Volume 11, Number 7 -- February 22, 2011

Infor Has High Hopes for New S&OP Application

Published: February 22, 2011

by Alex Woodie

Infor last week launched a new Sales and Operations Planning (S&OP) application designed to improve the profitability of manufacturers, distributors, and companies in other industries by serving as a clearinghouse of supply chain-related data, and fostering better collaboration among decision makers in a supply chain. The software giant plans to sell the software, which has a Windows-based OLAP underpinning, into its existing customer base, including companies that use BPCS, MAPICS, System 21, and Baan, as well as competing ERP and SCM packages.

Infor S&OP is an entirely new application designed to help companies better understand many separate but related aspects of their businesses, including who their best customers are, what kind of manufacturing and storage capabilities they have, and where they find themselves in the sales cycles.

Infor has been in the S&OP solution business since the acquisition of Mercia by Agilisys (the precursor to Infor) in 2004. But in developing the new S&OP solution, Infor felt it needed to start with a clean slate, and build a cutting edge application framework that could justify customers making the S&OP-related activities a central part of their business processes, says Alan Lindsay, product marketing manager for Infor and a former Mercia employee.

S&OP encompasses many different business disciplines, and touches many different IT systems. It involves elements of demand planning, sales forecasting, production scheduling, supply and material planning, and inventory optimization. It's often integrated with a customer's CRM system for identifying customer trends, and is usually getting data from an ERP or financials system.

At the core of the Infor S&OP software is an in-memory multidimensional OLAP database that stores data collected from these systems, including the results of the planning algorithms that spit out magic numbers companies have traditionally used to determine how much product they should make or order to satisfy demand.

And while these fancy algorithms are still an important part of the supply chain planning process, S&OP seeks to take it all up a notch by delivering an overarching framework that connects the information silos, connects the stakeholders, and drives decision making through the rigorous S&OP process.

The S&OP process was designed to, in effect, tease the collective wisdom and experience out of an organization. This ingrained knowledge isn't readily visible or usable when everybody is heads-down in their own comfortable niche, working within their favorite CRM, demand planning, or materials forecasting applications. S&OP forces them to step out of those boxes and work with co-workers to test the bounds of the company's operational capacity.

S&OP best practices resemble a continuous cycle that involves getting input from sales and marketing folk, reviewing assumptions and capabilities, coming to a consensus on demand, creating a supply chain plan, and then monitoring results. To that end, Infor S&OP's Web-based interface utilizes dashboard concepts, and leans heavily on key performance indicators (KPIs). What if and predictive modeling allow analysts to see how different assumptions and constraints will effect expected sales levels for thousands of SKUs, over weeks or months. Write-back capability in the OLAP database makes it easier to make changes to budgets and forecasts.

Benefits of implementing S&OP extend beyond the traditional supply chain focus of minimizing inventory levels. Expert practitioners of the S&OP arts have better knowledge of who their best customers are and how promotions will affect their buying habits. Companies that have structured their supply chain decision making around an S&OP product should be able to react more quickly to changes in the marketplace, according to Infor.

The Great Recession has intensified the need to change supply chain planning activities, Lindsay says. Demand levels in many product areas were fairly consistent before 2008. Since then, many companies have been unable to adjust to the "new normal," which is characterized by extreme demand volatility. Making or ordering too much or too little of a product, and shipping it to the wrong stores or distribution centers, can easily cost a company millions of dollars. S&OP presents itself as the new best practice for avoiding this.

The traditional role of S&OP before the Great Recession was to keep costs down, Lindsay says. "Then the world changed quite significantly, and S&OP became a revenue finder, a way to find what limited demand is out there." As consumer confidence grows in 2011, companies can use S&OP to differentiate themselves and grab a bigger share of growing markets, he says.

S&OP is available on Windows. Customers can run the software on anything from a dual-core laptop to the latest multi-core Intel server. Infor is very eager to sell the product into its core industrial base of customers running IBM i-based ERP systems, such as ERP LX (BPCS, PRMS), ERP XA (MAPICS), and ERP System 21. Many ERP LN (Baan) customers are expected to give S&OP a shot.

Integration with other Infor products should be fairly straightforward, as Infor S&OP was developed with pre-defined hooks into Infor's ION middleware architecture. However, Infor also hopes to sell S&OP to customers who use competing ERP and supply chain planning (SCP) products from Oracle and SAP. It developed the software as a stand-alone application instead of an integrated module of a larger SCP suite, which widens the potential customer base, Lindsay says.

Pricing for Infor S&OP will be highly dependent on the installation, but you can expect to pay around $100,000 for an entry-level implementation. For more information, see www.infor.com.

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Editor: Alex Woodie
Contributing Editors: Dan Burger, Timothy Prickett Morgan
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