A balanced supply chain and significant reduction in escalation by S&OP

Published on by NTS. The reading time is approximately 6 minutes.

A thorough Sales & Operations Planning is one of the most important business management processes. A well-designed S&OP enables a company to look ahead and to optimally manage an organization, supported by forecasts. For this reason, NTS has firmly addressed the subject and has been able to thoroughly implement S&OP within a year and a half. This new way of working results in a balanced supply chain and a significant reduction in the number of escalations. NTS’ ultimate ambition is to be able to look six quarters ahead. The entire company has now become aware of this importance, essential because S&OP encompasses the entire value chain.

"I chose NTS because of its family culture and by doing so I chose for sustainable competitiveness,” says former COO of NTS Rob Karsmakers. “Besides that, the fact that we both manufacture, engineer and assemble appealed to me: at NTS you find a high degree of vertical integration. What struck me when I came to NTS was that we consist of many separate companies, each with their own strength. The companies could have reinforced each other but actually worked in silos too much while the synergy is so important. That requires collaboration.”

Sustainable company, reliable supplier and good employer

“That was also the main reason for introducing S&OP about a year and a half ago. A thorough Sales & Operations Planning is one of the most important steps you can take to make this company sustainable in the long term. It's not just about short-term profitability; you want to be a solid, sustainable company, a good employer and a reliable supplier and customer. This requires investments, even if it demands making sacrifices in the short term. Management also has a social responsibility, a responsibility for the company's long-term perspective.”

Looking six quarters ahead

“One of the most important business management processes is the sales & operations planning. This enables you to look ahead and make business choices based on these forecasts. For that reason Patrick Kilkens started as Supply Chain Manager about 1.5 years ago. Ultimately, our ambition is to be able to look ahead six quarters. Another aim is to make sure the whole company is aware of the importance of S&OP. It covers the entire value chain.”

S&OP – the benefits
- Balanced supply chain and substantial reduction of escalations
- Pro-active conversations between customer and supplier: less frustrations and peaks in workloads
- Less stock, less working capital
- Timely investments in people and machines
- Improvement of long-term returns of the internal organization through central overview

Thorough implementation of S&OP within 1,5 years

“When I started here, we weren't able to look ahead very far yet,” continues Patrick. “Moreover, short-term forecasts in some cases turned out to deviate significantly from what could actually be achieved. We did receive extensive forecasts from some of our customers, but we did not have the systems and working methods to deal with this properly. After having heavily invested in its implementation, we can now call ourselves a frontrunner in S&OP, just about 1.5 years later.”

Monthly S&OP consultation and weekly follow-up

“We currently organize a monthly S&OP meeting during which the site director, operations manager and the business managers are present. We follow up the agreements made during that consultation during a S&OE (Sales & Operations Execution) every week. We load the forecast from our customers into the system, then we have a very high degree of certainty that orders will be placed. If we do not have a forecast from the customer, we try to make an estimate ourselves and process this in the systems. We try to plan our material purchase optimally in advance, so that we can control our working capital. ”

Clear communication with customer, balanced supply chain and reduction in escalations

“When delivery times may be at stake for a customer, we proactively send out a signal. We already notice that this way of working leads to a better balance in the supply chain and results in substantially fewer escalations. Our customers are happy with it. The forecasts give us insights that form the basis of a conversation with the customer. Through this way of working you not only gain insight into your own organization, but also in where the customer's priorities lie. By giving them insight in advance, you can start the conversation pro-actively. This results in genuine cooperation with the customer. We work together to anticipate on potential problems in the future process and avoid unnecessary peak loads.”

S&OP bears its fruit both externally and internally

“Customers find this a very professional way of working, it contributes to predictability and this makes us a reliable partner,” says Rob: “but also internally this way of working has resulted in us looking at interests from an integral NTS perspective. In the cooperation and mutual delivery between our manufacturing and assembly companies, we are therefore now focusing more on value creation for our customers. From this perspective it is important not to focus on the individual result of a manufacturing company in the short term, but to use an NTS-wide horizon. This means that everyone is on the same page and we give priority to assignments that are important to NTS for the long term. S&OP makes this transparent, which makes us structurally more competitive. And you really need each other for that."

Stepping out of your comfort zone and monitoring a healthy balance at the same time

“We have been able to implement S&OP in such a short period of time because NTS is small enough to know each other and large enough to acquire the expertise that is needed. At NTS you feel the inspiration and drive to want to make something out of it together. In addition to a professional IT backbone, bringing such a process to a good result is primarily a matter of human dynamics. You have to be all in and need to excel together. What is state-of-the-art today, will be normal tomorrow. That is why it is very important to stay out of your comfort zone and maintain a healthy balance at the same time."

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