E2open—An Unexpected S&OP Player: Part Two

Last week in the TEC blog we took a close look at E2open’s sales and operations planning (S&OP) strategy, including the vendor’s four-step blueprint to collaborative S&OP. We talked to E2open vice president of product marketing Sean Rollings to find out more about E2open’s S&OP strategy and capabilities. Following is a Q&A with Rollings, including more information about E2open’s S&OP offerings and Rollings’s ideas about trends in the S&OP market.
With more than 25 years of supply chain experience, Sean Rollings is a seasoned product and corporate marketing executive and supply chain practitioner as well as a consultant in the high technology, software, and consumer products industries. His areas of e xpertise are in global trading networks, cloud computing, S&OP, and software-as-a-service (SaaS) delivery and implementation for enterprise customers.

TEC: What would be a “sweet spot” E2open S&OP customer?

SR: Any company where the quality and integrity of the S&OP plan relies on information and data that is heterogeneously distributed internally or externally will immediately benefit from the E2open platform. The E2open Business Network is an open platform that allows spot tools such as demand planning and financial planning tools to be easily integrated under one umbrella. A typical conversation with an E2open customer is that they use X or Y for S&OP demand plans, financial plans, etc.—but the system they rely on for information, planning feasibility, collaboration, and execution is E2open.

TEC: What is your competitive landscape, and what separates you from the competition?

SR: E2open’s unique position in the market is that we provide a platform that can tie in various data points from demand, inventory, capacity, and future supply availability—and provide highly robust yet flexible mechanisms to obtain and share this data from/with the relevant internal stakeholders and partners. As such, the S&OP landscape for E2open isn’t so much competitive as it is complementary. Each best-of-breed provider plays a significant role, but none of them spans either the entire S&OP ecosystem of stakeholders or the end-to-end process. The embedded business process management (BPM) and supply planning and response capabilities make it easy for companies to make immediate use of the available data for improved decision making. We typically work with a demand plan originating in another system, and financial and sales analysis from other systems. We then facilitate bringing the information from these systems together along the aforementioned four-step lifecycle.

TEC: Are there any particular S&OP capabilities you do that no one else does?

SR: Yes there are. We enable connectivity and collaboration to integrate and orchestrate the internal and network stakeholders. Because of the isolation of many of these systems, S&OP teams typically rely on spreadsheets and one-to-one communication of information to assemble information for meetings. E2open provides a collaborative platform for gathering in a one-to-one, one-to-many, and—uniquely—many-to-many fashion for S&OP meetings. That one-to-many and many-to-many collaboration is a key difference in streamlining planning feasibility testing and creating alignment—collapsing the sales and operations planning cycles.
The multi-tier cost model, which includes capabilities for buy/sell and other procurement models, multi-stage manufacturing, and distribution, allows for immediate analysis of cost implications for decision support. Where there is a high spread of cost variations and a simple average is inadequate, E2open will remove assumptions and provide for factual and granular analysis.

TEC: Do you think the S&OP market is sustainable on its own or will it inevitably become part of a larger SCM ecosystem?

SR: The S&OP market is sustainable when viewed as an ecosystem of vendors and practitioners working together to deliver solutions and capabilities for the S&OP process, not just pocketed functions. It can be part of the larger SCM ecosystem, but it is also part of the integrated business planning (IBP), customer relationship management (CRM), and supplier relationship management (SRM) ecosystem. You can think of S&OP as a Venn diagram intersection of several ecosystems.

TEC: What recent trends in buying behavior and drivers for S&OP software adoption have you seen in the market?

SR: There is certainly a shift to buy into a more holistic platform rather than addressing an isolated need for a specific function relative to S&OP. Furthermore, the buying behavior is shifting toward more thoughtful consideration of collaboration among financial, commercial, operational, customer, and supplier contributions. We’re seeing consideration of the interdependency of these teams in the pursuit of corporate objectives—and also of those of the entire network’s success—to ensure sustainability of partner relationships.

TEC: What is your mobility, big data, and social medial strategy (or are these not that important for your S&OP users)?

SR: We are responding to rapid change on three fronts: 1) mobility is critical to the ever-changing shape and activities of S&OP teams and activities and their need to operate untethered and with immediacy, 2) fast data—an ever greater number of supply chain nodes, an ever greater amount of data, and the need for this to be shared directly and in near real-time, and 3) a greater opportunity to spot trends in advance and collaboratively solve problems—or prevent them altogether with advance visibility (e.g. demand sensing among marketing and supply not in isolation as it is today).

TEC: What is the role of master data management (MDM) in S&OP, and what is E2open doing in that regard?

SR: E2open’s connectivity and process management address an important blind spot of traditional ERP systems: cross-network master data management. MDM outside the virtual four walls is a key aspect for an effective S&OP. In many operating models the authority of master data is blended between an original equipment manufacturer (OEM) and a number of its trading partners such as contract manufacturers (CMs) or original design manufacturers (ODMs). Especially for new product introductions (NPI) the orchestration of master data around the new products is critical for a successful launch. The bill of material (BOM), its components, and associated attributes, such as lead times, cost etc. may have various degrees of ownership across companies. A collaborative cloud platform fills the void to provide a complete picture. This also includes the translation of part number schemes which is often a hurdle for full transparency up the supply chain. As such, E2open can be best described as not necessarily being the system of record to maintain master data, but the system of process to link multiple master data systems and stakeholders inside and outside a company.

TEC: How do you differentiate between executive S&OP and operational S&OP, and what related solutions do you provide in those regards?

SR: The major difference can best be described in terms of perspective and time horizon. An executive S&OP focuses on establishing mid- to long-term goals, from a financial, market share, and customer service perspective, for example, and enables tracking towards these goals. It enables executive decision making and course correction and typically operates on an aggregated level. Operational S&OP focuses on how these targets are met, what investments need to be made, or what bottlenecks need to be resolved. Oftentimes operational S&OP also factors in shorter term tactical considerations and constraints inasmuch as they impact the S&OP plan and require faster adjustments and response management.
The often ignored third pillar is S&OP execution, used to ensure that decisions made will be executed and to provide a linkage from S&OP committees to the operational teams inside and outside the four walls. The entire E2open stack, from connectivity to process management and collaboration—and what-if analysis with KPIs, dashboards, weighted scorecards and planning metrics—guide more frequent decision making and course corrections as demanded by dynamic business environments.
We consider executive S&OP to be more of a planning and collaboration activity that meets on a regular cadence with more formal processes for planning and decision making. Executive S&OP has a strong financial focus. If you will, E2open enables preparation, or the homework, that goes into an effective executive S&OP meeting. E2open capabilities provide a foundation of confidence in the underlying operational assumptions.
E2open supports demand translation for granular supply/demand match, and internal what-if analysis alignment through propagation of plans to customers and suppliers and alignment loops with these partners. Once agreed upon by the stakeholders, the plan of record, usually ERP, is updated and operational execution is initiated through E2open process management and planning.

TEC: Do you see a link between S&OP and multi-echelon inventory optimization (MEIO) and pricing optimization, and do you offer any capabilities in that regard?

SR: Yes, there’s a nice opportunity here. There are many more specialized tools to support an effective S&OP that vary by business, operating model, and industry. While E2open currently does not provide these capabilities itself, we do provide an open platform where these specialized and sophisticated capabilities can be integrated from other best-of-breed vendors.

TEC: Same as above for project portfolio management (PPM) and new products introduction (NPI)?

SR: Yes, for new products. E2open can facilitate the what-if analysis for launch scenarios and enable collaboration with suppliers and customers to analyze feasibility, or plan alternatives to enable a successful product launch. 

TEC: How do you accommodate environments with deep multi-level bills of material (BOMs) or do you think S&OP should focus on finished goods only?

SR: The answer to this question lies in the operating model, types of products, and industry. If you take consumer electronics, with very short lifecycles, constraints heavily slated on the material side, and many common components across a variety of finished good products, you will inevitably need to tie in the BOM to determine the feasibility of your plan. Additionally, you may need to tie in your Tier-2 supplier as the fundamental constraint that may reside on that level. A slight shift in product mix can have a major implication on any component in the BOM and the associated supplier’s ability to deliver. If you just operate on a finished goods level, with some high level assumptions, you will miss this important fact and operate off an invalid plan. In fact, a lot of companies simplify their S&OP process by just working off projected finished goods plans. They will spend a majority of their time firefighting because they get blind-sided by unforeseen shortages, excess inventory, and excessive operating costs.
Other industries, in contrast, such as industrial and automotive, are capacity intensive. Here we have proliferation of SKUs against a common set of multi-tier capacities. The quality and integrity of the plan can be severely thrown off by ignoring the down-level and non-obvious constraints. With a more granular view of supply and/or demand, constraints based on capacity and supply can be identified, what-if analyses performed, and outcomes evaluated among stakeholders for modification to the master operational and impact on financial and commercial plans. This inline collaboration accelerates evaluation and rapid resolution of constraints to speed the team toward execution of the best plan. Stakeholder confidence in underlying information facilitates and speeds up alignment.
Related Reading

E2open—An Unexpected S&OP Player: Part One (TEC; May 2014)
S&OP Execution: Making Supply Chain Plans Work (E2open white paper)
Big Tent S&OP: Expanding the Scope of a Critical Process (E2open eBook)
Infor Joins the S&OP Fray (TEC; May 2011)
S&OP Newcomer Asserts Notable Domain Expertise (TEC; March 2011)
Discussing the S&OP State of Affairs with Logility’s Karin Bursa (TEC; Dec 2010)
APICS 2009 From the Expo Floor: Is S&OP Coming of Age? - Part 5 (TEC; Jan 2010)
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