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Infor Joins the S&OP Fray

Written By: Predrag Jakovljevic
Published On: May 2 2011

Infor, a $2 billion (USD) enterprise software company with more than 8,000 employees and a broad portfolio of solutions that meets the needs of manufactures and distributors (more than 70,000 customers in 125 countries), is not viewed as an aggressive innovator, even though relentless innovation is one the vendor’s proclaimed core beliefs. Rather, Infor has been in the news lately due to its intent to acquire companies (most recently in the process of acquiring Lawson Software) or speculations about whether and when the company will go public.

A slew of acquisitions (more than 70) logically bring Infor’s ensuing product rationalization and maintenance revenue to mind (as well as the incurred debt) rather than innovation. The vendor’s recent moves with regard to its go-forward technology platform (framework), Infor ION, and its cloud computing strategy, Infor24, have also been shrugged off by many as Infor taking the path of least resistance by leveraging Microsoft technologies (although some might see some pragmatism here).

One undisputed (and yet lesser known) area of strength is Infor’s Supply Chain Planning (SCP) Suite, with many unique capabilities for complex process and discrete manufacturing, as well as for distribution-intensive organizations. Infor has grown through not only acquisitions, but also delivery of new innovative products to meet the ever-changing needs of the market. The newly launched Infor Sales & Operations Planning (S&OP) product is the latest so-called “evolve” offering. The global solution was a three-year project from concept to market delivery, including design validation from analysts, consultants, and customers to provide a new generation of S&OP technology solutions.

 

Enter Infor S&OP 1.0
Infor S&OP 1.0
is an entirely new solution, purpose-built by Infor to meet the needs of manufacturers, suppliers, and distributors. These companies are increasingly challenged to quickly, accurately, and more profitably adjust their operations to address shifting demand, as the global economy improves (or stagnates, as the case may be). The brand new solution provides capabilities for creating, managing, and using electronic workflows that address every major stage in the S&OP process, allowing global teams to gain consensus and make faster, more confident decisions. It integrates extensive "what-if" scenario building tools directly into decision-making workflows. This allows teams to model potential changes based on up-to-date demand data, choose the action that results in the highest potential increase in revenue or margin, then finalize and publish the changes automatically across the global supply chain.

Infor S&OP has been generally available (GA) since February 2011, with variable pricing based on implementation scope and complexity. It is a stand-alone software solution that can be used independently, or integrated with supply chain management (SCM) systems from Infor and most third-party providers. According to Infor’s official press release, the solution provides benefits in the following key areas:

  • More accurate alignment of supply with demand—Workflows tightly integrate data from throughout the global supply chain, providing clear visibility into current demand trends, historical demand levels, and key indicators of potential near-term demand shifts. Using this data, teams can collectively make proactive decisions that better align production and distribution with the biggest opportunities for revenue, and more quickly adjust operations based on earlier insight into demand variability.
  • Increased opportunity for top-line revenue and higher margins—Infor S&OP integrates extensive financial data and impact modeling directly into workflows, enabling users to safely see the potential cost, margin, and profit impact of their decisions instantly, before the changes are implemented. Teams can then confidently make the most profitable choice.
  • More value from capital assets and the company's workforce—Through more informed decisions based on accurate and up-to-date demand data, customers can more closely align the use of production, fulfillment, and other key supply chain assets with the most profitable market opportunities. This can significantly contribute to gross margin levels by maximizing revenue for specific product lines, while simultaneously reducing costs through more intelligent asset utilization.

Additional resources offered by the company are as follows:

It’s Never Too Late for a Good S&OP Solution
Infor joins an already abundant S&OP marketplace, perhaps somewhat belatedly, but the vendor believes that its solution’s differentiating traits will help it flourish in the crowd. Infor has long had so-called “Operational S&OP” capabilities within its individual enterprise resource planning (ERP) and SCM solutions, such as Infor Demand Planner, Infor Advanced Planner, and Infor Advanced Scheduler. But in the case of S&OP, Infor has decided to build a best-of-breed “Executive S&OP” solution that provides strategic decision support, as well as scenario, financial, and risk-opportunity analyses.

By leveraging the best capabilities from former Mercia, Berclain (Baan), and Fygir SCP products, the Infor S&OP solution is versatile and can meet the needs of discrete and process manufacturers as well as those of distributors (including service parts organizations). The product was also designed and developed from the ground up with business intelligence (BI), workflow/business process management (BPM), and alert management capabilities. The BI capabilities (e.g., dashboards) come from the Infor PM suite, while the latter technical capabilities come from the aforementioned Infor ION framework. Other differentiating traits are the product’s capability to accommodate a local demand consensus building (to be rolled into global demand) and its integration flexibility (to draw data from ERP, SCP, BI, CRM, and other external systems).

The success of Infor S&OP will depend on how well this composite application will integrate with several different applications that all have different user interfaces (UIs). With an intuitive Infor Workplace (formerly code-named Companion) UI and simplified processes, S&OP users can get started without getting overwhelmed. Once they are ready to take on a new component, they can plug it into the S&OP framework. This approach should allow Infor to continue to sell into SAP and other ERP customer accounts and cross-sell into its own install base. Figures 1 to 3 are screenshots depicting some of the product’s capabilities.

Figure 1.

Figure 2.

Figure 3.

An S&OP Discussion with Infor
What follows is a question-and-answer discussion session with Infor’s SCM product managers. Infor was given the opportunity to answer similar questions as those previously posed to Karin Bursa, vice president (VP) of marketing at Logility, Charles Chase, global business enablement manager of demand intelligence solutions at SAS Institute’s global manufacturing & supply chain practice, and Trevor Miles, director of thought leadership and (chief blogger) at Kinaxis.

TEC: What do you believe is behind the surge of interest and activity around S&OP? What are the anticipated benefits?
Infor: Two things. Clearly, the volatile economic times have given rise to process improvements. In the downturn, the supply chain organization was tasked with cost reduction while still satisfying what little demand was left. We think that has raised their profile to the executive level. We see more VP SCM and Chief Supply Chain Officer titles than before. As the economy recovers, the supply chain organization is front and center in the battle to enter new markets, and delight customers with excellent service and more choice. Their purview now allows them to influence more levers that affect customer behavior and ability to serve new markets in a way that maximizes revenue and margins. This has led to the finance part of the business being driven by the supply chain and the executive team to be more involved in the process.

TEC: Do you think the definition of S&OP is clear in the marketplace? If not, is that a problem? How do you personally define S&OP?
Infor: We think there is a general agreement on concept and purpose, but the level of detail, the horizon, tools, and process maturity can differ by organization and industry. With this recent resurgence, we may see software vendors claim that they have an S&OP product when in fact they do not, and of course we must not forgot that media and analysts have their views and stories to write. This will always lead to some confusion, but the important point is that S&OP is being talked about, and manufactures finally see that investment in technology to support this process will drive real improvements in key business metrics.

TEC: How important is a maturity model for S&OP? Do companies have to be at the most advanced stage of S&OP to claim to be doing S&OP?
Infor: S&OP is a way of doing business, not a stand-alone process. While measurement of an adherence and quality of process is important, manufacturers still look to key metrics—customer service, fill rates, forecast accuracy, inventory, and return on assets (RoA)—to gauge whether the process works. If a simple, less-mature process works for them, then great. But, it must be adaptable to the ever-changing needs of the markets they serve, which by definition will be a mature process.

TEC: Many are advocating the evolution of S&OP into Integrated Business Planning (IBP)? Are you a proponent of IBP, per se? Tying the financial plan/measures directly into the process is a key component of IBP—what else distinguishes IBP from S&OP?
Infor: We think that the IBP phrase has led to some confusion—what is it that is different from S&OP? If it is tying financial measures and goals into S&OP, then I call that a more mature S&OP process. In the years to come, new product development (NPD) and product portfolio management (PPM) will be a regular aspect to S&OP. Will we come up with a new name or will it just be a natural evolution of a trusted process?

TEC: Organizational thinking is often inherently bound by the dimensions of the “box” it is currently in because people don’t question working assumptions strongly enough. Do you believe “process inertia” is a barrier to advancing S&OP processes?
Infor: Yes, successful S&OP organizations tend to have a champion passionate about the process that drives adoption and adherence. What happens is that person goes or does not exist? Strong executive leadership will always be needed to underpin a successful process, but some of the pressure can be taken away if the adherence to the agreed-upon process is executed and measured by technology.

TEC: Can the S&OP process be carried out without technology? Does this relate to the S&OP maturity model?
Infor: Yes. You can run a business without ERP, but at some stage, you are limited to what you can do, due to the sheer volume of products to manage, number of people and locations, the speed of demand and supply change, and the complexity of the business. The impact of financial decisions to the supply chain can be done with a calculator and a piece of paper, but technology can do it faster and more accurately.

TEC: Is it possible to have an effective S&OP process that only looks at the aggregate or “volume” level? How important is it to consider the operational and tactical feasibility of the S&OP plan?
Infor: They are all connected, but in a loosely coupled way. The decisions from the executive S&OP meetings—the strategic plans and objectives—need to be inputs into operation planning. If not, how will you effect change?

In addition, how much ‘flex’ is in the supply chain? If there is some, then larger-grained decisions can be made by the executives, and operation planning can figure out how to make it happen in the real world. However, in very lean or cost-sensitive areas, organizations may need to run alternate strategies through the operation planning engines to get a hyper-accurate view of long-term effects. 

TEC: How do you differentiate between Executive S&OP and Operational S&OP, and what related solutions do you provide in those regards?
Infor: We have dedicated solutions for both. Executive S&OP is the strategic decision-making tool that can pull information, drive process, and allow analysis and real-time simulation. Infor S&OP is the solution for this.

For operational S&OP/Planning, we use the stock-keeping unit (SKU) level detail products for forecasting, inventory planning, supply planning, and optimization all the way down to detailed production scheduling. Best-in-class organizations will likely use dedicated solutions and connect them in a loosely coupled way.

TEC: Do you see a link between S&OP and multi-echelon inventory optimization (MEIO), and what do you offer in that regard?
Infor: Inventory ties up cash and drives the all-important customer service. Its success should be monitored as part of S&OP and it inputs agreed-upon in the executive S&OP meetings, but it is another engine like supply optimization or statistical forecasting that is not needed for S&OP but that by itself can affect the key metrics S&OP measures. Put it another way, S&OP may identify that too much money is tied up in inventory across many locations, so a project is kicked off to utilize MEIO to improve those metrics. We have some level of inventory optimization through complex supply chains that meet most needs, but not with the level of sophistication of some niche MEIO players.

TEC: There is indeed a great deal of cross-functional cooperation and collaboration that is required for managing S&OP. How are companies enabling this, and are they doing it successfully?
Infor: The key S&OP success factors are as follows:

  • Executive Sponsorship—It is well understood that any successful business process change requires the executive team support to provide the carrot and stick to instill change. Nominating an S&OP champion who is empowered to make that change is vital. Without that or until S&OP becomes engrained in the business ecosystem, the endeavor will change.
  • Education—Understanding how improved forecast accuracy, through statistics and collaboration, works its way through the supply chain to provide high-level service to customers is important so that everyone knows the part they need to play in this process. People generally want to help make things better, but only if they know how and what they do affects the overall plan.
  • Aligned Metrics—Many organizations still have competing metrics across their departments that can lead to suboptimal decisions at the executive level. S&OP can help identify these, so they can be managed or changed completely.

TEC: If you had to name three priorities for a company looking to evolve their S&OP process, what would they be?
Infor: Those priorities would be as follows:

  1. Measure what you do, not just normal business key performance indicators (KPIs), but also adherence to a standardized process.
  2. Identify the poorest performing KPIs and the reasons why.
  3. Implement the technologies that can improve these metrics.

TEC: What role does exception management play, or should play, in S&OP?
Infor: We think variance analysis and root cause analysis are the better tools for determining when actual operational results are no longer on track with corporate objectives. Exception management to us still means real-time or near real-time problems to operational issues that need to be resolved at the detail level.

TEC: How and where do "what-if" capabilities fit into the S&OP process? Is it a priority capability for an effective S&OP process?
Infor: Everywhere, from operational planning to Executive S&OP, everyone is being driven to make quicker decisions that will have a significant impact on the bottom-line. We need to ensure they are not only valid and feasible, but also optimized to whatever objective is needed. But quick decisions may be risky if not tested out first, and with the growing need for accountability how can executives ensure they have the backup to defend the decisions that are made? What-if analysis, scenario management, and assumption tracking are the mechanisms for better, quicker, and more confident decisions.

TEC: What is the role of master data management (MDM) in S&OP, and what is Infor doing in that regard?
Infor: We are first building a reporting MDM system to support transactional reporting across multiple ERP and other source systems. Within Infor SCP, we plan to build basic MDM capabilities, as SCP/S&OP tends to sit on top of multiple source systems. This will allow basic data mapping and normalization across multiple domains (such as part numbers, customers, etc.).

 

 
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