The average global company has 5 different S&OP processes, scattered across different regions and completely unintegrated. If yours is one of them, then congratulations! You have an opportunity to fix it and drive serious improvements in visibility, cost reduction and efficiency.
Global companies without an integrated global S&OP process are not using their assets in the most efficient way. Or, it can be said that they are not serving their customers with the best service or the most cost-efficient option. This could be due to several reasons: resistance to change, acquisitions, poor communication, silo management or lack of business integration.
Today, multi-national companies are all competing to be more cost-efficient but, in a customer-centric economy, they need to carefully balance the tradeoffs. Supply Chain professionals are the ones called in to solve this problem with innovative and practical solutions. The benefits of global S&OP rollout are:
- Cost reduction
- Better visibility
- Expansion into new territories
- Improve chances of successful new product launch
- Reduced complexity
- Removal of inconsistencies across the network
Buy-in and collaboration are crucial to any change management project; if there’s no collective will to implement it, it is destined to fail.
For a company to successfully roll out a Global S&OP process, it needs 3 core elements:
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1. Helicopter View On Their Regional S&OP
If they manage their regional S&OP teams separately without any global perspective, the company will not be able to leverage them to create a global network – no matter how mature the local S&OP is. A global outlook is needed, as is a similar level of maturity in the local S&OP organizations. Once the company is able to gather and analyze the current global situation, they can then move forward with potential solutions.
2. Total Cost of Ownership (TCO)
Having a global overview of supply and demand means you can optimize the supply chain network (SCN). The TCO plays a key role because it provides the total cost of serving customers from the different facilities that the company owns. The objective will be to minimize the total TCO for the SCN without impacting the customer service level.
3. Change Management Plan
Once the opportunities to optimize the global SCN are identified, the stakeholders will need to come up with a project to catch those opportunities. A change management plan is essential to highlight the importance of the project, align the different regions and stakeholders, and to avoid power struggles. Buy-in and collaboration are crucial to any change management project; if there’s no collective will to implement it, it is destined to fail.
This is not to mention the importance of technology, people and processes. Integration of regional S&OP organization requires software and the people to use it, and structured processes implemented by visionary leaders who may or may not currently exist in your company. Further insight into planning and implementing global S&OP is featured in this edition of the Journal of Business Forecasting.
In November 2017, Matias spoke at ‘Business Planning, Forecasting and S&OP: Europe’ in Amsterdam, alongside Nestlé, Diageo, Johnson & Johnson, Heineken and more. We look forward to welcoming you to next year’s conference in Amsterdam, on 14-16 November 2018.