I interviewed Guillaume Akbaraly who discussed S&OP.
It's good to speak with you today, Guillaume. Looking forward to hearing your views today on S&OP. My first question is, can you define what is S&OP and share a little bit about what is your experience with working with S&OP?
Sales and Operation Planning is a process to basically have an alignment between the business (demand of the market) and the constraint of the supply (all the upstream part of the supply chain). This is a process which is linking the demand and the supply to make sure that everyone is aligned on the one set of number to move forward, because the issue we're facing, in all the companies, is that everyone have their own set of number — the finance will have their own, their marketing will have their own, the business will have their own number, then of course the supply chain will be working on their own set of number, which is creating a lot of discrepancies and misalignment the whole supply chain.
So, this is a process, the supply and the demand.
Can you talk about some of the challenges that you face?
I'll give you one of the main challenges when you're moving and implementing the S&OP, you are implementing a process. It's not like implementing a tool like an ERP or a forecasting system. A process means that there is a proper governance to be defined and proper engagement from the different stakeholders on the business side and the industrial side. All those need to be aligned.
And of course, also, it's the sponsorship of either your general manager or CEO which is important, because without that, since this is on a monthly cycle it be difficult to have the engagement of all stakeholders. So that's the main challenge.
You don't need a tool to run this S&OP. The engagement of all stakeholders is really critical in making sure that everyone is aligned, you need have a good governance and good KPI to follow the success of your process and to, of course, increase your customer service. It should help to regularize your stock and having the right supply for the right demand and making sure that everyone is moving in one direction.
Could you share with us how it's done effectively?
I have implemented this process couple of time... The important part is on the implementation. After having the sponsor, it is important aligning the different stakeholders of what should be the objective, what is the added value... On the business side, of course, is to make sure that the potential opportunity are met and not only for the short them because here we're talking about something, to keep a vision about two to three years, on monthly basis. So that's important for them because it's including also new product launch and so on. Currently, I'm in the pharma industry, so a product launch means a two-year plan to have the product on the market. And, of course, for the industrial side, to make sure that the capacity is well set to meet the demand. So once that's aligned, then you roll out the monthly process. You have a path to execute.
For the process you start basically by the data gathering where you actualize all your sales, the stocks in of the different channels and in the different distribution centers or the factory. You also update your KPI. Then you move on to working with the business part to get the demand consensus. From your statistical forecast you work with the business side on what will be the final forecast for the coming months. And then based on that, you extrapolate for the next two to three years. Then you use this forecast to check with the supply side on what would be the industry of constraint, like capacity constraining, raw material shortage, etc….
Then, we align both, the demand and the supply and stop check what will be the final plan and to see if we need to make some tradeoff because, of course, nothing is perfect, so we need to prioritize, for example, some product with a higher growth margin, etc.,, And then you can do a definition of the different scenarios, to go for the last step, which would to do the S&OP meeting, which would be having all the key stakeholders — the CEO/GM, the CFO, the different business heads, the industrial heads and the supply chain head — to take what would be the final decision on the different tradeoffs to be done, if there is any conflict between the different departments. At the end of the meeting, we will have having a single set of number and a direction to be taken. Then we'll move on the execution.
Once it's rollout, usually it takes six to eight months to have a process which is moving smoothly. Also, this is process, you need to make the people understand that you must be patient because it's not a magic tool. Of course, when you start rolling it, there will be some hiccups. the six to eight months is to make sure you have the continuous improvement and that it’s well-adapted to your company (customize to the company needs). For example, in pharma, the S&OP is slightly different than my previous experience which was in the electrical component manufacturing. That's why it takes that much time to make sure that the process is implemented successfully.
Could you provide a brief background about yourself?
I have more than 10 years’ experience in supply chain. I'm passionate about supply chain and I am an industrial Engineer by education. I started to work in the supply chain from the beginning of my career in different positions within demand planning, in supply planning, warehouse management, etc…. Now I'm heading the supply chain for a pharma company in the UAE, based in Dubai. I've had experience in steel manufacturing then with an electrical component manufacturer and now in the pharma industry, all in supply chain, which makes me also think that one good thing with the supply chain is that even if industries are, of course, are different and that they have their own specificity, but the base remains the same. I'm also a strong believer of the base of the supply chain is the demand management that is why S&OP has been always an important process.
And, being in the Middle East and dealing with the Middle East, Africa — by the way I have been, all my career in emerging countries — the aim is not to be able to have a stable demand because it's never happening in the emerging countries but to be sure that you're well equipped to plan for the volatility of the market because of the fact that those are volatile markets. Thanks to the S&OP, also, this is where you can align the unstable demand with the supply and to make sure that we are meeting this unstable demand. When are you dealing with countries in the Middle East or in Africa, of course, depending on the situation —economic situation, political situation —you have to be really flexible. And now the main question is really how you improve your agility in the processes. So this is why this is a topic, also, which I'm really passionate about.
Thanks again for sharing.
About Guillaume Akbaraly
Head of Supply Chain at Globalpharma a Sanofi Company