CASE STUDY

Supply Chain Management

Supply Chain Management

Part I Case study

Question 1:

To begin, S&OP is not a new technique.  It's been a management tool for decades.  What researchers find, however, is a wide variation in the degree to which it is used and the results of the effort over an extended time frame.  An analysis reveals the typical firm has dipped its toe in the water by trying some form of S&OP.  It also shows most companies failed to pursue it to best case conditions and as interest waned, dropped it from the high priority activity list.  Current studies indicate leading firms have re-discovered the tool and are generally well pleased with the renewed effort.  With the help of willing suppliers and customers, they have introduced collaborative techniques that dramatically and favorably impact sales forecast accuracy and the matching of supply with demand - so cycle times and inventories can be significantly reduced, while improving responsiveness.

Let's consider applying the tool by using this dialogue:

You've read the articles…

You've convinced management that you need to do something about sales an operations planning

You may have bought enabling software

You've opened cross-functional communications

You're doing a better job of balancing supply with demand

So, you're doing Sales & Operations Planning, RIGHT?

But, has your business significantly improved?

When a business goes through this analysis, it generally gets them to draw some interesting conclusions:

The current S&OP activities do not adhere to a “Best Practice” approach  of structured processes, data supported, “What-If” decision-making capability, consensus decision making and understanding of the business direction and potential risks for moving forward

There is little to no business impact sensitivity analyses performed to support the decision making processes

Alternative scenarios are not reviewed or considered during the current S&OP process

These conclusions often lead a firm to develop a formal and robust Sales & Operations Planning process.  Such an effort will become a vehicle for the communication and integration of the demand and supply planning activities with the financial plans of the company.  This move will introduce clear and consensus understanding and communication of the business direction and potentials risks ahead throughout the organization.  A pilot approach can also be discussed that allows for a “proof of concept” for a piece of the business - to minimize risk before rolling out S&OP across the entire organization

Exhibit 1 is an illustration of the approach that can be taken, as the firm moves from an initial assessment to design and prototype of the system to be applied.  It includes a recommended pilot phase and concludes with a successful roll-out.

Question 2

The purpose of this part of the paper is to shed more light on the extent to which time constitutes a barrier to trade to Ikea. It will not only focus on how time affects the size of observed trade flows, but more importantly it will look at the probability that trade between two locations will take place at all. In order to do so, it is necessary to include countries that do not trade with each other ...