Companies are facing an ever more increasingly complex environment coupled with increasing marketplace volatility. This is causing companies to strive to be more flexible and responsive by streamlining both planning and execution. In addition, companies are attempting to conserve the use of their valuable resources. Instead of investing in products prematurely that then creates an inventory that may not be demanded, companies must be able to use its resources to produce only those products that will be actually demanded by their customers. But how can a company transform into an agile demand-driven enterprise capable of staying ahead of today’s hypercompetitive market? Clearly, the answer must be a systemic change – an alignment of sales and demand-driven operations.
Sales & Operations Planning has been around for over thirty years and has enjoyed only moderate success. Demand Driven Material Requirements Planning (DDMRP) has been around for almost a decade; however, it is only now being recognized by an increasing number of companies as the operating model for which they have been searching.
S&OP and DDMRP are very complementary and symbiotic if combined properly. This requires organizing and utilizing people in the right way, with the proper attitude and motivation. This process begins with trust which has to come from the top. The executives of the company must create an environment of trust in the company and instill that in its people. Next is the concept of collaboration. This takes people working together with common goals. In a truly collaborative environment, it is not about who is right, it is all about what is right for the company. This is sustained by employing flow-based metrics that align the individual and company goals.
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