When it comes to the term “S&OP”, there is some uncertainty around how it all started. Some say it started with Oliver Wight in the early 1980’s, others say it was Richard Ling and Walter  Goddard in their book Orchestrating Success: Improve Control of the Business with Sales & Operations Planning. I’m not here to debate that because for me, it all started in 2007.

I remember the first S&OP presentation that I saw. It was as basic as you can imagine with Excel graphs copied and pasted into PowerPoint presentations. I am sure some of you are thinking to yourselves “we still do that”. You’re not alone. S&OP is a journey, not a destination and with every journey, it takes time.

Over the next few years, improvements were slow but gradual. We stayed with Excel and PowerPoint for quite some time. Different metrics came and went and unfortunately, so did some Demand Planners. The most important thing stayed constant, though – support from leadership. When you have buy-in from leadership and they truly understand the value behind S&OP, then resources such as personnel and systems start falling into place.

Remember, change is good. Change means stopping doing what’s not working, keeping doing what is working, and always making improvements.

With the support of leadership, we continued to upgrade our forecasting tools, we integrated our systems with both our promotion planning tool and a short term demand sensing tool. Things were starting to click, but we still needed improvement on the presentation side.

In 2019, Microsoft invited a few members from my company, mostly IT people, to their corporate offices in New York City. The point of the meeting was to introduce some of their tools that we weren’t taking advantage of: Yammer, Teams, and Power BI. Fortunately for me, someone couldn’t attend, so the invitation was passed along. So on a cold rainy day in the Fall, I took a short train ride with a coworker, spent the day in the city, and was immediately enamored with Power BI.

If you’re not familiar with Power BI, some say it’s closer to Excel than Microsoft Access but I like to think it’s the best of both worlds. Not only can it handle large amounts of data, like Access, using it’s query editor, but it’s a great tool that has interactive data visualization options that can help tell your S&OP story.

Power Bi was introduced into our S&OP process shortly after the trip.

When this happened, it brought energy back into the process. You could tell there was more excitement than there was in recent years. We were still showing similar data, but we were showing it using our shiny new toy.

We weren’t done yet.

We needed to keep up the momentum so it was time to partner with our friends from IT. We wanted to make the shift from static data to interactive data. We wanted our S&OP meetings to be able to answer questions on the fly. “What was case fill last year?”, “What caused that drop in forecast accuracy last month?”, “How does our inventory this quarter compare to inventory last quarter?”. The objective was to be able to answer these questions at any time.

Luckily, we had the right support. So, by partnering with IT, we were able to directly connect Power BI with data coming from our transactional system and just like that, magic. We had an interactive S&OP presentation. Don’t get me wrong; this took a lot of time and energy.

We now had one Power BI document that could be filtered on a specific Planner’s brands. Not only that, but we could filter our visualizations to show different time periods and we could begin to answer the questions that we previously had to follow up on.

One of the biggest improvements was time. There was no longer the need to make a dozen different PowerPoint presentations with Planners doing the same repetitive work. Instead they could use time more wisely; looking into forecast accuracy misses, explaining gaps to other forecasts, and laying out assumptions. We were working smarter, not harder.

And that is currently where we stand.

Over the last 15 years, I like to think we came a long way. It wouldn’t have been possible without the support and dedication from those involved.

The journey isn’t over. We are further along today than we were yesterday so let’s start thinking about tomorrow.

How To Present Forecasts Properly

Spreadsheets Are Obsolete In The Age of Big Data —What Is Replacing Them?

The Intersection Of Forecasting, Machine Learning & Business Intelligence

So you’ve got a long list of possible options for when you decide to upgrade or replace your demand planning software. In the previous articles we looked at the functional and service, technical, and implementation requirements of your new software. We have carefully calculated what we believe we can see as benefits and improvements, and created our budget to look for an 18 month return on our investment.  Now it is time to find that perfect match and seal the deal.

Unfortunately, there is no perfect dating app for this and no opportunity for you to simply put in what you like and when you and the solution provider both find a connection, you both swipe right.

From here, the next step is to begin conversations with the various vendors that meet your needs.  A great place to start – outside of some simple internet searches – is by attending an IBF conference.  Many of the top solution providers are available with booths to allow you to find all of the vendors under one roof or exhibition hall. This provides the opportunity to ask questions and even the opportunity for demos to see the functionality they offer.

For some, this is where things get even more confusing. How do you narrow down the list, scheduling demos and ensuring the right content is covered?  Are you missing anything? Are you asking the right questions? If what you need is not overly complicated, many people can sort through the next steps of the process to a final selection. If done right, you’ll have all the necessary information to make an informed choice and get the solution you need.

But there is another potential option that may help save time and money…

Should I Use a Third Party Company?

Many companies believe that going it alone or directly to a software manufacturer to obtain new forecasting or demand planning solutions is the best way to get exactly what they are looking for. For many companies this will work and there are good solution providers that will help you get what you need. Unfortunately, the reality is that no matter how good you or the software provider is, there is still bias and you have no way of knowing if the software gives you exactly what you need unless you have used it before. What’s more, you may not be completely confident you know what you need and want an independent, second opinion before you commit a big chunk of your department’s budget.

Rather than relying on the biased opinion of a specific software developer, it may be best to involve a third-party, such as a software consulting company

Rather than relying on the biased opinion of a specific software developer, it may be best to involve a third-party, such as a software consulting company. These businesses exist with the sole purpose of helping companies sort through their specific needs and budget, and navigate all available software options to find the best solution. They can also provide you with an in-depth analysis of the pros and cons of each of your options, along with an estimate of the likelihood of a specific software platform to stay at the “top of the heap” based on current software trends.

Beware The Limitations Of Consultants

Consultants are not all-knowing though. You still need to do your own homework and due diligence.  Just because you pay someone $200 an hour does not mean they know everything. Many naively assume all consultants are geniuses and later find out they are far from it. It is vital you still understand your own needs and requirements, budget, estimated benefits and stay heavily engaged. No matter how much analysis consultants do, they will never know the business details and issues as well as your employees. When the project team is not fully engaged and not adequately trained on the software, even the best of systems will give you problems from the outset.

There are many things good third-party consultants can do for you. Because a software consulting company needs to know the ins-and-outs of the industry, they will be able to help you assess your needs and requirements too. Many consultants can facilitate process mapping exercises and drill down to better understand current and recommended future processes.

A software consulting company also has the ability to help you obtain a fair contract

Although no third-party company can guarantee you the best rate or a glitch free roll out, they can help you avoid the potentially serious issues that companies face when they decide to implement a new software package. In addition to helping you locate the right software, a software consulting company also has the ability to help you obtain a fair contract. They will have the necessary industry experience to know which contract terms to insist upon and which ones to avoid.

How Much To Pay A Consultant

All of this will come with a price tag. Many factors contribute to the total third-party consultant cost. The greatest aspect is time investment. Generally, you are looking at anywhere from $150 to $225 an hour plus travel costs but some do charge project flat rates as well which is highly dependent on scope and everything they will be doing. The time or scope can be as basic as the software selection to full service project management, so it is difficult to put a number on it.

Let us be clear though, hiring a consultant can be expensive. At the same time, with the many software vendors to choose from and potential pitfalls of the selection process, a good consultant can pay for themselves in project or contract savings alone. Additionally, if you are unable to do the implementation with your internal resources, the benefits of having an implementation consultant can be huge and ensure you launch your system as effectively as possible.

Is it expensive? Yes. Is it worth it to have the job done right? Absolutely!

A third-party company to help you identify your needs and negotiate the path of implementation of a new demand planning and forecasting system plays a huge role. Is it expensive? Yes. Is it wort it to have the job done right? Absolutely!

Remember though, third party consultants will not make us successful. Consultants can educate, suggest, coach, and help choose the right software but cannot make your company forecast better than the people and processes are capable of. It is important you focus first and foremost on the right talent, culture, processes and best practices that allow you to get the most out of the technology.

I and other S&OP leaders will be discussing this topic and more at IBF’s Leadership Forum in Orlando on October 17, 2018.  Designed for leaders in planning, forecasting and S&OP, it’s the best of its kind, and is designed to help managers with implementation and management of people, process and technology. It’s a great event – you can see the schedule here.

While the basic concepts of Machine Learning (ML) and Artificial Intelligence (AI) are not new to forecasting and demand planning, there obviously seems to be renewed interest. For years, forecasters have used algorithms including artificial neural networks, association rules, decision trees, and Bayesian networks – all of which are common methods in Machine Learning. I guess you can say we were data scientists before data science was sexy. 

But this is not your daddy’s AI, in part because definitions change over time. Artificial Intelligence is the concept of machines being able to carry out tasks in a way that we would consider “smart”. There was a time when a machine could add 2+2 without humans providing the answer, and that was considered to be smart.  Now it deciphers unstructured text analytics in almost real time, tells us directions, makes predictions on our purchase preferences, and even talks to us.

Artificial Intelligence In Demand Planning Has Hit A Tipping Point

Another reason we are seeing this hype about Machine Learning and AI is we have also hit a tipping point. For a while, forecasting and demand planning processes and capabilities were greater than the technology that could support it. Now, we are no longer playing catch up and technology has surpassed planners’ abilities. Because of new technologies, the Machine Learning we see today is not similar to the type of Machine Learning we saw in the past. While many Machine Learning algorithms have been around for a long time, the ability to automatically apply complex mathematical calculations to Big Data – over and over, and at faster speeds – is fairly recent, and is now far, far more advanced.

There is an arms race to leverage both Machine learning and Artificial Intelligence in demand planning solutions

This has lead to an ongoing arms race to leverage both Machine learning and Artificial Intelligence in demand planning solutions more effectively, and in new ways. Interviewing one software provider, they stated that almost all their research dollars going forward are tied to these technologies.  All of this makes one pause and think that if we have come this far today, where will we be tomorrow?

IBF’s Survey Results Are In – Here’s What You Said

Last year the Institute of Business Forecasting (IBF) conducted our own research and asked demand planning and forecasting professionals how they saw their roles tomorrow. These questions were to measure how practitioners saw the discipline of demand planning in the year 2025 in regard to people, process, and technology. [Ed: this is the final in a series of articles discussing the results – other survey insights can be found regarding PEOPLE and PROCESS]

To help gauge the future of technology, we asked “What are the top technology advancements in the next 7 years that will have the largest impact on forecasting and demand planning?” Not surprisingly, of the 200-plus respondents, close to 70% of them answered Artificial Intelligence and Machine Learning as either their first, second, or third choice. Other key takeaways were dynamic simulation with 14% of first choices and blockchain (just making the list with only 2% of first choices).We are seeing these and other similar trends begin to emerge today.

70% of respondents considered AI and Machine Learning to be the most important technological advancement in 2025.

The Real Applications Of AI and Machine Learning Today

Research just released, conducted by Forrester Consulting and commissioned by Ivalua, revealed that 55% of organizations are set to make a major investment in Artificial Intelligence over the next two years. With applications using Artificial Intelligence and Machine Learning, algorithms can learn by taking the output of an application like a forecast and examining that output against some measure of the truth, and then adjusting the parameters involved in generating the output forecast, and seeing if the adjustments lead to more accurate outputs. Technology should also help liberate current demand planners away from rote SKU monitoring, toward more complex tasks, such as algorithm generation for the automated technology.

Starbucks will now generate serving recommendations for customers approaching their stores

Companies like Merck can change forecasts immediately based on far-off events, like hospital fires or natural disasters, that could impact demand for pharmaceuticals. Starbucks will now generate serving recommendations for customers approaching their stores, using location data to know when customers approach. One large CPG company is now considering lights-out statistical forecasting and re-deploying its demand planers to new value-added roles being more collaborative and supporting multiple functions and predictive analytics needs.

The research findings are taken from Institute of Business Forecasting’s (IBF) on-line survey “Future of Demand Planning and Forecasting”, conducted between September 1st 2017 and October 24th 2017. The findings were discussed in the Winter 2017 issue of The Journal of Business Forecasting. Click the link to download. 

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