How to make S&OP work with AI forecasting

Organizations that effectively use sales and operations planning are more likely to succeed in achieving their business goals. By implementing a robust S&OP process, companies can control production capacity, make informed workforce decisions, manage vendors effectively, and optimize materials requirements.

Leveraging AI technologies can help companies enhance their S&OP. The webinar “How to make S&OP work with AI forecasting” unveils the main S&OP challenges and how to cope with them. Our expert speakers Igor Eisenblätter, Managing Director at Business Views Consulting, Philip Taylor, Managing Director at Kernel Supply Chain Consulting, Natalie Lopadchak-Eksi, VP of Partnerships at GMDH Streamline, and Amy Danvers, S&OP Implementation Expert at Streamline, explained why S&OP should be accompanied by an effective and efficient solution platform, a digital technology stack that allows us to maximize the value of planning and collaboration and communication processes.

The webinar includes practical demonstrations of implementing these approaches using the Streamline platform.

Why S&OP matters?

In the context of effective company management, aligning strategy and execution is crucial to prevent organizational fragmentation. This alignment necessitates robust communication channels across all levels of the company. Achieving a unified focus, vision, and priorities is fundamental. S&OP (Sales and Operations Planning) encapsulates this need for cohesive action, consolidating activities into four essential components for streamlined and synchronized operations.

S&OP Activities

In S&OP activities, four main components form the core process. Firstly, data collection stands pivotal, sourcing information from IT systems and sales teams to grasp customer perspectives, market dynamics, and needs. Concurrently, operations teams contribute by gathering data through their activities, enhancing the information pool. Second, evaluation becomes crucial. Understanding collected data is essential, managed by demand and supply planners, departmental staff, and executive management, ensuring a comprehensive assessment. Thirdly, consensus becomes the goal. Across all levels—planners, departments, and executives—consensus is paramount, signifying agreement on the course of action. Finally, execution takes center stage, orchestrated by operational leaders, managers, and teams, ensuring the planned actions are executed effectively at every level of operation.

Unifying the perspectives from Sales, Finance and Supply Chain

Each team has distinct objectives: forecast accuracy for planning and operations, customer satisfaction for sales, and budget adherence for finance. They also view data differently; while planners focus on product grouping by supplier or manufacturing, sales look at market channels, and finance tracks budget achievement. Moreover, they speak different “languages” regarding quantity, value, revenue, profit margins, and cash flows. With AI, the teams can view commercial and statistical forecasts, cater to different category groupings, and toggle between SKU details and category totals, fostering better team collaboration and understanding.

Managing Inventory, Service Levels, Profit, and Cash Flows in the Supply Chain

AI plays a pivotal role in optimizing inventory management, service levels, profit, and cash flows within the supply chain. Leveraging AI-driven algorithms and predictive analytics, businesses can accurately forecast demand, ensuring optimal inventory levels. By analyzing historical data, market trends, and customer behavior, AI enhances inventory accuracy and minimizes stockouts or overstock situations, thereby optimizing service levels and customer satisfaction. Moreover, AI facilitates cost-effective inventory handling, impacting profitability positively by reducing excess inventory costs and mitigating financial risks.

Concluding with Decisive Actions and Clear Decisions

AI, as a powerful tool, significantly contributes to facilitating clear decision-making and decisive actions. By harnessing AI’s predictive capabilities and data-driven insights, businesses can streamline complex information into actionable intelligence. This technology’s ability to process real-time information assists in identifying potential risks, opportunities, and optimal strategies, empowering organizations to respond swiftly and effectively to dynamic market conditions.

AI Impacts on S&OP

AI-driven planning significantly reduces the cycle time in S&OP. Traditionally, this process involves a couple of weeks for modeling and analysis, with limited time for thorough examination and decision-making due to manual processes, Excel sheets, and data handovers between teams.

“With Streamline AI-based platform, the initial weeks of demand forecasting and statistical analysis take merely seconds instead of weeks. This acceleration allows for extensive demand analysis and concurrent supply planning, enabling the rapid generation of multiple options. Consequently, executives gain more time for informed decision-making, fostering quicker and better decisions,” – said Philip Taylor, Managing Director at Kernel Supply Chain Consulting.“This shift to AI-powered planning becomes pivotal, shaping the efficiency and success of the entire S&OP process.”

Using AI-driven forecasts, incorporating diverse considerations and constraints, is game-changing. The concept of ‘what-if’ scenarios, such as the time machine resembling a digital twin, illustrates its potential for evaluation and executive comprehension.

“Establishing precision in planning fosters trust, not only in data but among teams, enabling more significant organizational changes. The AI-powered S&OP is important in fostering cohesive and effective organizational workflows,” – said Igor Eisenblätter, Managing Director at Business Views Consulting. “So, AI enhances processing efficiency, empowers clear decisions, frees up time for strategy work or other important tasks, balances objectives in real-time, and improves customer satisfaction.”

The Bottom Line

Sales and operations planning is a crucial process, harmonizing demand, supply, and financial planning. Through AI, Streamline aims to elevate the maturity and efficiency of the S&OP process, ensuring tangible outcomes. Consider optimizing what suits your operations best, aiming for increased predictability, and recognize how Streamline can enhance the value of your S&OP procedure.