The SCM and S&OP journey

Sales & Operations Planning (S&OP) is currently a hot topic. But the new buzz word in the supply chain is currently ‘journey’. This week, Niek Visarius, interim supply chain manager at AkzoNobel, called S&OP a ‘journey’. Peter Roerig, Supply Chain Manager for FrieslandCampina, used the term during his presentation at the very same seminar in Den Bosch. According to him, “S&OP is a journey of continuous improvement: you will never arrive”.

This catchphrase was flying all over the shop during the 3-day SCL Europe congress in Prague in June. “We are on a journey to supply chain excellence’, Dirk Petermann, Head of Competence Center Supply & Logistics at Continental declared whilst discussing the years of effort that have gone into their supply chain. Dave Manning, a consultant to Oliver Wight, started in the same vain: “Everybody is on a continuous improvement journey.” And, Global Supply Chain Director at Coats, originally an English thread manufacturer, Hizmy Hassen’s message was almost the same: “We are on a journey to a world-class low-cost supply chain. It’s a continuous journey, because life is a circle.” Then lastly, Alistair Hill, Director Western Europe Supply Network Solutions at Procter & Gamble, used the new catchphrase yet again: “P&G is on a journey to meet the change in demand from the last 15 years with supply chain applications.”

So where has all this talk about the supply chain management (SCM) and S&OP journey come from? Congress Chairman, Alan Waller, gave us the answer in Prague. In his opinion, SCM was conceived in the 1980s and born in the 1990s. During the first ten years of this century, SCM went through puberty, whereby many managers threw their first tantrums, wanting to join the adults on their table, and in 2010, SCM reached adulthood. Dirk Petermann from Continental explained how SCM in their company had started as a revolution and is still continuing to evolve even now. Dave Manning also included the word evolution in his presentation about Integrated Business Planning which is set to follow on from S&OP. There are obviously real structural changes going on in the world of the supply chain with two more buzz words: revolution and evolution.

The subject of supply chain in the board room was also mentioned a number of times during the congress in Prague. “An important conclusion from a study we carried out is that the supply chain has been identified as important for businesses,” explains Alan Waller. According to his research, 47 percent of the companies included in their research had a representative from the supply chain in the board. Among the companies included in the world’s Top 25 Supply Chain list from AMR Research, this was 72 percent. “The supply chain has been given significance in the board room and has earned a place at the family table,” comments Franz Einert, Director Supply Chain Competency at BASF, who claims that due to its success during the economic crisis, the company’s directors have given his supply chain the recognition it deserves. “A crisis is not the time to be creating waste,” said Franz Einert. Alan Waller agreed by saying that a crisis is an opportunity, especially in the supply chain, to save on costs by decreasing stocks. “The crisis has forced markets to require a fast response,” said Franz Einert. And this requires flexibility: another buzz word at the moment. “A word that has been particularly abused is flexibility,” commented Franz Einert. Dirk Petermann from Continental explained how he had created flexibility by harmonising the production technology used to make their tyres, globally. In Pierfrancesco Manenti’s view, Research Director at IDC Manufacturing Insights, many companies have moved their production to low-wage countries and are now complaining that they don’t have any flexibility.

It is more than obvious to see that supply chain management and the process of Sales & Operations Planning within it, are a journey. But it is essential to know where that journey is going to, irrespective of whether or not you reach the destination. In the children’s story of Alice in Wonderland, the Cheshire cat said something quite fitting here: “If you don’t know where you are going to, then it really doesn’t matter how you get there.” Soon, most supply chain professionals will be off on holiday. This will give them the chance to shake off (some of) those supply chain adventures. I wish all supply chain professionals a safe journey. I presume that in this case, they all know where they’re going to!

Martijn Lofvers, Publishing Director & Chief Editor, Supply Chain Magazine