Today’s installment of Whitepaper Wednesday is written by Erick Opdenbosch, SPSM. Please help me welcome back Erick for his fourth contribution to the Purchasing Certification Blog!
Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I will be reviewing a whitepaper entitled “Game Plan for Business Success: Ensuring Effective Sales and Operations Planning” from Supply Chain Digest.
Some indexes are showing that the U.S. has recovered from the financial crisis of 2007-2009. For example, The New York Times indicated that unemployment has dropped notably. Although there is still some skepticism about it, there is a clear trend that shows that the economy is recovering. Now, it is time to evaluate if we are ready for the future. Have our companies dedicated time and efforts to have better operations? Have purchasing agents developed better ways to evaluate suppliers? The whitepaper I chose goes into evaluating the way fluctuating demand is confronted by implementing a Sales and Operations Planning strategy – a supply chain concept that touches purchasing at some level.
The crisis has brought the opportunity to evaluate how companies operate. The whitepaper states that “while the primary objective during these troubled times has been to contain cost and ensure survival, organizations are also looking for revenue-generation opportunities while keeping costs/inventories low.” Purchasing is one of the main players here since minimizing cost is one of our main goals, perhaps the most important. Also by applying strategic sourcing approaches, the company can gain competitive advantage.
The whitepaper also talks about supplier diversification and supplier dependence. It is not new to talk about multiple, dual, or single sources and which one is more convenient. The whitepaper argues that it is difficult for companies to meet demand when the same vendor that supplies critical elements, also delivers to competitors. Purchasing agents have to evaluate suppliers and do everything possible to identify future problems, even with sole sources.
The whitepaper goes into defining Sales and Operations Planning (S&OP), and how it is important to implement it in order to answer to today’s “volatile demand signals.” S&OP is “a set of decision-making processes with three main objectives:
1) To balance demand and supply,
2) To align volume and mix, and
3) To integrate operational plans with financial plans.”
It is basically a model that goes far beyond the purchasing arena and touches other areas in the company. Among its major benefits are the anticipation of problems and quick execution plans. This is the outcome from the collaboration of all functional areas, which I believe is the main conclusion from this white paper.
The white paper proposes that in order to be effective, “an organization needs to include certain capabilities such as maturity model, Integrated Business Planning, the role of leadership, intra-organizational integration, cross-functional cooperation, and exception management.”
Purchasing has the advantage of being linked to all areas in the company. Hence, Purchasing can lead the integration and cooperation within the company.
The white paper may not be a purchasing topic per se, but it sure highlights that purchasing is an important part of business. In order to have access to the whitepaper go to Supply Chain Digest at http://www.scdigest.com/TypeList.php?colid=InternalWhitePaper (registration required).