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I nervously paced back and forth in front of the audience.  I just didn’t think that they would understand, and then what was I going to do?  What was I going to tell my kids?  Despite my paranoia, I started…

‘I’m going to miss those days.’  (“What days, Ray?”).  Those days of gathering endless amounts of data from all the stakeholders, of compiling a massive data file that had to be zipped out, of never being able to analyze the massive amounts of data, of not being able to answer the pesky ‘what if’ questions, of not being able to answer all those variance questions…

I’m going to miss the pain and suffering, similar to missing an in-grown toe nail.  The constant reminder became a part of life, and now something is missing.  (‘What’s missing, Ray?’).

Ok, ok, enough of the rhetoric.  Let’s get to the heart of the discussion.  The pain and suffering often associated with Sales and Operations Planning has finally been addressed and is now dead.  For the past year, we have been working closely with many customers and we now have some amazing technology that addresses many of the issues that I have lived first hand around S&OP.  I can’t say that I am really going to miss that pain, but as a former marathoner I have always had a strong appreciation for the benefits of pain.  Normally with pain comes strength, but not in this case.

Let me explain what I view as being different from a very practical standpoint.  Again, I was a practionere and I was responsible for the S&OP process for a global $1 billion business – it was not huge (5 manufacturing locations, 6 distribution centers, a few contract manufacturers), but I lived it each and every month.  So here is what is different, and this is not in a priority order:

  1. SAP has embraced the fact that planners plan in Microsoft Excel.  Period.  The planning environment in this application leverages an EPM UI client in Excel – all the templates, graphs, formulas, etc. that planners have used for years is now leveraged as part of the SAP application.
  2. The ability to aggregate and disaggregate data at any level, from the high product family or market level down to the product SKU level, can now be done in seconds.  This ability is made possible by the power of in-memory technology from SAP (HANA TM).  Never before could you drill down or up the entire value chain, on any data set regardless of size, in seconds.  Cool stuff.
  3. A completely integrated data model so you can answer just about any question from one location.  Demand, supply, inventory, financials – currency, quantity, units, variances.  Make a change to the demand plan (‘Ray I see inventories at the auto dealers are down, that can only mean that sales are up.  We should adjust our plan for impact modifier that goes into the bumpers up by 10% – can we do it?).  Today, I can now create the scenario in S&OP, determine the impact on supply, capacity, inventory and even margins – and I can answer the question IN THE S&OP MEETING.  No-one else can do that.  Period.
  4. A front end Web UI HTML5 that can be viewed by any mobile device.  The home page has clear process flows, with action items, progress, alerts, and of course some killer graphics that are role-based and easily configured by the USER, not an architect.
  5. Social collaboration by design that enables the business process flows – follow the activities of the supply team, or the sales team, invite participants, assign action items, create visualizations such as polls or analysis to facilitate decision making.  Social collaboration is enabled by the development of SAP Streamwork (check it out for free at streamwork.com). 
  6. A cloud-based deployment so you can be up and running quickly – we’ll take care of the server, the back-ups, the hardware and everything else.  Innovation cycles happen fast in the cloud, so new enhancements can be deployed on shorter schedules.  And, you can roll out one business at a time. 

I don’t know if I can make all your pain go away – the battle scars will remain no matter what.  But I can tell you that if you are a planner and you have sat thru a dreadful S&OP meeting, that you should start to explore some new options.  I think you will be surprised at what SAP has to offer. 

Did I miss any critical components in my 1 thru 6 list?  Would love to hear from you, let me know what you think and what the challenges.

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4 Comments

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  1. Sean Mawhorter

    The only other benefit that I would point out is that the implementation of HANA S&OP does not require the immediate decomissioning of the current planning system (i.e. APO DP, SNP, MRP, etc.).  S&OP can be implemented and migrated in pieces and at a rate that fits your business.  It’s initial use as a quick reporting engine and what-if scenario support mechanism should be fairly easy and quick to get up and running.  One of my partners recently published a blog that touches on some of these subjects.

    http://scmconnections.com/SCM_BLOG/2014/10/14/navigating-through-and-taking-advantage-of-the-transition-from-apo-to-ibp/

    Great post!

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  2. Anitha Naduvath

    Hi Ray ,

      I have a pure technical background in HANA . I have 2 very basic questions

    – How is this solution a value add for chemical industry ? THis solution will also be used in other industries as well right ?

    – Is this solution offered in SoH ? Or does it involve additional licenses ?

    Thanks!

    Anitha .

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    1. Raymond Adams Post author

      S&OP is now part of the IBP stack in supply chain.  We have over 60 licensed customers (yes, it is separate from SoH).  Key value add comes from a few angles – first, the process is very collaborative, and interactions are enabled thru Jam.  Second, the concept of simulations and scenario planning were always very onerous in other applications – in S&OP, it is very intuitive and easy.  Huge value in examining options.  S&OP also has the ability to run profit optimization and rough cut capacity planning.  The other key value proposition is the fully integrated data model – make a change to raw material price and see the impact on margins, make a change to anticipated demand and see if you have enough inventory and capacity, plan a shutdown and determine if you have enough inventory to sustain.  Yes, very appropriate for multiple industries – CP, High Tech, Chem, O&G, retail, etc. 

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