How best to meet the supply and demand challenges posed by e-commerce
Even before the global pandemic of 2020 caused a peak in online shopping, e-commerce changed the concept of retail and placed greater demands on companies to meet customer expectations.
As a result, companies have learned to embrace sales and operational planning or S&OP, as a fundamental practice of their organization to change their response to market demands and customer expectations. Data is now king and uses it in forecasting practice, a more common tool for predicting customer behavior.
The S&OP process includes increased cooperation between business areas, the development of the Group throughout the business to assess revenue, manufacturing and inventories, and the sophisticated use of data to achieve this. The idea is to align business plans with goals and improve revenue.
The focus on the use of S&OP has increased since the COVID-19 pandemic, encouraging companies to move to the concept and its promise of predictability, more reliable forecasting and inventory optimization. This has become even more important following supply chain disruptions caused by a pandemic, following downtime in countries, industry and companies. The new use of online shopping by consumers has already contributed to supply chain hiccups before the virus, but the pandemic exacerbates the problems as new consumers fill the Internet flock at the same time and supply decreases due to reduced manufacturing and limited production parts Products.
As a result, many companies have become direct customer-oriented companies, eliminating traditional retail brokers as they expand their operations online, where customers have grown exponentially. To this end, these companies have adopted specific strategies.
First, they increased their investment in technology that can be used to effectively implement the S&OP process. Technology is critical to leverage these efficiencies, including inventory optimization, effortless ordering, fast delivery, and real-time delivery information to customers.
Second, these companies made the use of data and analytics a central part of managerial decision-making processes. This change in philosophy for many companies has allowed them to leverage important data and analysis. This is not only the momentum for their short-term planning, but also for their long-term decision-making.
Third, companies use scenario planning and forecasting in their decision-making process. Of course, this is greatly enhanced by the use of their data and analytics. It is also evidence that the traditional forecasting method is no longer an acceptable way to measure customer demand and product supply. It is now more complex, but also easier to quantify using more advanced tools that make the process simple and reliable. In fact, more advanced tools make supply chain management much easier, managers have found.
With all the challenges that companies and manufacturers face due to the expansion of e-commerce and the pressures of a pandemic, the S&OP process has provided companies with an effective solution to solve these problems and seize new opportunities.