6. Feasible Plan. As organizations mature, the discussions are data-driven. Operational execution
closely links to the S&OP plan. This is possible because the modeling optimizes trade-offs to the
strategy and the decision support technologies are selected and refined to develop a feasible plan.
7. The Process. Planners love planning technologies and push for model improvements. Companies
hold themselves accountable to drive progress in the measurements of Forecast Value Added
(FVA), manufacturing plan adherence, order on-time, and in-full measurements, and inventory
obsolescence (SLOB).
8. Volume-to-Value Discussions. The goal of the plan is to maximize value. In this discussion,
decision support technologies are used to optimize the trade-offs between volume, mix, and cost.
The models enable "what-if analysis."
9. Bi-directional Orchestration. The traditional supply chain focused on functional excellence while
the mature S&OP process targets cross-functional trade-offs to improve a balanced scorecard. The
focus is from the customer's customer to the supplier's supplier analyzing compromises of product
mix, new product launch, alternate supply, product platform rationalization, and cost-to-serve. The
leadership team aggressively drives a dialogue on cross-functional trade-offs.
Demand Networks Despite lots of discussions, few companies build demand networks. We know of two companies
successful in building demand networks. One is Lenovo. The other is confidential. Companies are
supply-centric thinkers; and as a result, miss the opportunity to improve agility through demand
networks.
Let's get clear on definitions. What is a demand network? A demand network decreases demand
latency and improves sense and respond capabilities for a Company. (Demand latency is the time
from channel purchase to demand translation of channel replenishment to drive order to an
upstream trading partner.) While most companies believe that an order is a good predictor of
demand, with product proliferation, globalization, and microsegmentation, demand latency
dramatically increased over the past decade. As a result, the order is not as good of a predictor of
demand as it was ten years ago. Increasingly, it is out of sync with the market.
IBM changed this for their Lenovo brand. IBM named the demand network iBAT. (The IBM Buy
Analysis Tool).
The Problem IBM had too much inventory in the channel driving excess costs. Computers, like bananas,
decreased in value over time, due to price declines, with age. As the Company launched
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