S&OE cuts across the tactical plan, execution plan, and operations to provide critical execution support across these three parts of the overall value chain. While S&OP/IBP helps in monthly response planning, S&OE assists in predictive planning and reliable execution.
Shortages, potential risks, inbound and outbound shipment delays, excess or redundant inventory, supplier lead time mismatches and the reported daily/weekly uncertainties, external causes creating short term disruptions in execution, real time production/supply/transportation/distribution gaps, and their root causes; the S&OE can handle all these. S&OE flags the disruptive variables, adjusts the short term schedules, alerts the operations teams on changes and constraints, and collaborates with the S&OP to help adjust their plans fortnightly, monthly or weekly.
S&OE can also help manage execution plans of the overall network, supply chain and distribution, factories, and equipment levels. S&OE teams perform root cause analysis, what-ifs on short term and constrained parameters, build strategies for execution disruptions, and ongoing real time incidents/events track/trace/monitor/report – all these are crucial for manufacturing organizations to manage the key benefits and outcomes delivery with S&OE mentioned below:
- Accuracy in managing eventualities and constraints.
- Re-adjusting plans while handling short term actions quickly.
- Reduction in the RM, WIP, and FG inventory levels (raw material, work in progress, and finished goods).
- Improved visibility into production/supply capacities.
- Adapting to customer demand changes and better forecasting adherence.
- Improved stock fill rates and OTIF (on time in full).
- Lead time reduction and quick response in choosing alternative suppliers.
- Events/Incidents visibility and improvement in scheduling and allocations.
- Annual cost savings by managing disruptive events and improved OEE (overall equipment effectiveness).
- Improvement in collection efficiency.
- Improved execution collaboration, revenues, and overall profitability.
Create a robust supply chain to beat disruptions
Disruptions, uncertainties, and recessions create uneven recoveries, posing significant threats for organizations in meeting their bottom line. So, where should organizations begin and focus?
We have identified three key actions that organizations can take right now to mitigate disruption risks to their value chains. Performing these actions now will mean greater security to manage supply, rapid cost takeout, address lost sales, and optimize financial/ service levels/working capital/resiliency goals. The client can realize all these benefits within three months.
ACTION 1: Secure cash flow and improve working capital to manage business continuity.
In times of crisis, cash is of paramount importance. Short term vulnerabilities need swift action and business as usual implemented.
Start by setting two different teams to manage S&OP and S&OE processes and activities. Both teams should have different agendas, cadence, goals, KPIs, and action points. Have a dedicated S&OE Center of Excellence (COE) team to manage the frequent cadence, short term and even real time uncertainties, events, and incidents. Onboard S&OE teams and start the S&OE activities to manage disruptions and business continuity.
The S&OE teams can stabilize operations by providing a quick view of critical disruptions and execute actions needed to maintain inventory levels, alternative suppliers, pay terms acceleration for critical suppliers, and collections efficiency– all very important to maintain cash flows and optimize working capital.
ACTION 2: Re-evaluate or create a framework to accelerate the digitization of S&OE.
Making the right cost reduction decisions and bringing about transformations in digitization is the key to unlocking efficiencies.
Assess and evaluate the current process, tools, and platforms used by the planning teams, analyze gaps, extend the tools/platform, if capable, to perform S&OE.
Create an S&OE framework/workflow for the CoE to perform ongoing S&OE activities, extract meta data and critical KPIs/process metrics. Use AI/ML and deep dive advanced analytics for real time data capture, deep dive analytics on critical misses, alerting, and highlighting disruptions. A digital System of record (SOR) will help organizational interventions, create a repository of best practices of vast data sets, use real time single source of data to become smarter and more autonomous over time.
Setup an S&OE twin of S&OP processes and meetings, which can be weekly instead of monthly, to monitor, adjust, and action short-term execution gaps.
ACTION 3: Ensure that ongoing daily execution outcomes – not just monthly planning outcomes – are maintained as top priority.
Create S&OE focused metrics, clear KPI definitions between S&OP and S&OE, and delivered and managed outcomes daily to realize improvements. Having real time connectivity to shine light on the actionable short term and real time insights is the digital foundation of visibility. Create an S&OE command center and visual control towers across the network for visibility of critical events, incidents, disruptions, and actions, in addition to the S&OE CoE intelligence.
With targeted, structured, precise, and daily ongoing execution, it is easier to gain control of uncertain situations and overall spends. Aligning on a common execution strategy with the cross functional planning and execution teams will help in agility and long term resiliency in supply chain and operations. For this, it is equally important to generate an innovative and agile feedback loop for S&OP-S&OE collaboration on an ongoing basis.
Conclusion -- Weathering the STORM!
While it is impossible to know what the future will bring, we must plan for immediate focus – to address short term challenges and structure our approach to action the uncertainty that the future will bring in.
Businesses must predict and be proactive, using quick execution actions, rather than be reactive in weathering the storm. In a volatile environment of operations and complex supply chains, having a dedicated ongoing S&OE team managing supply chain resiliency and agility is essential to success. It will be the difference between leaders with predictive planning and proactive execution vs. laggards with only reactive planning.
About Wipro’s S&OE offering:
WIPRO’s THREE POINT SOLUTION AND STRATEGY ON S&OE:
‘Digital Twin S&OE’– structured and systematic framework to enable S&OE.
‘SO&E Center of Excellence (CoE)’–Dedicated S&OE teams to collaborate and manage due diligence assessments, process mining, predict eventualities, manage ongoing S&OE tasks, and unlock efficiencies to bring in improvements.
AI/ML and deep dive analytics – for insights and actions with ‘S&OE Control Tower Orchestration’ for execution alerts, visibility, and spotlights on critical misses.
The figure below illustrates Wipro’s S&OP-S&OE Digital Twin framework: