Pan-European disaster area?

Related tags Europe

Pan-European disaster area?
Sales and Operations Planning (S&OP) is the forum in which operations and sales directors organise themselves to balance their sales effort and...

Sales and Operations Planning (S&OP) is the forum in which operations and sales directors organise themselves to balance their sales effort and manufacturing and delivery capability.

When the factory that makes the goods is in the UK and only serves the UK, it's an easy problem to resolve since S&OP participants have direct control over all operational levers. But what happens when the factory is in France and is serving every European country?

The French factory probably reported to the French trading entity in the past. The corporation, recognising that this would create problems, changed the reporting structure such that all European factories report to an operations chief and set performance metrics and targets like 80% overall equipment effectiveness (OEE).

Whilst tension between OEEs, batch size, inventory and service levels always exists, the internationalisation of manufacturing has pushed the issue of S&OP conflict up to the very top of the European management tree.

Take Product A, made in the French factory, and sold in several packaging variants across five countries. Three want to sign up to a promotional deal with a big customer that will double demand. But French customers need a two-month planning lead time whereas Germany needs three.You can already see the potential for disaster unless S&OP communications improve and demand is managed well in advance.

The quality of communications at this level of detail and at the top level is generally poor. The result is frustrated promotional deals and loss of profit invoices from the major multiples.

You might improve service levels by increasing inventory but that is too blunt an instrument to provide a commercially viable solution. Until pan-European companies dedicate the right calibre of people to resolving this issue, continuing failure is guaranteed.

I'm afraid that inflexibility is the inevitable consequence of a "focus factory" policy. Unless you invest in the right internal communications and manage country expectations to take account of the consequences, you will continue to be frustrated by apparently intractable supply problems.

Related topics Supply Chain IT Services

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