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In today’s volatile market where organizations must quickly react to the speed of business, S&OP is a true competitive differentiator, helping businesses plan to demand trends to positively affect their bottom line. Yet, because S&OP requires collaboration from both inside and outside of an organization, configuring ERP for this crucial function is no easy task, involving expending valuable time and resources. The solution? Businesses should remove S&OP processes from their ERP system, and instead, look to the cloud.
The Incredible, Inflexible ERP
Purchasing, implementing and supporting an ERP system is a huge investment and massive undertaking, so it’s no surprise that many organizations feel obligated to use it for S&OP. Nonetheless, once ERP is implemented, it isn’t long before its users realize its intrinsic inflexibility in customizing it for effective S&OP.
Best-in-class S&OP processes require cross-functional collaboration, bringing together both internal and external players to plan to the same data and access the same insights. If a retailer in the United States is monitoring its inventory in one ERP system, whereas its supplier in China is using another, the two cannot work together to collaborate on and plan to the same information if their data is housed in disparate systems. This disparity of information creates challenges such as forecast inaccuracies and even issues with overstocks/out-of-stocks – all leading to loss of profit and dissatisfied consumers.
Also, because of their inflexible nature, ERP systems are slow to adapt to the speed of business. Inevitable changes in demand, the launch of new products, evolving technologies, and even mergers and acquisitions require a level of flexibility that is not found in an ERP system – not without laborious ongoing upgrades and customizations.
Looking to the Cloud – Collaboration and Flexibility
The degree of collaboration and flexibility needed for successful S&OP is most readily found in cloud-based solutions. With S&OP as a cloud-based, collaborative process, data is immediately accessible from virtually anywhere, in real time. The instantaneous availability of data gives both internal and external organizations and business partners across the supply chain consistent visibility into demand and planning information. Using this information, retailers, suppliers, manufacturers, financial and sales departments alike are finally able to work together with the same information, standardized by the S&OP system. For example, by looking at a retailer’s inventory, a manufacturer could identify where and when replenishment is needed, and then create the optimal amount of product. Or, the manufacturer’s management team can view that same data to gain insights on areas of improvements and perform predictive analysis to prepare the organization for upcoming supply and demand trends.
Further extending S&OP outside the limits of an organization, a cloud-based solution allows users to access information – and plan to it, analyze it and share it – from anywhere in the world via one single platform, from any device. This capability ensures the continuous review of business and enables a fast reaction speed, no matter the location of the user.
Of course, cloud-based S&OP does not require the complete elimination of ERP’s role in this process. Integration with ERP – rather than customization of ERP – only adds more value to S&OP systems. A cloud-based S&OP solution has integration points that allow standardized data to seamlessly flow between ERP, S&OP and other systems to further align business processes within a single repository. At last, “big data” within S&OP is no longer a challenge; with once disparate data in one location, demand and forecast planning can take into consideration information from internal and external players’ systems for finance, sales, marketing, trade promotion management and others.
Fast Deployment, Faster Results
In addition to collaboration, cloud-based S&OP offers a quick and easy deployment so that users can achieve fast results — without the need for a full-scale implementation warranting additional IT support, hardware and resources. The flexible configuration options will prove invaluable later on down the road, as cloud-based S&OP provides the right tools and agility to adapt to changes (introduction of new technology, M&A, demand trends, new products, etc.) without the struggle to keep ERP ahead of the curve or to reconfigure dozens of systems across the supply chain.
The flexibility of a cloud solution can help drive user buy-in, not only because it is fast to deploy, but also because it can be gradually rolled out, giving skeptics the opportunity to test the system in smaller increments without making a complete commitment. Greater user buy-in equals higher adoption rates, leading to a more successful overall project.
Reaping the Benefits of Cloud-based S&OP
With a cloud-based solution, S&OP becomes a collaborative, dynamic and integrated business management process that helps synchronize supply chain functions across an enterprise and beyond it. Removing S&OP from ERP, and integrating the two rather than making a futile attempt to customize ERP, is setting apart best-in-class companies from the rest. As a result of cloud solutions’ flexibility, rapid deployment capabilities, and quick deployment, organizations can enhance demand forecast accuracy. With greater forecast accuracy, comes greater product availability and more inventory turns and therefore, increased sales and a greater level of customer satisfaction.
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