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A few weeks back, I shared a Supply Chain Matters commentary, Parts Shortages in the Mainstream Press-Are you actively educating senior management? Our commentary noted how financial and other media were featuring more and more articles noting that critical parts shortages among a variety of industries were affecting major manufacturing supply chain activities, and in some cases, making an impact in financial results. In that commentary, I noted that now is the time to keep senior management constantly informed on current demand and supply imbalances, which again reinforces the overall importance that a viable sales and operations planning (S&OP) process can demonstrate.

 

A tip of the hat goes to Lauren Bossers of Kinaxis for calling my attention to a couple of additional articles that also bring these points to reality. An article featured in the Dallas Morning News notes that critical parts shortages are effecting many popular smart phone producers. While the article points out that Texas Instruments, a supplier of several component chips for the DroidX, EVO and  iPhone4, is struggling to keep pace with customer demand, it is far from being the only company with supply chain challenges. The mobile manufacturers themselves are responding by switching to other components that may have more availability.

 

To drive home the importance of S&OP in this current environment, an article published in CFO looks at how the CFO of Oakley discovered the benefits of improved alignment of cross-functional teams, as well as the reduction in debates as to who has the most up-to-date data. The article reinforces what I have often found as well, that sales teams will ask for ultimate flexibility to make the sales plan. However, an occasional "nudge" from the CFO can be a rather grounding. The article also mentions another interesting, but sometimes hidden benefit to S&OP, a more timely process for grounding a company’s financial plan with feedback loops on supply and demand imbalances.

 

Firms sometimes abandon challenging and highly visible processes when the stakes on potential bad news increases, but, it is precisely in these current challenging environments when these types of processes have the potential to deliver their most effective benefits.

 

What about your organization?

 

Are you experiencing S&OP benefits?

 

Bob Ferrari

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