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TRENDS Jul 7, 2022

How do you make your business more flexible?

Aurelie Favresse

"Focus on your sales and operations plan", says Marc Van Hoeck of valueXstream.

What do successful companies have in common? Right answer: the ability to adapt to change. That ability is certainly being put to the test today. Forecasting models that had, until recently, proved reliable are failing. Sales forecasts and operational plans have become pure guesswork in many organisations. Why is that and how do you get your supply chain planning under better control? Supply chain architect Marc Van Hoeck observes and advises.

Marc: “In recent years, the focus of digitisation has changed. Earlier it used to be on making processes more efficient and cutting costs. Today everything revolves around customer service. Organisations want to excel in providing services, with products that meet customer needs and expectations. Everything must be perfect right from the start, on time, at an excellent price, and also sustainable. Those who succeed in doing this are, by definition, efficient and cost-effective.

Sustainability and circularity have become very important. In this context, I’d like to refer to Lansink’s Ladder. You must prevent or reduce the creation of waste. The raw and other materials used in your product must have as low an impact on the environment as possible after your product has been used. Your product or the materials used must be reusable and/or recyclable.”

Q: What does this mean for the digitisation process in companies?

Marc: “All these requirements lead to numerous new product developments and innovations. That’s good, because it gives you a competitive edge. At the same time, the rapid changes are shortening the life cycle of the products. Consequently, today companies are digitising to increase their flexibility, to respond faster to abrupt changes in the market, to improve their productivity and operational resilience.

First the pandemic, and later the war in Ukraine, have made forecasting even more complex. Before the pandemic, global sourcing was the norm. Today, those who source locally are better off.

As a result of all these factors, sales and operations planning (S&OP) determines your success more than ever. With S&OP, you match supply to demand by taking into account all the drivers of your supply chain: the sales forecast, stock position of raw and other materials, available production resources, capacity planning, etc. Whoever plans well, wins.”

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Q: How do you go about that?

Marc: “Recently, we carried out an exercise with an international player in construction supplies who sells and rents equipment and materials. Such a business requires a lot of flexibility from the organisation. The management wanted to improve the profitability of the company. In order to do that, as in many other industries, planning is crucial. This is determined by service levels, cost prices, the sales forecast, available resources, the stock situation, the production plan, the operation of the distribution network, etc.

We listed the various obstacles in the supply chain planning and the related inefficiencies. After that, we mapped out the desired situation, future way of working and financial objectives. Based on this planning exercise, we outlined the process structure and identified areas for improvement and priorities. One point for attention was, for example, stock management: how do you optimise stock levels and costs without compromising service levels?

That step resulted in a roadmap with timelines and responsibilities. And it doesn’t just stop at the theory: based on the knowledge gained during this process, we proceed to guide the customer with the implementation of the new approach. Testing your assumptions against reality, I think that’s essential.”

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The management wanted to improve the profitability of the company. In order to do that, as in many other industries, planning is crucial.
Marc Van Hoeck - valueXstream

Q: Is the supply chain becoming more important?

Marc: “In just about every company I know, the role of the supply chain is indeed becoming more important, as is the knowledge regarding planning systems. I’d like to add a side note to this: many people think tools can solve problems. But they don’t always do that. Often the problems only start with the implementation of the tools. My advice: first, identify what you want and what you need. Structure your processes and assign responsibilities in your organisation. Work on your master data and focus on concrete transactions - the basis of any reliable plan. Then see which tool best suits your needs. In the initial phase, Excel is often sufficient for validating new methods of working. Further fine-tuning in specialised systems is something for later. Tools don’t manage your processes: they only provide support.”

Interested in discussing your ideas with Marc? Send Marc an e-mail: marc.vanhoeck@valuexstream.eu

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