keeping demand and supply in sync is a constant need. My
point is that this is a linkage between demand control and master
scheduling.

Regards

D

Sent from my iPhone
1 month ago• Like

Follow Finlay
Finlay McMillan • Keeping planning and execution separate is yesterdays business process.


Enlightened companies use connected planning with one set of volume and financial numbers driving the entire business and serving all levels of management.
5 days ago• Like

Jon Kirkegaard • Finlay:

Could not agree more...

The problem with the software market and the challenges and opportunities of improvement using "supply chain" is marketing and analysts artificially break up the domain of the problem to (1 )attempt to solve some portion of it and (2) to become the worlds tallest midgets of their declared space.

This is WHY when DCRA Inc. was founded in 2000 we created a solutions firm with software )no patented) and decades of strat and operational consulting frameworks and methodologies as we ONLY wanted to engage to solve problems not sell "stuff". Never met a client who wanted to buy software or hire a consultant... they always want to solve a problem or create an opportunity

S&OP in particular (in our opinion) only be addressed this way - period. Anyone who engages with a pure software company to solve S&OP is very naive

Taking S&OP and saying S&OP should only use X data because of Y issue is looking back not forward. Go back to my example (above) using Autocad and a change order in construction... this is like saying - " no won't use the tool to figure out extra material and labor to charge for ...we will just wing it"... very evident folks who get on this diatribe have never owned or competed in business. You ALWAYS look for a WAY to survive, profit and prosper or you go away. If you understand the "theory" behind S&OP it is all about using resources in a lean way to make profits... not following some procedure laid out in a 1960's textbook ?

S&OP and using its data relationships is probably the single most powerful way just about any business and improve in today's market - our opinion but one I think we can support analytically and empirically

Cheers

Jon
www.sopbook.con
www.dcrasolutions.com.
4 days ago

Follow Sujit
Sujit Singh • Jon,

When you know what building you are going to construct, then the Autocad example is apt. But what about the case when you could be up for a few possibilities. An apartment complex, a office building, a strip mall? It could be a strip mall in Florida versus Texas which could drive the type of foundation you would lay down. Or the building code you would have to follow could be different by state/country. In this case, would you be doing Autocad level (detailed) decision making or a more general level (directional) decision making. From your response, it seems you prefer the detailed level at all times. Am I reading this right? If so, I will have to disagree.

I think that S&OP is dealing with a longer horizon, and therefore has uncertainty in it. For that reason, I feel that the Autocad analogy does not apply.
4 days ago• Like

Jon Kirkegaard • Sujit:

Don't read to much in my metaphor what I am trying to make aware is the relationship model behind the scenes of the all the dialog and consulting or software overhead.

What I wanted to emphasize is my experience that is the relationships managed that are the "secret sauce" behind S&OP. Relationship of planning bill of materials to suppliers... just like take off of material to construction subs

relationship of manufacturing lead times to planning bill of material same as dependency in construction... you don't frame a building after wiring it or put a roof on before pouring a foundation

So metaphor is the relationships in an engineers head or enforce by a software tool are valuable. If you have 10 engineers and two achitects and 20 subs having a set of plans only way to keep build in sync...

However, what happens when things change (the execution between plans) or a change order in construction can be handled... ad hock, wing it or can use the tool and relationships to better engineer a profitable execution / change

using relationship manager in a different cycle of time very useful if not required ?

When you setup an S&OP system or manually done a plan you see these relationships? (material, planning bill of material vs. engineering bill of material), sources, alternative sources, lead times, timing of supply chain execution feeds, multiple suppliers for one component etc.)

There is enormous profit POWER and coordination synchronization and opportunity in use of this relationship model whether it is used once a year for annual budges or for every order. How it is used should be a function of business need. The relationships are not owned or created by S&OP. S&OP just a model of reality and a good place to collect and institutionalize the understanding and make transparent

JUST LIKE A SET OF BUILDING PLANS MAKES THE BUILD TRANSPARENT TO ENGINEERS, CONTRACTORS AND ARCHITECTS.

cheers

Jon

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