Humans love stories and learn best from examples. Behavior scientists have even given a name to this common practice: Narrative Bias. In simple terms, the human brains understands and retains facts much better if there is a story binding them together. This concept has been talked about by many authors in many different contexts and then there is this: “Because suppose you eschew gossip and just say Mr. Smith is in love with his wife. Why that disposes the Smiths as a topic of conversation for the rest of their life, But suppose you say with a smile, that poor little Mrs. Smith thinks her husband is in love with her, he must be very clever, Why then you can enjoyably talk about the Smiths forever.” – by Ogden Nash (I have it on good authority.)
I recently watched a TED talk video by Alison Ledgerwood on YouTube. In the video, Alison gives the example of her paper getting accepted for publication (positive news) and another one getting rejected for publication (negative news). She talks about how it takes longer to recover from (i.e., go back to being her normal self) a piece of negative news as compared to a piece of positive news. While she makes a lot of good points in the video (and I do recommend that you watch it), here is what stuck with me.
Sales and Operations Planning (S&OP) is typically a monthly process. Through a series of detailed planning steps, and usually three meetings, companies define a plan to deal with what they think they can do to meet the demand given their supply and other constraints.
Key Point: A Sales and Operation Planning (S&OP) meeting is a meeting to design the future course of a business. Yet, too many companies spend too much time talking about the past or the current period. I recommend using about 60-70% of the time discussing the future. The (S&OP) process consists of a lot of leg work to support the three main meetings: Pre S&OP Demand, Pre S&OP Supply, and the S&OP meeting itself. (OK, some companies have a fourth one: The Executive S&OP meeting). The whole process is designed to allow a company to make the best possible plan for the future based on current estimates, as well as prepare for certain contingencies via what-if scenario planning. However, things do not always turn out this way.
You have a favorite forecast accuracy metric(s) you’ve been practicing within the organization for a while, and now you think you are ready to bring it to the Sales and Operations Planning (S&OP) meeting as a Key Performance Indicator (KPI) of your demand planning process. But you are not sure exactly how to go about reporting forecast accuracy to the attendees. In this post, I will address this question.
Most folks involved in Sales and Operations Planning (S&OP) for supply chain management have heard the terms “optimization” or “linear programming” with regards to supply planning and have cringed at the sound. Over the past few years a new “cringe” worthy term has emerged – “machine learning” which is sometimes used with the term predictive analytics or data mining. The purpose of the material below is not to explain optimization or machine learning, but to provide an easy to follow example from numerical methods applied to high school algebra to illustrate the key computational principle that supports important decision technologies. We will see it as Generate,Test,Next.
Research shows that a majority of mergers fail. A recent study put the percentage as high as 83%. As one would imagine, there are various reasons for this high rate of failure. However, the reasons can be divided into two main groups:
In my last post, I wrote a little on the importance of extending participation in the sales and operations (S&OP) collaboration process as well as knowing what questions to ask each party. In this blog, I would like to step away from collaborating with internal departments to discuss collaborating with customers.
In my experience with several different companies, it is evident that companies make great decisions some of the time. Unfortunately, being successful only some of the time doesn’t cut it. The key to business success is to make good decisions all of the time. Company success is much like investment success. It requires a disciplined process to evaluate ever changing data and make rigorous judgments about the future. Not all the decisions will necessarily work out, but the hope is that the large majority of decisions will have a positive outcome.
What-if scenario planning is an excellent technique that allows a planner to ask questions on the future. Given a working model that represents a business, a planner can quickly ask the questions that represent the range of possibilities in the foreseeable future which can render the current plan obsolete.