67% of companies who engage in processes Syop remain in their initial stages of maturity (1 and 2). Gartner http://supplychaindelivery.nl/gartner-sop-maturity/
Sales planning and operations (SYOP or PVO) are an interdisciplinary and collaborative process of supply and processing information. The company seeks to realize its strategic objectives into tactical and operational plans to be implemented, which may need to be measurable and generate feedback and continuous improvement processes. That is the maximum SYOP objective for companies that are in their full stage of maturity.
The emergence of the concept IBP ( Integrated business planning ) is the PVO evolution, where artificial intelligence is expected to have the tools. Demand sensing – Demand translation, manage large volumes of data ( big data), among other features, which allow the company to react more agilely to external signals (market, competition, suppliers, etc.)
Entering more deeply into the concept of IBP can be found significant advances such as :
- Visibility from beginning to end of the supply chain and all the relevant information for it.
- Create and evaluate scenarios: “what if”…. to have alternative action plans on hand in case implementation is not achieved or is only partially achieved.
- Extend the collaborative process to suppliers and clients directly.
- Eliminate the concept of monthly collaborative cycles for permanent collaboration among all stakeholders.
According to the strategic plan, constant review and monitoring of the execution to make the necessary adjustments.
You can quickly then understand that this is a critical process within companies. Its improvement depends on achieving execute the strategy and the results in terms of profitability. Now, to ensure a correct deployment that effectively integrates all those involved and that they collaborate in a responsible and disciplined way with the process, a leader is needed, an area that takes ownership and is accountable for carrying out this process. Taking a holistic view of the business, which serves as a judge of its economic performance, and the area can not LOGISTICS.
SYOP – IBP is the best way to generate an assertive communication between business areas and oriented strategy.
It is clear that, in the first stages of implementation and deployment of the PVO process, the interest is to achieve a match between demand and supply, seeking; as a result, optimal levels of service and working capital; outputs other than the previous ones are not expected. The Logistics area provides the inputs to the process, such as inventory levels, provisioning times, or base and forecast sales. From there, the commercial areas review the proposed forecast and modify it, thus obtaining the definitive future sales data to specify what is known as the “Unrestricted Demand Plan.”
Later, and according to the current conditions of supply, internal restrictions of the company, and other aspects, areas responsible for managing the company offer (supply, transformation, and movement) made the best offering plan, which will be discussed and adjusted by senior management.
It’s logical, then, that this process to be “operationally led” by the area of logistics. To be seen as a process of this area; However, the logistics area still does not have the prominence or weight required in companies to produce the necessary changes that bring the PVO – IBP process to its greater maturity.
The PVO process in its last stage of maturity is the COMMITMENT TO ORGANIZATIONAL DISCIPLINE. It’s understood as a long-term process and will benefit all company’s indicators even if SOME ARE SACRIFICED IN THE PRINCIPLE.
THE COMMITMENT TO ORGANIZATIONAL DISCIPLINE achieves:
- Defining policies.
- Making clear the responsibilities and expectations of each of the participants.
- Setting strict control of time through calendars and schedules.
- Defining clear organizational strategic objectives.
- Depurate management indicators looking for company indicators, not area indicators that seek local efficiencies (such as those that come from cost accounting).
- Defining new and innovative ways to encourage and recognize the areas involved. Above all, remember and reward organizational discipline.
- A change management process with all the commitment of the company’s directives.
- Understanding by top management that the supply chain is a complex system that must have minimum stability to be successful.
However, for many companies, especially those of medium and small size, organizational discipline is seen as a straitjacket that takes away dynamism and flexibility from the marketing and sales department.
Policies, deadlines, schedules are strict until you hear phrases like “the market is very tough.” At that point, right out there, the indicators are overlooked, and the rewards are selectively delivered because “we don’t want the sales force to get discouraged. “
However, in the monthly results meeting, questions arise: Why is spending so high? Did you forget that “the market was very tough”, and we delivered several consignment orders that were later returned to us?
Be careful, being flexible is very different from being a spike. ORGANIZATIONAL DISCIPLINE IS FLEXIBLE.
The inability to achieve one or more of the above items does arise those “natural conflict” between operations and business areas. There are even companies where the leaders sponsor these conflicts. This fact causes them to deepen every day, to throw away communication and solidarity between the areas, complicating the evolution of the PVO process and even causing people to die without having started.
Some companies have gone bankrupt for attending as much business and commercial opportunity as appears, just as there are companies that forgot the market as the market forgot them, so it is essential to understand why and which area should lead this critical process.
There are many approaches to which area should lead this process, all with very valid arguments that sometimes depend on the type of industry or business model. However, I believe that the financial area of the company should be the natural leader of the process, being this and who ensures the ultimate interests of profitability, it has access to all the information and is a “neutral” area in these “disputes” that exist between the commercial and operational areas. For them, financials, sales, costs, and expenses are equally important, and they understand the impacts of any action on these aspects without any “fanaticism”.
My vote is for the financial area, trusting the leadership of the deployment and maintenance of the SYOP process.
By their nature, Finance can speak without problems in terms of strategy and know that success is making money today and into the future sustained manner. Obviously must be a financial area with a vision of the future, not shut or in numbers and statistics, to be achieved see more beyond today and tomorrow, and be willing to take calculated risks to opportunities that arise.
Defining the Financial Area as the leader from the beginning, it will be possible to explain and a more binding and better-accepted deployment within the company, of what SYOP will be initially and where it will want to go, IBP in short.
Juan David Restrepo Cardenas
Production Engineer, Logistics Specialist
Currently Consultant at WA Solutions, São Paulo, Brazil.