Spreadsheet-based S&OP

Sales & operations planning (S&OP) is definitely the hottest supply chain topic right now. One important issue for companies is how to successfully set up this internal process of strategic consultation between Marketing, Sales, Supply Chain and Finance. According to a recent global study by research and analysis firm Supply Chain Insights, many companies with an effective S&OP process use supply chain planning software.

But spreadsheets are utilised as one of the three key types of software for S&OP by 87 percent of the ‘frontrunners’ and 86 percent of the ‘laggards’. In practice, it appears that successful companies can manage just fine with Excel spreadsheets.

Reima, a fast-growing Finnish manufacturer of children’s clothing, uses Excel spreadsheets for the S&OP process with a planning horizon of four seasons (i.e. two years), said Chief Supply Chain Officer Nina Anttila at a conference in Helsinki. However, in view of the company’s growth in 30 countries, she expects to have to replace those spreadsheets with specific software in the future. The demand-driven and project-based company Kone Cranes also uses Excel for integrated business planning, an advanced version of S&OP including the translation of volumes into euros and comparisons against the annual budget and recalls, said Director of Planning Toni Sirviö.

Meanwhile Xavier Tholey, former Vice President Supply Chain at Unilever, stated during a recent conference in Prague that an implementation of SAP APO for S&OP had cost 500 million euros, yet the forecasting accuracy had actually only improved by one percentage point to 53 percent. He subsequently decided to switch off the application without telling anyone and simply produced the same as in the previous month. This also improved the forecasting accuracy by a percentage point, so in his view the investment was a waste of money.

Recent research by Eyefortransport revealed that 70 percent of investments in S&OP are spent on software, 20 percent on process design and 10 percent on training. The ideal split would be the other way round. Although spreadsheets are less secure, more prone to errors, more time-consuming and more difficult to scale up than specific planning tools, it nevertheless makes sense to first practise in Excel before spending too much money on expensive S&OP software.

Martijn Lofvers CEO & Chief Trendwatcher
martijn.lofvers@supplychainmedia.nl

This article was first published in Supply Chain Movement Q2 – 2016

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