ManufacturingJanuary 19, 2022

How Steel Companies Can Boost Agility & Profitability with Collaborative Sales & Operations Planning

A well-executed S&OP process is particularly difficult to achieve as innovation in…
Anna Burschik

Why Collaboration is Essential for Sales & Operations Planning

Sales & Operations Planning (S&OP) is by no means a new process, but it is one that many companies struggle to get right. One of the top reasons is a lack of collaboration, which is a key element to a successful S&OP process. Many manufacturing companies still operate in silos. Many areas that should be included are planning in their own vacuums and find it difficult to adhere to an overall plan. The supply chain—plants, warehouses, shipping lanes, trucks, etc.—are additional resources that are often at the forefront of S&OP. Additionally, finance executives view information in terms of profit and loss, balancing, cash flow and how these plans impact the business. Ensuring effective S&OP means aligning and closing the gaps between operations and business strategy.

For the steel sector, this is no different. However, a well-executed S&OP process is particularly difficult to achieve as innovation in the metals industry itself goes only as far as planning and processes are concerned. Heavily relying on inefficient tools and spreadsheets for planning and production impedes visibility. This costs companies the agility needed to thrive in a volatile marketplace. Though many steel organizations assuredly have some form of S&OP in place, few are able to harness the process effectively enough to achieve their business goals. So, why exactly should they invest in enhancing this process?

Heavily relying on inefficient tools and spreadsheets for planning and production impedes visibility. This costs companies the agility needed to thrive in a volatile marketplace.

Why Steel Companies Should Invest in S&OP

Between global pandemics and shifting market dynamics, the steel industry must contend with a growing number of disruptions. The global oversupply of steel and the increase of prices by 200% since early 2020 have further compounded market volatility, not to mention the increase in demand by 6% in 2021[1]. Additionally, the sustainability mandate is calling for the business world to improve and reimagine operations against changing regulations. All these factors are pushing steel manufacturers to seek alternative ways to better execute their business strategy, boost profitability and address their sustainability goals.

In sectors like steel where stock costs are immense, S&OP becomes fundamental to effectively and efficiently manage costs and activities between all relevant parties in the value network. It can also be beneficial in managing increasing market complexities, including rising demand, global competition and high CAPEX and OPEX.

S&OP benefits the business, from improving visibility, productivity and forecast accuracy to reducing inventory. It is especially crucial to obtain highly accurate forecasts as it allows manufacturers to better plan across operations and increase overall profits. This enables them to be closer to the planning reality, provide accurate input for the creation of a lean supply plan and make data-driven decisions that are in line with the organization’s strategies or objectives. Companies with best-in-class S&OP achieve improved financial results, including increased revenue, productivity and on-time delivery.

How the right tool can boost the efficiency of your S&OP process

As S&OP is all about collaboration, it is wise to invest in an advanced solution capable of connecting all aspects and actors within the process. A solution specifically made for the steel industry will enable manufacturers to implement a streamlined S&OP, that:

  • Supports data-driven decision-making
  • Delivers company objectives
  • Drives scenario-based planning
  • Enables continuous improvement

These capabilities will empower steel manufacturers to drive better, faster and data-driven decision-making as well as implement more sustainable practices. DELMIA Quintiq for Sales & Operations Planning can help achieve this. Powered by the 3DEXPERIENCE platform® and world-class optimization, DELMIA Quintiq S&OP is a configurable solution that facilitates the creation of company-wide plans that link corporate strategy to operations and aligns the plans of different functions and entities within the supply chain. It helps companies improve enterprise-wide transparency to maximize utilization and centralizes data in a single system to take decision-making to greater levels of efficiency.

The solution enables you to strengthen collaboration and strategic planning by making informed and fast decisions based on accurate insights as well as unique constraints and business needs. With it, steel companies can increase forecast accuracy and overall consistency, enable flexible scenario-based planning with the ability to optimize supply and demand planning and maximize synchronization across daily operations and business functions to ensure targets are attained. This results in increased customer service, higher profitability and focused inventory management, allowing you to create a path to supply chain resiliency and operational excellence.

Discover the 6 best practices for successful S&OP by reading our brochure.

[1] As forecasted by the World Steel Association—after declining in 2020 due to COVID-19.

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