{"id":2387,"date":"2014-02-04T07:27:02","date_gmt":"2014-02-04T12:27:02","guid":{"rendered":"https:\/\/demand-planning.com\/?p=2387"},"modified":"2014-02-04T07:27:02","modified_gmt":"2014-02-04T12:27:02","slug":"sop-in-the-heavy-machinery-industry-an-atypical-case-from-caterpillar","status":"publish","type":"post","link":"https:\/\/demand-planning.com\/2014\/02\/04\/sop-in-the-heavy-machinery-industry-an-atypical-case-from-caterpillar\/","title":{"rendered":"S&OP in the Heavy Machinery Industry, an Atypical Case From Caterpillar"},"content":{"rendered":"
\"Hichem<\/a>

Hichem Mustapha – Caterpillar<\/p><\/div>\n

Sales and Operations Planning<\/strong><\/a> is critical in achieving business targets for Caterpillar. Sales cycle length and financial impact of working capital in this capital-intensive industry makes it a priority to optimize inventory and overcome the dreaded bullwhip effect. The main challenge in our environment is that sales are not managed directly, but through a dealer network.<\/p>\n

1- Distribution model :<\/strong><\/p>\n

Caterpillar, heavy machinery industry leader worldwide, is renowned for its unique distribution model, which relies on a dense network of dealers which it has been serving end users since 1925. Not only has this model been a business success, but it probably epitomizes one of the main intangible assets and strengths that the enterprise can be proud of. However, from a supply chain standpoint, this leads to greater complexity in managing the S&OP and monitoring balance between demand and supply. The fact that the dealers are independent entities (owned and operated from outside Caterpillar) makes it vital and challenging to ensure alignment and integration within an atypical \u2018\u2019two-storey\u2019\u2019 S&OP process<\/strong><\/a>.<\/p>\n

2- Four clear milestones in the process :<\/strong><\/p>\n

To achieve a robust process and reliable deliverables,Caterpillar has diligently worked with the dealers to implement 4 steps, while clearly spelling out ownership between different stakeholders and expected outcome from each of these stages :<\/p>\n

a) Demand Review: gather and consolidate market intelligence and sales funnel management data to build the demand signal (unconstrained forecast consensus reflecting the authentic market conditions, regardless of any supply constraint)<\/p>\n

b) Supply Review: compare this forecast to the supply pipeline, and reduce it where relevant due to availability limitation (from unconstrained to constrained forecast)<\/p>\n

c)\u00a0Financial Review: internal meeting within dealership, where financial impact is assessed, leading in decision of confirming or reducing the order placement (working capital, budget etc\u2026) depending on financial priorities<\/p>\n

d)\u00a0Monthly S&OP review<\/strong><\/a>: performance review and comments, gap analysis, decision making , conflict resolution and issue anticipation<\/p>\n

3-\u00a0Main metrics used to monitor velocity:<\/strong><\/p>\n

In measuring its dealer performance, Caterpillar focuses on the following (to ensure consistency and enterprise alignment ) :<\/p>\n

a) Forecast accuracy<\/strong><\/a>
\nb) Forecast bias
\nc) Inventory turns
\nd) Aged Inventory
\ne) Order compliance<\/p>\n

I will be covering this topic and providing a more detailed view and deep-dive on how Caterpillar is paving the way for dealers to reach S&OP excellence. I am looking forward to sharing this presentation with you during IBF’s upcoming:<\/strong><\/p>\n

Dubai: Supply Chain Forecasting and Planning Conference: Middle East \u2013 24-25 March 2014<\/strong><\/a><\/p>\n

Hichem Mustapha<\/strong>
\nSales Operations Manager<\/strong>
\nCaterpillar Middle East<\/strong><\/p>\n

\"dubai_Header\"<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Sales and Operations Planning is critical in achieving business targets for Caterpillar. Sales cycle length and financial impact of working capital in this capital-intensive industry makes it a priority to optimize inventory and overcome the dreaded bullwhip effect. The main challenge in our environment is that sales are not managed directly, but through a dealer […]<\/p>\n","protected":false},"author":2667,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[277,82,271,255,263,62,275,41,65,66,162,34,68,260,273,35,36,76,248,81,251,236,264,37,252,73,74,270,258,38],"class_list":{"0":"post-2387","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-forecasting-and-planning","7":"tag-analytics","8":"tag-apics","9":"tag-apo","10":"tag-big-data","11":"tag-certification","12":"tag-collaborative-forecasting","13":"tag-cpf","14":"tag-data-cleansing","15":"tag-demand-forecasting","16":"tag-demand-management","17":"tag-demand-planner","18":"tag-demand-planning","19":"tag-executive-sop","20":"tag-finance","21":"tag-forecast-value-added","22":"tag-forecasting","23":"tag-ibf","24":"tag-ibp","25":"tag-innovation","26":"tag-inventory-management","27":"tag-marketing","28":"tag-metrics","29":"tag-new-products","30":"tag-sop","31":"tag-sales","32":"tag-sales-operations-planning","33":"tag-sales-forecasting","34":"tag-sap","35":"tag-siop","36":"tag-supply-chain"},"_links":{"self":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/2387"}],"collection":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/users\/2667"}],"replies":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/comments?post=2387"}],"version-history":[{"count":0,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/2387\/revisions"}],"wp:attachment":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media?parent=2387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/categories?post=2387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/tags?post=2387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}