How effective is your company at seeing the future? I’ll answer that for you, “I wish we were better at it.” The better you plan, the smoother all business functions will run. However, even the best forecasting processes still yield error and send out the wrong signals. If you want to crush the competition and keep your customers happy, you must have an accurate forecast. However, do realize, it is not the only tool in your shed. Demand Planning and S&OP are also critical “tools” that can enhance your company’s ability to react to changing and often unexpected situations.
Several years ago I found myself thrown into a difficult situation. One of the top retailers in the world was unhappy with our service levels and we needed to turn it around . . . and fast. I was told to get involved, drop all other tasks and find solutions. The lessons I learned over the next several months became the foundation for driving forecasting improvements, demand planning and S&OP in our company. I began working closely with the retailer’s replenishment analyst. It was important to heal the situation in their system according to their metrics and I needed to see what he saw. We began to collaborate closer on forecasting so that forecasts for both companies were sending the same signals. In some cases where inventory was tight, we worked together to spread the inventory at the correct levels to the correct stores so that a few stores didn’t end up with all the inventory, leaving other stores empty. I modeled each of our SKUs so I could let the customer know exactly how much inventory would be available each week for months into the future. This allowed us to call out concerns and work together to resolve issues well before they happened. It also allowed me to work with our supply chain and resolve inventory shortfalls before they happened. This difficult situation became the starting block for S&OP within our company. I’m happy to report that the relationship with that retailer is going strong, and that we have full support for S&OP at the highest levels of our organization.
I will be speaking at the APICS & IBF Best of the Best S&OP Conference in Chicago this month and will be sharing this journey and many other experiences that will help you see the importance of a collaborative forecast, the difference between forecasting and demand planning, and how to use them both in an effective S&OP process.
When you utilize all these tools effectively, you will increase your fill rate, improve your inventory turns, and improve customer satisfaction – allowing you to gain more business and dominate your competition.
Global S&OP Manager
Orbit Irrigation Products, Inc.