Fresh produce supply chain planning:

Fresh produce supply chain planning, demand forecasting, pricing by the Farmsoft app provides premium fresh produce business management for progressive food companies.

Fresh produce supply chain planning, demand forecasting:

Fresh produce supply chain planning, demand forecasting, pricing by the Farmsoft app provides premium fresh produce business management for progressive food companies.

Quality inspection for fresh produce

Consistent and accurate quality control ensures higher customer satisfaction and adherence to industry, de-facto, and in-house quality control standards. Track supplier quality performance, customer feedback & complaints, create QC tests for any part of the fresh produce & food manufacturing process (incoming goods, raw materials, finished goods, expiry test, export/shipping tests), daily factory hygiene, machinery calibration, employee checklists... 

Fresh produce logistics

Manage orders, pack to order, picking and auto picking, dispatch & shipping process. Generate invoices, bill of lading, pick slips, export documentation and other sales documents... Dispatch teams are guided through the dispatch process ensuring every order is filled perfectly, and on time. Paperwork such as BOL, freight documents, export documents are automatically generated based on the customer and destination to guarantee no rejected shipments or issues at borders.

Fresh produce labels

Generate fresh produce SSCC pallet labels, GS1 case & PTI labels, bin labels, batch labels, traded unit labels, harvest labels and more. Use the built in industry standard labels for Walmart, Woolworths, Aldi, Tesco, Loblaws etc - or design your own with the built in label & report designer. Our team can design all of your fresh produce documents to ensure farmsoft matches your requirements perfectly.

Fresh produce packing control

Sales, Quality, Profit, Dispatch, Pack, Farm...... Dashboards for sales teams provide instant impressions of customer orders and current inventory levels. The dispatch dashboard helps plan shipments, order of loading, and transport companies & drivers... The Profit analysis dashboard shows margins per unit and most profitable customers. Use our API to access your data however you like.

Fresh produce batch packing

Project required raw materials needed to pack/manufacture orders, potential shortages, schedule multiple orders to be packed in batches on selected production lines with a few clicks, automatically send new job alerts to managers, schedule additional harvests, analyze outstanding orders. Manage entire packing and manufacturing process with ease.

Fresh produce alerts monitoring

Automatic alerts for shipments can be sent to customers, transport providers, or even team members. Every time a batch is finished processing, receive an alert with the pack-out breakdown and percentages of grades & quality and waste. Alerts can include simple shipment notifications, or even invoices and original order details. Other alerts include order changes/modifications, yield reports, new order alerts, and low inventory alerts... 

Fresh produce supply chain planning, demand forecasting

The Farmsoft inventory control app provides business wide quality management inspection systems for fresh produce, food manufacturing, seed processing, meat packing & processing, and flower packing.

Salad manufacturing & packing for food service & convenience packs: Easy management of the salad processing, mixing, and packing environment. Pack salad convenience products, mixed fruit, mixed vegetable products.

Salad manufacturing & packing for food service & convenience packs: Easy management of the salad processing, mixing, and packing environment. Pack salad convenience products, mixed fruit, mixed vegetable products
The best salad dressings are those that enhance the overall taste while still allowing the individual salad components to shine. Today many varieties of salad dressings and sauces can be found everywhere which means we can add interesting twists and flavors to our salads and other dishes. Therefore, MF Food has presented its wide unique range of salad dressing that cater to all its customer’s desire.

Freshness is everything when it comes to salads; the crisp and refreshing taste, the vibrant colours of the different ingredients – not to mention the nutritional values - are the qualities that make a salad appealing for your customer, and all of them are quickly lost right along with the freshness of the vegetables. As such, choosing the right packaging for your salads becomes an important choice. By using the right salad containers, you can keep your salads at that perfect level of freshness for quite a length of time.

Fresh produce RFID inventory app manages fresh produce inventory for packers of fruit, vegetable, meats, and seafood. Fresh produce RFID solution from farmsoft is inexpensive to implement and uses easily available inexpensive RFID hardware for fresh produce.  Fresh produce RFID inventory app fruit & vegetable handling & control
The rest of the paper is organized as follows. Section 2 introduces the reference scenario, highlighting main problems. The proposed reengineered model and its implementation in a real pilot project are reported in Section 3. Main details related to the software system architecture are summarized in Section 4. In Section 5, a description of the hardware adopted in our work is reported. A system validation is discussed in Section 6. Finally, Section 7 summarizes the conclusions and sketches future works.

RFID inventory control for fresh produce: Main Requirements and Open Issues in the Fresh Vegetables Supply Chain.

Fruit and vegetable inventory management: manage fresh produce inventory, fruit & vegetable rotation FIFO and expiry of fruit & vegetable inventory.  Fruit and vegetable inventory management and fresh Produce Stock Control
Fresh Produce Stock Control
Fruit and vegetable inventory management
FarmSoft provides extensive fresh produce stock control of incoming fresh produce & fruit/vegetables from the very moment it is delivered to the pack shed. Comprehensive Fresh Produce Stock Control is delivered via labeling, movement tracking, temperature control, quality control, documentation, and registration of incoming produce – all of which is essential in creating a strong traceability audit trail. FarmSoft provides comprehensive Fresh Produce Stock Control for fruit, vegetable, hop, grain, flower, and other fresh produce.

Business management app for salad packer processor wholesaler: manage entire salad packing process from raw salad materials to salad mixing, salad packing, and salad sales & logistics.  Mixed salad loose leaf salad lettuce packing
Use farmsoft to manage the entire mixed salad loose leaf lettuce packing operation for any loose leaf specialty products including spinach, baby kale, green coral, mignonette, butter lettuce, 4 leaf salads, baby cos, rocket, arugula, chives, basil, bunch dill, bunch kale curly, bunch kale deck, bunch mint, bunch silver-beet, bunch tarragon, bunch thyme, tuscan kale, chard, continental parsley, cochran iceberg, cochran cos, mizuna, chard, salad blends, organic salad packs, Asian mix, braising mix, frissee, organic raw, raddichio, Lollorosa, red romaine, spring mix, wild arugula.

Configure the ingredients for each loose leaf salad & lettuce recipe, project the required materials, produce orders based on requirements (or schedule new harvests or new plantings) to ensure mixed salad loose leaf lettuce packing is accurate and easy to manage.
Salad Processing – Creating Spring Mix
Salad Processing – Creating Spring Mix
Business management app for salad packer processor wholesaler
Post published:April 9, 2019
The spring mix harvesting process has been documented previously on the blog (see post HERE), and in this week’s blog, you get to see the salad processing step, showing what happens to those different types of lettuce varieties after they are harvested. The continuation of this process takes place with the same company, Babé Farms, at their processing facility (Fresh Venture Foods) in Santa Maria, California.
What Lettuce is in Spring Mix?
Although we are accustomed to the name “spring mix”, all companies use their own unique mixture to create their specific mix. For Babé Farms, they create multiple different types of lettuce mixtures. In the picture below, you can see how they dictate what types of lettuce are included into each mix.

Manage your seed, oilseed, cereal inventory traceability, orders, seed storage, seed sales, wholesale and export. Organic and conventional. Silo storage, cleaning, packing. Print Canadian Grain Council (CGC) forms and reports.  The app manages your seed, oilseed, cereal inventory traceability, orders, seed storage, seed sales, wholesale and export. Full business management solution for grain, seed, and cereal handling.

Organic and conventional. Generates paperwork for CGC and other government requirements; saves your time.
Create Purchase Orders to order seed inventory, or receive seed inventory from your own farms without needing an order
Record your customers orders of seed (optionally allow customers to order online using the shop, or B2B portal)
Receive bulk seed deliveries and store in silos, traceability is full maintained from the instant you receive the seed inventory, to post sales auditing and mock recalls.
Perform a quality check during the delivery process to determine waste % or dockage.
Generate Form 7 for CGC Canadian Grain Commission (sample here!) Ask us if you need more forms for your local region
Report rapidly on the total seed inventory stored in each silo, including off-site storage locations
Processing seed: Clean, sort, perform safety scanning (x-ray, magnetic) on seed stocks
Store cleaned seed inventory in clean silo
Bulk load trucks directly from seed silo for bulk sales
Pack cleaned seed inventory into 1MT, kg bags, and LB bags
Controlled seed sale process tells shipping teams exactly which inventory should be shipped to which customer
Shipping container management, temperature recorder numbers, seal number, and more for exporting seed stock
Generate reports that give you all the information you need for auditing and reporting such as CGC Weekly report, CGC Monthly Liability Report, CGC Receiving report, CGC Settlement report.

5 Ways to Reduce Fresh Produce Inventory Waste Right Now
5 Ways to Reduce Food Waste Right Now
“Sometimes the simplest lessons are the most groundbreaking.” That truth is over 30 years old, but its words still resonate loud and clear.
The goal of today’s post is to share a some surprising, yet logical ways to reduce inventory right now…
The key to reducing inventory is not to buy LESS; the key is to buy LATER. Teams that use this inventory reduction strategy and mindset will free up incredible amounts of capital for their organizations.
So as you might guess, the opposite absolutely holds true:
The key to raising service levels is typically not buying MORE; it is buying EARLIER. Perhaps we’ll save that breakdown for another day. Here we’ll explore ‘buying later’ as a strategy to reduce inventory and challenge you to see if there’s opportunity to do so in your organization.
How to reduce inventory in supply chain planning: those first few days
Let’s start with a quick word about your initial days using an advanced supply chain planning solution. Most companies experience a dramatic and welcome inventory reduction when they first move from the world of old buying reports and spreadsheets to a best-in-class inventory planning solution. The advanced forecasts offer dramatic results as expected, and the proper safety stock amounts finally being placed on each item often offer a shocking inventory reduction.
This common benefit is based on the fact that most companies carry too much safety stock on their fast-moving, or smooth ‘A’ items. Once those victories are realized, much more opportunity typically unfolds. Even a strong team with an advanced inventory planning and replenishment solution will continue to see deeper results as they increase their knowledge and be more open to coaching and growth.
When safety stock gets inflated, here’s why

Optimizing Fresh Produce Inventory Management.  Today’s Planning Posts chat is with long-time veteran in the inventory optimization world, Tracy Coon, along with Planning Posts evangelist Dan Craddock, on the topic of Optimizing New Item inventory.

Summary: New item forecasting is a troubling area because of its tremendous profit impact. If a company has $50M in inventory, New Items could be $5M or more of that investment. Yet, as Tracy explains, so few demand forecasting teams make optimizing new items a key focus. Download now to learn some strategies for putting a sense of urgency behind improving the performance of your new items across the portfolio.
Todd Intro: I am here with two people who consider themselves lifelong inventory optimization professionals. They love the profession and their careers have been built on educating inventory analysts and inspiring inventory planning and demand forecasting excellence.
Welcome, Tracy Coon and Dan Craddock! It’s great to have you both on the show and I know you want to dig into this topic in a big way. You were both replenishment analysts for wholesale companies prior to becoming education consultants.
Dan & Tracy: brief introductions
Todd: Despite this passion for the profession, you both say that you continue to be frustrated by the lack of success in one key aspect of a company’s inventory:
Optimizing Fresh Produce Inventory Management
Optimizing Fresh Produce Inventory Management.

Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Demand Forecasting,
Inventory Optimization, and
Price Elasticity
Supply chain planning relies heavily on science and algorithms for better demand forecasting and inventory management. This includes forecasting independent customer demand, which changes with customer preferences. It also includes dependent demand that aggregates demand streams at a stocking point upstream to other echelons of the supply chain.
Let’s look at how science and machine learning in Sales & Operations Planning (S&OP) is streamlining demand forecasting, inventory optimization and price elasticity to improve long-/short-term planning for complex distribution supply chains.
Why is the Distribution Supply Chain So Complex?
Many factors are contributing to increasing complexity in these forecasts, including outbound customer demand volatility, managing multiple suppliers with long lead times (especially overseas), constrained transportation capacity, and increasing inbound supply line volatility.
Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Large Assortments
Distributors face even greater complexity in managing their supply chains. Large assortments to serve existing customers has become key to differentiation, but introduces an ever larger assortment with intermittent, lumpy and sparse demand in the “long tail.”

Essential Steps to Expert Demand Planning in fresh produce supply chains.  Order Analysis: Essential Steps to Expert Demand Planning in fresh produce space

You’ve taken care of your customers’ needs. You’ve created your replenishment order, but you left a few stones unturned… What about those Special Orders? Before you send the replenishment order to your supplier, don’t overlook the opportunity to boost revenue and cut costs in these 3 Special Order areas:
Events and Promotions,
Investment Buys, and
Overstock Transfers and Balancing
It has been almost 23 years since we first heard a phrase we’d love to borrow from the beloved Jerry McGuire… “Show Me The Money!” That’s exactly what Special Order analysis does for your business.
We are stoked that you are here today for Step 6 of our 7 Essential Steps to Expert Demand Planning series. We’re here to Show You The Money. Well… more like you are here to Show Yourself The Money through strategic Special Order analysis. We’ll give some strategies you can use to optimize Special Order opportunities and drive incremental margin on all your promotions, investment buys, and overstock transfers/balancing. These areas offer a fast, easy win for boosting sales, expanding margins, elevating your products, and balancing overstock.
Special Order analysis happens after basic replenishment and before the final rounding of buying multiples and supplier brackets in the demand planning process:
Demand Forecasting
Lead Time Forecasting
Order Cycle Optimization.

Post harvest traceability software for for fresh produce packing, processing, export/import, sales – for fruit, vegetable, seafood packers.   Better handling of FIFO, monitor expiry dates, and accurate fresh produce inventory control & labeling help to reduce waste in packing, processing and storage. Further waste reduction can be achieved with other handy farmsoft features like Quality Control that ensures ‘waste’ is actually waste, waste reports that automatically calculate waste from a batch based on inputs and outputs – allowing you to identify potential areas of shrinkage, incorrect categorization, or mishandling.

post harvest traceability software
post harvest traceability software
Improve dispatch accuracy
Let farmsoft improve the accuracy of your dispatch processes by managing orders, allowing assignment of inventory to orders and invoices from phone or tablet (directly from the forklift) or by PC/Mac. Documentation required for each specific customer can be automatically generated based on each customers requirements. Ensuring correct documents accompany every shipment reduces the possibility of a shipment rejection.
Consistent quality control
Quality officers are guided through the quality control process, presented with images and instructions for each test, ensuring they know what to look for at all times, corrective actions are presented if a quality issue is detected. This makes training new qual

Fresh produce marketing

Fresh produce marketing software reduces shrinkage, increases efficiency, and makes compliance easy. Turbocharge your profits now with farmsoft!Fresh produce marketing software reduces shrinkage, increases efficiency, and makes compliance easy. Turbocharge your profits now with farmsoft!
One hundred percent accurate traceability starts at the purchase order or delivery phase, and follows the fresh produce through all of the fresh produce processing and storage phases all the way to the customers doorstep and beyond. Recalls can be performed based on only a small amount of supply chain information, making farmsoft one of the best fresh produce traceability software solutions on the market. Trace software marketed to customers using any of the following: pallet number, inventory number, batch number, customers reference, purchase order number, sales order number, contract number, delivery date, invoice, delivery docket number and more. Farmsoft makes fresh produce marketing, importing, exporting, and sales and distribution easy with a range of handy features to ensure maximum traceability and efficiency in the fresh produce sorting, grading, packing, processing, warehousing, wholesaling, and sales & distribution processes.
Farmsoft fresh produce marketing software has solutions for all produce marketing enterprises and packhouse and pack shed.

Fresh produce processing software delivers reduced waste and shrinkage, increased traceability and profit. Make fruit and vegetable packing easy, automatic paperwork generation, reduce administration cost.
Fresh produce processing software
Fresh produce processing software
Farmsoft is a full featured fresh produce processing software solutions. Delivering comprehensive management from the delivery of goods, through the entire storage, washing, sorting, grading, packing, processing, and sales, marketing, and dispatch of fresh produce. Farmsoft includes many optional modules from which clients can choose to build a perfect solution for their fresh produce processing enterprise. Access farmsoft from the cloud, or install on your local server. User your PC / Mac / iPhone/Android / tablet / industrial PDA to access farmsoft. Improving the traceability and reducing post harvest loss is the cornerstone of the farmsoft Packhouse solution. Farmsoft enforces good manufacturing practices to ensure minimal waste and maximum pack shed profit. Comprehensive quality control systems ensure quality testing is fully standardized and quality managers are alerted immediately of any significant quality deviations.
Fresh produce processing refers to the the conversion of one or more fresh produce inventory (for example fruit, vegetable, seafood, herbs, hop, flowers) into a value added product. The value added product may be simply a dried herb, or may be a more complex product such as a mixture of processed juices. Fruit and vegetable production and consumption in Asia and the Pacific region have shown a marked upward trend over the past several years. Rising consumer demand in the region has come with greater awareness of food safety issues and increased need for convenience and quality.

Packhouse management software from farmsoft delivers comprehensive packhouse management for fruit, vegetable, and fresh produce processors, packers, importers and exporters.
From inventory control through to sales and dispatch. farmsoft packhouse management software fills in the gaps and ensures your fresh produce processing business always has maximum quality, minimum waste, and extreme traceability.
Packhouse Management Software
Packhouse Management Software
The farmsoft packhouse management solution can manage fresh produce from delivery, short and long term storage, washing, packing, processing, and even full food manufacturing and value adding processes. To complement these features, farmsoft packhouse management solution also manages sales orders, sales contracts, export documentation, dispatch, shipping containers, and invoice preparation. Talk to a farmsoft consultant today to find out how packhouse management can be implemented in your packhouse to increase traceability and at the same time, reduce waste through better fresh produce handling procedures.

Fresh produce management software from farmsoft delivers rapid traceability, waste reduction, and packer accountability for fruit, vegetable, hop, and coffee. For use in medium to large packhouses, and co-operative packing.
Improving the traceability and reducing waste is made easy for fruit and vegetable packers and processors using farmsoft. The farmsoft fresh produce management software suite provides a comprehensive management system that addresses modern packing concerns including waste reduction, employee management and labor capture, traceability maintenance, export documentation, sales, orders, contracts, purchase orders, multi-pack site management and more.
‍As an optional feature,farmsoft is also ready for corporate deployment, where one company can have multiple packing sites. Each packing site can operate independently, and users at each site can only see the data relating to their activities. Of course, head office is able to view all sites, monitor packing progress, assign sales orders to be fulfilled at specific sites, and track performance and all KPI’s from each packing site. Download fresh produce management software specifications, or download sample packhouse reports.
Fresh produce management software
Farmsoft fresh produce management software for enterprise management of simple and complex packing operations including receipt, sorting, grading, processing, packing, storage, sales and dispatch.

Fresh produce distribution software makes fruit and vegetable supply chain management easy! Manage the entire ordering, storage, packing, sales and distribution processes with farmsoft.

Farmsoft fresh produce distribution software makes fruit and vegetable supply chain management easy! Manage the entire ordering, storage, packing, sales and distribution processes with Farmsoft.
Farmsoft fresh produce distribution software does everything you need to manage a busy fresh produce packing, sales, and distribution enterprise. Handy features like instant traceability, mobile point of sale interfaces, and print on demand solutions make Farmsoft the most sophisticated – yet easy to use Fresh produce distribution solution.
Farmsoft fresh produce distribution software makes your packhouse more efficient and reduces post harvest waste.
fresh produce distribution software for fruit importers, exporters, packers, cross docking, and short and long term fruit storage.
fresh produce distribution software
Farmsoft’s easy to use functionality covers all operational requirements for import, export, packing and processing of fresh produce. Use farmsoft’s cold store quality control modules to ensure minimum waste, and maximum customer satisfaction.

Fresh produce management system for inventory management - Orders - Quality - Packing - Sales - Shipping - Recall & audit.  Fresh produce management systems gives fresh produce packers & processors reduced waste and increased traceability.

The farmsoft produce management system is a complete business management tool for fresh produce packers, processors, and import/exporters and wholesalers. The farmsoft system ensures maximum traceability and minimum waste with an overall process based on systematic management.
Fresh Produce Management System slashes paperwork and administration costs, improves compliance, and reduces waste.
The farmsoft fresh produce management system takes the headache out of fresh produce processing and packing by generating fresh produce documents & food safety management systems. Easily generate paperwork for your fresh produce packing and processing operations.
farmsoft fresh produce management system
farmsoft fresh produce management system
Today's complex supply chains render firms susceptible to diverse risks and require robust fresh produce management systems; however, SMEs of PFSCs are found to be more vulnerable to risks due to exposure to extremely uncertain weather conditions and consumer concerns about product quality and safety attributes. These firms, however, constitute a major part of the world's economy and provide raw material for many industries such as food and beverage using their fresh produce management system.
These firms, constitute a major part of the world's economy and provide raw material for many industries such as food and beverage, fruit & vegetable fresh produce management systems. A disruption in their supply chains could result in food shortage, high inflation or economic decline. Most of existing studies on fresh produce management systems predominantly focus on perishable industries such as fresh food, fruit, vegetable, meat, seafood, and flowers.

Perishable inventory management software, Reduce perishable inventory waste with FIFO and strict inventory management & monitoring.
Perishable inventory management...
Implement a simple traceability solution, or comprehensive business wide perishable inventory solution – the choice is yours….Perishable inventory management software, Reduce perishable inventory waste with FIFO and strict inventory management & monitoring.
Detailed perishable inventory management video...
Perishable inventory management software for fresh produce and more...
Download the detailed product specifications here.
Perishable inventory management software, Reduce perishable inventory waste with FIFO and strict inventory management & monitoring.
Perishable inventory management software, Reduce perishable inventory waste with FIFO and strict inventory management & monitoring.
Perishable inventory demands attention. Specific inventory-tracking methods help with the job of managing and accounting for perishable inventory. Perishable refers to items that have an expiration date, such food that will go bad if not eaten in a certain amount of time. Single-period inventory control and first-in-first-out, or FIFO, inventory valuation are commonly used to deal with perishable goods.
Much of operations is about being able to match supply to demand. This can be difficult with certain business models that sell perishable goods. As a result, managerial accounting has come up with methods for recognizing inventory for perishable goods. Perishable goods, or goods that may have no value in the next period, can be difficult for managers to track; however, the single-period inventory control system can help to alleviate many issues involved with automatically replenishing inventory when it's down.

Export fresh produce using farmsoft fresh produce business management suite...
A modular solution including comprehensive business management options to choose from to help manage and increase efficiency in your fresh produce packing, processing, and food manufacturing business. With functionality built specifically for import/export of fresh produce including export documentation, certificate of origin, phytosanitary certificates, and other food export requirements.
Track your fresh produce export orders from order to dispatch.
Ensure all fresh produce handling and traceability is managed accurately.
Rapidly print fresh produce export documentation such ass hipping, invoice, and customs.
Manage fresh produce export for fruit & vegetable packer, processor, and importer...
Easy fresh produce exporting with the farmsoft fresh produce export management suite.
Export fresh produce
Manage export processes for fresh produce fruit & vegetable
Turbocharge your fresh produce export...

Coles order management for fresh produce, fruit & vegetable sales...

Rapidly import order files from Coles, saves time, and increases accuracy. You can even import updates and deletions that will be automatically managed.
Coles order management
Sell fruit and vegetables by scanning pallets and inventory onto orders, farmsoft will manage the balance remaining on each order to ensure each dispatch is sent with the correct content, at the correct time.
Coles invoices are captured automatically during the dispatch process (or entered by administration team) ensuring accurate Coles orders and invoicing processes.

Fresh produce traceability app for fruit, vegetable: inventory, processing, packing, sales & distribution.  
There are currently more than one billion smartphones in use across the world – and that figure is projected to double by 2015. As the use of “smart” mobile devices continues to grow, apps have become an incredibly effective way of providing information and resources to a wide audience. farmsoft provides access to food traceability information directly from smartphones, tablets, and PC's. Essential traceability information can be accessed at any place in the fresh produce supply chain.
An increase in smartphone use happens to coincide with the growth of a consumer demand for more sustainable food – “organic,” “locally grown,” “seasonal,” and “pesticide-free” are becoming more and more common in the vernacular of food sales. In the United States alone, annual sales of organic foods and beverages grew from US$6 billion in 2000 to US$26.7 billion in 2010. And there are nearly three times as many farmers markets in the United States today as there were in 2000.

Fresh produce software for more profit & reduced waste.  Fresh produce software delivers efficiency & traceability improvements for fruit and vegetable packers, processors, & import / export.

Farmsoft fresh produce software provides end to end business management for fresh produce processors and marketers. Farmsoft fresh produce software manages all facets of the fresh produce process from incoming produce, to processing, sorting, grading, packing and even value adding. The functionality of farmsoft fresh produce software is rounded off with comprehensive quality control, sales, dispatch, and invoicing functionality.
Farmsoft fresh produce software provides comprehensive labeling, inventory management, pallet management, pallet control, audit functionality, quality control and other fresh produce tools to make every day business management easier.

Fresh produce supply chain planning, demand forecasting
Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing

Demand Forecasting,
Inventory Optimization, and
Price Elasticity
Supply chain planning relies heavily on science and algorithms for better demand forecasting and inventory management. This includes forecasting independent customer demand, which changes with customer preferences. It also includes dependent demand that aggregates demand streams at a stocking point upstream to other echelons of the supply chain.

Let’s look at how science and machine learning in Sales & Operations Planning (S&OP) is streamlining demand forecasting, inventory optimization and price elasticity to improve long-/short-term planning for complex distribution supply chains.

Why is the Distribution Supply Chain So Complex?
Many factors are contributing to increasing complexity in these forecasts, including outbound customer demand volatility, managing multiple suppliers with long lead times (especially overseas), constrained transportation capacity, and increasing inbound supply line volatility.

Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Large Assortments

Distributors face even greater complexity in managing their supply chains. Large assortments to serve existing customers has become key to differentiation, but introduces an ever larger assortment with intermittent, lumpy and sparse demand in the “long tail.”

Fulfillment Standards

Multiple distribution centers serving a demanding customer base with increased expectations of rapid and reliable fulfillment introduces further complexity to the multiple echelons of inventory. Finally, increasing sales on mobile, ecommerce, and other direct channels is growing and competing with traditional channels for inventory and adds to inventory volatility across channels and echelons.

Sophisticated Science and Analytics
One solution to address this complexity is advanced analytics that can handle large data sets down to transaction-level details. Demand classification is key to identifying the type of demand for each product on each channel to apply the best forecasting techniques.

Advanced seasonality techniques are critical for identifying recurring seasonal trends, de-seasonalizing demand, and determining baseline demand. This supports flagging peaks in demand above baseline that can be associated with events like promotional activities, non-recurring natural incidents, and other factors driving demand forecast anomalies.

Machine Learning Tools for Inventory Optimization

Sophisticated science also improves inventory optimization. Machine learning is becoming a more significant addition to the demand forecasting toolkit, and is being widely used to optimize inventory forecasting accuracy.

Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Fresh produce supply chain planning, demand forecasting, pricing: fruit & vegetable packing
Price Elasticity and Price Optimization

A crucial piece of the supply chain planning puzzle is price optimization. Since distributors face increasing transparency and competition, there is growing price sensitivity across channels and customer segments. Price elasticity must use similar techniques to demand forecasting in de-seasonalizing demand to determine baseline and measure response to price changes.

A proven practice for using elasticity of demand to measure willingness-to-pay is to measure price sensitivity for products sold on all channels and locations down to the customer level.

Another critical practice is using product attributes to infer price elasticity deeper into the assortment using Bayesian inference and other techniques. Remember analyzing large data sets down to the transaction level? Invoice-level data and analysis is part of this approach.

Long- and Short-Term Supply Chain Planning
Short Term: Sales & Operations Execution (S&OE)

Demand forecasting, Multi-Echelon Inventory Optimization (MEIO), and Price Optimization science certainly complement each other in tactical, shorter term (12-18 month) supply chain planning. I refer to the concept of short-term SCP + Pricing = Demand Shaping as “Sales & Operations Execution (S&OE)”. But what about using these advanced techniques in longer-term S&OP?

The benefits of effective S&OP are compelling - lower operating costs, reduced inventory requirements, and top-line growth, and top-performing S&OP companies are realizing these benefits and in the process gaining competitive advantage.
Almost 70% of Respondents Have Adopted Formal S&OP View Slideshow

The Hackett Group Resources
The Hackett Group’s “The CPO Agenda: Procurement’s Key Issues in 2013” Research Report

Of all the Hackett Key Issues Studies conducted in the last five years, the 2013 edition shows the greatest year over- last change in priorities for both performance and capability-related issues.

Pricing: Distributors’ most powerful value-creation lever
September 16, 2019 | Article
By Alex Abdelnour and Walter Baker
Pricing: Distributors’ most powerful value-creation lever
With new digital capabilities, distributors are finding that pricing can do more than traditional margin-expansion methods to create new value.
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Pricing is undergoing a revolution fueled by big data, advanced analytics tools, and powerful digital capabilities. Distribution businesses are well positioned to reap the benefits of this revolution, given the high volume of transactions they support and the breadth and complexity of both their product and customer portfolios. The pricing capability is critically important in a business where margins tend to be razor thin; no other lever can do more to raise earnings. But mind-sets haven’t caught up. Many industry leaders still relegate pricing to a “deal desk” rather than making it the centerpiece of commercial excellence.

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Distributors who embark on end-to-end pricing transformations can expand earnings by up to 50 percent with modest or negligible impact on volume. Their sales forces will be far more efficient and effective as they tailor pricing to each customer and situation, and they will provide accurate quotes more quickly, thereby improving the customer experience. Armed with additional capital, some companies will invest more in growth and differentiation. By offering new value-added services, these leaders can gain competitive advantage and build market share.

For many distributors, the traditional playbook of margin expansion has run its course
For years, distributors have pursued greater scale to expand margins by a few percentage points and return on sales in mergers that have significant overlap by up to 3 to 4 percent. Since the bottom of the Great Recession, nearly 30 percent of publicly traded distributors have acquired at least one other distributor (up from 20 percent in the decade before the recession), and revenue increases from the average acquisition today are roughly 35 percent larger.

In this industry-wide scramble for scale, attractive targets have become scarcer and thus more expensive, reducing returns on investment. Most industry leaders realize that once they have become the number-one or number-two player in a market, additional acquisitions can yield diminishing returns; indeed, many customers continue to use secondary suppliers to limit the risk of supply-chain disruption and sometimes to keep their primary suppliers honest. In addition, most acquirers face complex challenges as they try to merge far-flung sales organizations that make daily pricing decisions on hundreds of thousands of SKUs for thousands of customers and, at the same time, try to marry disparate IT systems, each with a patchwork of homegrown tools and expensive enterprise resource planning (ERP) solutions.

But even as building scale is delivering less value, raising margins through pricing is so complex that many big distributors have shied away from it. Instead, they allow sales teams to rely on their own knowledge and experience, assuming that each customer is unique and therefore no algorithm or dynamic pricing tool can offer useful insights. Mergers contribute to the problem when a focus on the challenges of integration causes managers to underinvest in data integration and analytical capabilities to optimize pricing across product catalogs, geographies, and organizational fiefdoms. Many focus on back-end margins—for example, maximizing supplier rebates and special pricing to expand margins—not realizing that gains in purchasing and procurement may be given away to customers due to a lack of pricing capabilities.

Pricing is distributors’ most powerful value-creation lever
In contrast to past reliance on growth through M&A, the outperformers in the years ahead will be the distributors that see price optimization as the foundation of commercial excellence—speeding pricing approvals and helping salespeople make not just more and bigger deals but more profitable deals. For a distributor, pricing is by far the most powerful lever for improving overall margins and increasing profits. A 1 percent price increase across the product portfolio has more impact on bottom-line margins (earnings before interest, taxes, depreciation, and amortization, or EBITDA) than a 1 percent uplift in volume or a 1 percent reduction in procurement cost or in selling, general, and administrative expense (SG&A).

Looking across our database of 130 global and publicly traded distributors, we estimate that a 1 percent price increase would yield 22 percent increase in EBITDA margins (Exhibit 1), and a 25 percent uplift in stock price. Moreover, pricing has a disproportionate impact on a distributor’s enterprise value, with an increase of 20 percent for a 1 percent increase in price.

Exhibit 1
Pricing is the most powerful lever for distributors.
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Achieving similar impact using other levers requires improvements of a larger order of magnitude. For example, an average distributor in 2018 would have to grow volume by 5.9 percent while holding operating expenses flat to achieve the same impact as a 1 percent price increase—no small feat, especially in mature markets where competition is fierce and growth often comes at the expense of profitability. That same distributor would have to reduce fixed costs by 7.5 percent or buy 22 percent of its own size (assuming similar P&L structure) to deliver an equivalent uplift in EBITDA. The only other lever with the same power as pricing is procurement, where similar results would require an aggregated cost reduction of nearly 1.2 percent across specialty and commodity products.

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Optimizing price requires overcoming misconceptions
Even experienced salespeople may believe that raising prices means losing deals, especially when competitors offer similar products. They may argue for aggressive price cuts to keep large customers happy (and reach their own volume targets). Our qualitative and quantitative research reveals that the truth is more nuanced. A lack of product availability, poor service, and damaged customer relationships can scuttle more deals than high prices, for example, and low prices rarely win deals.

Our survey of more than 200 distribution customers across sectors indicates that pricing ranks sixth overall in what customers look for in a distributor (Exhibit 2). Price is the most important factor in winning deals on the key value items (KVIs) that represent the top 20 percent of products, which represent roughly 80 percent of an individual customer’s purchases. But most customers are far less price sensitive on the many other items in their shopping baskets. This is where distributors have the biggest opportunities to raise margins.

Exhibit 2
Customers rank pricing sixth in importance.
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Sophisticated sales teams can increase their win rates with a deeper understanding of each customer’s willingness to pay for KVIs and the other value they provide, such as one-stop shopping across categories, convenient and prompt delivery, a breadth of brands and models, financial facilitation for small and medium-size businesses, flexible return policies, and, of course, product expertise.

Salespeople hungry to make deals may continually ask for price reductions, but cutting prices in a low-margin environment risks eroding margins without enough volume uplift to make up the difference. For a distributor with gross margins of 18 percent, for example, the volume uplift required to break even is roughly 6 percent for a 1 percent price cut. Continuously lowering prices is a race to zero margin. In the long run, it makes more sense to build pricing strategies on each customer’s willingness to pay and a keen understanding of the nonprice factors that the customer values most.

In distribution, of course, the number of customers and array of SKUs are too large for any human sales rep to know exactly how much to charge in each situation. Instead, most focus on a handful of high-turn products they know well, supplemented by a shorthand approach to the remaining thousands of items, such as using the same markup, margin, or discount percentages across all other products. This can mean overpricing some items (which can shake the trust of the customer) and underpricing other items (resulting in missed margin opportunities).

The distributors who outperform are those whose sales reps focus less on pricing thousands of items and more on selling, growing share of wallet, and delivering on the distributor’s unique value propositions. Many of these winners have a pricing organization, digital tools, and analytical benchmarks to give sales reps the market and customer intelligence they need to drive volume and margins.

These distributors don’t raise prices across the board. Instead, they look for pockets of strategic pricing opportunities and continuously improve their approaches and systems. For instance, in a business with a large transportation-cost component, sales reps have clear incentives to include the cost of freight at the transaction level to avoid underpricing items with a higher shipping cost. Leading distributors drive changes in measurement, incentives, and behaviors to improve price quality and achieve customer loyalty and other desired business outcomes.

Leaders also keep pace with their customers’ rising procurement capabilities. Large companies have doubled their investments in procurement in just the past six years, giving their procurement teams new price-comparison tools, clean-sheeting techniques, and best practices in category management. Most companies would rather cut their own costs or persuade suppliers to drop theirs than ask customers to pay higher prices.

What really matters in B2B dynamic pricing
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Best-in-class distributors use pricing to create value
A handful of distributors have been pioneers in adopting pricing as a discipline and have invested in building pricing organizations with a mandate to deliver year-over-year margin improvement. They have then embarked on journeys to build pricing discipline and exception routines in the sales organization and adopt analytics and other tools to capture value.

Based on our experience standing up pricing organizations and supporting several distributors on their pricing journeys, we have laid out five key elements of building a profit-generating pricing organization that creates substantial, steady uplifts in margins, even during challenging economic times:

Build a dedicated pricing organization with organizational clout. Distributors should consider standing up a pricing and margin-management organization to improve pricing processes and discipline. Using best practices, it can drive more consistent approaches to pricing routines and margin management across the organization, provide an end-to-end view of how pricing affects customers, and use new tools and technologies to help the sales organization capture value.

For example, the sales organization of a leading food-service distributor had autonomy over pricing but limited sophistication. The company took a multiyear journey to build a centralized pricing organization with local support in branches. Reporting to the chief operating officer, the pricing organization had a mandate to drive yearly margin expansion, develop long-term pricing strategy, and fend off digital threats. The pricing organization started small, launching quick-win initiatives across pilot locations and creating enough excitement to develop a pull from various branch managers rather than a push from the ivory tower. Several years in, the pricing organization is a profit generator with strong credibility in the sales organization, consistently delivering margin improvements of 50 to 100 basis points.
Embed best-in-class processes in the sales organization. Pricing in many sales teams is often an art rather than a science and lacks the structure, thoroughness, or oversight needed for consistent profit maximization. The winners clearly define pricing processes, including steps, owners, inputs, and outputs.

For example, an electrical distributor has implemented a rigorous performance-management routine with a layered escalation process to manage and control runaway exceptions more effectively. A pricing “war room” evaluates requests for exceptions, tracking their frequency and depth, analyzing deal economics, and providing sales reps with real-time guidance on prevailing prices. Adherence to pricing rules, policies, and targets is monitored and used for coaching at various levels of the organization, including sales reps, sales managers, branch managers, regional managers, and senior leadership.
Embrace advanced analytics and the digital revolution. As noted, it’s unrealistic to expect sales reps to get the best price in every transaction. Today, however, large distributors can run advanced analytics using their treasure troves of internal data enriched with readily available external data to identify pricing opportunities and arm sales reps with benchmarks and digital tools to make better pricing decisions.

A high-tech distributor with hundreds of thousands of SKUs and thousands of customers invested in a dynamic deal-scoring solution to group customers and products in segments. It provides sales reps with pricing recommendations for each order, tailored to the order’s size, location, customer characteristics, end market, and suppliers. This has minimized human error and pricing variability, improving margins significantly. The dynamic deal-scoring algorithm is part of an easy-to-use tool that sales reps employ to get product information, price each product, and obtain real-time benchmarks showing how their pricing compares with similar transactions by colleagues, which builds their confidence in their ability to tailor prices to deal characteristics.
Align sales incentives with margin expansion. Sales-rep compensation has traditionally been tied to volume rather than margins, which sometimes leads to revenue growth at the expense of profit. Indeed, since the Great Recession, distributors have grown revenue by about 7.5 percent per year, on average, while margins remained low and well below those before the recession (Exhibit 3). Best-in-class sales organizations are increasingly tying compensation to both revenue and margin growth.

Exhibit 3
Margins have sputtered despite revenue growth.
We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.comAn electronics distributor, facing significant margin erosion despite solid sales growth, realized that its thousands of sales reps, who were compensated solely on sales growth, were giving away free freight and expedited shipping and lowering prices to “win” deals. A shift in the compensation model and pricing policies, along with training and tools, has optimized both sales growth and margin expansion.
Invest in sales reps’ pricing capabilities. Sustained impact from pricing initiatives requires investment in sales reps’ capabilities to price based on value, negotiate, and manage contracts end to end—and success in wining sales reps’ hearts and minds. Pricing organizations can score quick wins across a distributed sales organization landscape by first piloting pricing initiatives in a few branches with willing general managers and pressure-testing them for impact. This builds credibility within the wider sales-and-marketing function, creating a pull from all other general managers.

A plumbing distributor launched a major pricing transformation with new policies, processes, and tools that sales reps had to master quickly. The pricing organization worked with the sales operations team to build a “train the trainer” curriculum followed by online training, leadership videos, an online chat forum, and a hotline for urgent questions. Sales reps understood the rationale for the changes, the long-term vision, and—most important—how and why previous pricing approaches had cost the company money. Moreover, sales managers and branch managers were integral parts of the solution: after gaining an understanding of pricing levers and the rationale for change, they became pricing champions within their teams.
Pricing optimizers hold the competitive advantage
When we talk with decision makers at distributors that have not invested in pricing optimization, we ask what’s holding them back. We caution them that if they maintain this stance, they will be at an increasing disadvantage as customers consolidate and invest in procurement capabilities and competitors arm their pricing organizations with highly effective new approaches and powerful digital tools.

Over the past ten years, the distribution marketplace has grown more competitive, with the average gross margin across a global index of distributors contracting by 100 basis points despite a stable and growing global economy. The contraction has not been universal, however: top performers have grown margins by an average of 400 basis points, widening the gap between distributors that excel in pricing and those that do not.

Distributors that understand the importance of pricing and have invested in a best-in-class pricing organization have seen margin uplifts of 200 to 500 basis points. Furthermore, they continue to drive margin improvement and expand their advantages over the laggards. For distributors, price optimization is an essential part of a winning strategy.
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July 23, 2013 · By Len Prokopets
Long advocated by expert observers of the supply chain scene, the Sales and Operations Planning process (S&OP) has reached a point of broad adoption.

A recent study performed by The Hackett Group indicates that almost 70 percent of study participants have implemented an S&OP process.1 However, the study also reveals a wide gulf between S&OP top performers and those that merely practice S&OP.

Not only do top performers apply S&OP best practices to a far greater extent, they also have begun to take the next step of integrating their S&OP and financial planning processes to drive true integrated business planning. As a result, top performing organizations find that S&OP is 68 percent more effective at driving benefits than it is for other organizations.

This article outlines study findings, provides key insights on challenges and opportunities, and offers a path forward for those seeking to join the ranks of S&OP top performers.

Let’s begin with a definition. We define Sales & Operations Planning as a collaborative decision-making process used to develop and align time-phased demand, supply, and financial plans in support of the overall business plan. S&OP is, by its nature, a cross-functional process that involves individuals from sales and marketing, supply chain, finance, procurement, logistics, and even R&D and capital projects.

S&OP Has Entered the Mainstream
First emerging well over 30 years ago, S&OP has moved from business buzzword status to mainstream adoption among the world’s large supply chain-focused organizations. A current Google search turns up over 860,000 entries and a search on professional networking site, LinkedIn, finds more than 16,000 individuals who list the term “S&OP” in their profiles.

Reflecting S&OP’s new mainstream status, The Hackett Group’s recent study finds that almost 70 percent of respondents have adopted an S&OP process with defined steps, milestones, and reviews that are executed on a defined monthly cadence (Exhibit 1). Only a small fraction of study respondents claimed “very limited or no adoption of S&OP.”

Almost 70% of Respondents Have Adopted Formal S&OP
Overall, these study findings are highly consistent with what we see on a day-to-day basis among our client base; the vast majority of our large clients with physical supply chains have implemented a formal S&OP process. And even among companies that have not deployed S&OP enterprise-wide, many apply S&OP to some degree in their business.

Benefits of a Mature S&OP Process
The appeal of S&OP lies in its ability to drive dramatic improvements in key business performance metrics. Our experience indicates that effective use of S&OP can help grow the top line of the business while reducing operating costs and reducing inventory required (see Exhibit 2). Few business improvement initiatives match the economic return that implementing an effective S&OP process can generate.

Business Benets of S&OP
Our study identified a group of S&OP top performers based on their ability to maximize benefits of S&OP and operate the process more effectively. Our findings show that these top performers have realized that to truly maximize benefits of S&OP they must go beyond simply implementing a basic S&OP process and conducting meetings on an ongoing basis.

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These companies develop highly mature S&OP processes that leverage key best practices and as a result, realize significant performance improvements and create an opportunity for competitive advantage. Our study findings indicate that top performer companies’ mature S&OP processes are 68 percent more effective at delivering benefits than are those of other organizations.

Organizations Outside Top-Performer Ranks Report 10 Key Capability Gaps
Case Study of an S&OP Top Performer
The following case study highlights many of the best practices associated with putting a successful S&OP into action. The company, a $1billion-plus manufacturer, faced a set of business and operational challenges. The external business environment was unfavorable, with weak customer demand and rising costs. At the same time, the organization experienced many of the typical capability gaps resulting from an immature S&OP process.

The supply chain was unstable, providing poor customer service levels while operating inefficiently. In particular:

Customer service levels were sub-par, with order fill rates averaging below 96 percent in an industry where customers expect 98.5 percent.
Protracted product outages resulted in major disruptions for key customers, endangering major account relationships.
Significant manufacturing variances arose, driven by frequent changes in the production schedule, at times made to satisfy unexpected demand and at others made in reaction to materials or packaging shortages.
Sales and marketing lacked the confidence to plan promotions and new sales due to concerns that supply chain would be unable to respond.
Furthermore, financial performance surprises were routine, frustrating senior leadership and precipitating a monthly game of “whack-a-mole” that included chasing and firefighting the latest set of issues.

Facing pressure to improve business performance, the organization’s senior leadership team initiated a project to put in place world-class Integrated Business Planning/S&OP capabilities. The effort consisted of three phases:

Phase 1: Preparation
The organization took action to rapidly stabilize its supply chain environment, identifying and addressing underlying gaps and disconnects in demand, supply, and financial processes and tackling major issues and risks for specific products to stabilize the business.

The organization designed and implemented S&OP capability improvements in each of the 12 best practice areas in process, organization, and tools/data. Examples include:

Established a formal monthly S&OP process including repeatable tools, templates, and approaches for gap modeling and resolution.
Shifted focus of the S&OP process from planning the current quarter to planning a rolling 18-month period.
Established visible C-level ownership of the process and hands-on involvement in monthly meetings.
Developed an integrated data model as a “single source of truth” for supply, demand, cost, and pricing data enabling the linking plans and metrics across business functions.
Developed operating and performance reports to support S&OP.
Built analytical tools to support what-if analysis and scenario modeling.
The organization integrated its S&OP and financial planning processes, creating a single monthly process for Integrated Business Planning:

S&OP plans and what-if analyses were translated into dollar terms focusing decision-making on business performance impacts.
A P&L, generated for each month in the planning horizon as part of the S&OP process, became the financial plan, eliminating the need for a separate financial planning process.
Established a framework for continuous improvement of S&OP with a balanced set of quarterly targets for business performance and for improvement in process execution.
Phase 2: Conduct Pilot Cycles

After a rapid effort to implement improvements in S&OP process, organization, and tools/data elements, the organization conducted three pilot cycles of the improved S&OP process.
The pilot cycles were used as an opportunity to train process participants and prepare them to operate in an Integrated Business Planning environment.
The S&OP design was refined with each successive cycle leading to a full launch after an executive leadership go/no-go review.
Phase 3: Implement Continuous Improvement

The organization monitored S&OP performance and process execution measures and defined necessary changes and actions to drive improvement.
Tools and templates were refined over time. The company transitioned tools that had been built in Microsoft Excel and Access to leverage more powerful enterprise toolsets such as the ERP system, financial planning system, and supply chain system.
Download the White Paper:Successful Sales and Operations Planning in 5 Steps
The project yielded exceptional results, providing senior leadership with the tools to better manage the business and driving substantial operational and economic improvements.

Customer service fill rates rose from 4th quartile to 1st quartile in four months, consistently achieving targeted 98.5 percent fill rates.

Simultaneously, finished goods inventory was reduced by 10 percent. Expediting was substantially reduced enabling reduction in raw material and packaging costs.

Finally, the improved stability of the supply chain enabled management to redesign and rationalize the manufacturing network, reducing overhead costs by 10 percent.

How to Become an S&OP Top Performer
Achieving S&OP top performer capabilities and performance requires a focused effort, dedicated, knowledgeable resources, and at least six months.

Such a project is typically comprised of three phases: Preparation, S&OP Pilot Cycles, and Continuous Improvement. Exhibit 8 provides a sample implementation approach.

Sample Implementation Approach for Achieving Top-Performer Capabilities
In many organizations, an initial S&OP assessment reveals gaps, breakdowns, and individual supply, demand, and financial and business plans that are ineffective and can complicate or prevent implementation of overall S&OP capabilities. In these organizations, an additional triage and stabilization step may be necessary to address gaps and disconnects and establish a starting point for developing an Integrated Business Planning process.

Once the current S&OP environment has been stabilized, the typical next step is to develop the future state design. This design should, among other changes, put in place the 12 key best practices across S&OP process, S&OP organization, and S&OP tools/data (see below).

12 Best Practices of S&OP

1. A formal, defined S&OP process.
2. A single consensus demand plan.
3. S&OP that looks out over a period of 18-plus months.
4. A supply plan that defines requirements to meet demand and highlights constraints.

5. Cross-functional participation in S&OP.
6. S&OP process is senior-leadership owned.
7. Formal targets with accountability are in place.
8. Discipline in the organization to adhere to S&OP decisions.

9. S&OP reporting and performance dashboards.
10. S&OP plans fed directly into core WERP and EPM systems.
11. Ability to reconcile demand and supply plans and identify gaps and imbalances.
12. Ability to conduct what-if modeling supporting S&OP decisions.

Once a critical mass of process, organization, and tools/data capabilities are in place, the next step is often to execute a series of monthly pilot cycles, putting into action the new S&OP design. Pilot cycles allow for trial and error and course corrections. They also help build the organization’s comfort level and “muscle memory” to enable sustained execution of the process.

Once the pilot cycles are completed, organizations typically transition to a mode of continuous improvement that focuses on measuring performance, addressing issues and gaps, and executing further improvements in S&OP capabilities on an ongoing basis.

As top performers have experienced, a mature, best-practice-based S&OP process is a very powerful mechanism for managing the business and maximizing performance. Through a strong governance process and continuous progress, these improvements can be sustained over time, leading to a significant competitive advantage for the organization.

Longer-Term: Sales & Operations Planning (S&OP)
10 best practices you should be doing now
March 22, 2011Bob EngelNo Comments
In today's economic environment, doing what you've always done—even if you do it very well—is no longer acceptable. Under pressure to contain costs and produce results despite challenging circumstances, you (and many other supply chain managers) must transform rather than simply improve your operation. That means adopting the philosophies, methods, and processes that will make your organization "best in class."

What makes a supply chain organization best in class? The answer will vary for each company, but there are some practices that many leading companies are adopting now. This article will outline 10 of the key practices that I and my colleagues have observed through our work as supply chain consultants with clients in a variety of industries and locations.

3. Make technology work for you. Too many companies select software they hope will make them more efficient, and they structure their workflows and processes around that chosen technology. Instead, they should first review the processes that need improvement, and only then select the technology that best satisfies those process needs. That may seem self-evident, but I have seen more than a few companies buy first and figure things out later.

Rather than consider strategic sourcing as just a matter for the purchasing department, best-in-class organizations get internal "customers" actively involved in the decision-making process. More importantly, they solicit feedback and information regarding their objectives and strategies from those customers, which may include functional areas such as finance and accounting, engineering, operations, maintenance, safety/health/environment, and quality assurance—any internal business unit or function that will contribute to the initiative's success. This approach not only ensures availability of supplies but also results in lower total cost, streamlined processes, and increased responsiveness to customers' changing needs.

6. Focus on total cost of ownership (TCO), not price. One benefit of strategic sourcing is that it shifts the focus from looking only at the purchase price to understanding the total cost of owning or consuming a product or service. For significant spend areas, procurement teams at best-in-class companies are abandoning the outmoded practice of receiving multiple bids and selecting a supplier simply on price. Instead, they consider many other factors that affect the total cost of ownership. This makes good sense when you consider that acquisition costs account for only 25 to 40 percent of the total cost for most products and services. The balance (and majority) of the total comprises operating, training, maintenance, warehousing, environmental, quality, and transportation costs as well as the cost to salvage the product's value later on.

It's no surprise that best-in-class companies are paying attention to inventory at the highest levels. The "real" cost of holding inventory often is higher than the generally assumed 20 to 25 percent. In fact, recent research reveals that inventory holding costs could represent up to 60 percent of the cost of an item that is held in inventory for 12 months. Those findings included the holding cost of insurance, taxes, obsolescence, and warehousing.

Poor planning and forecasting are direct causes of inventories that are out of balance with a business's needs. Accordingly, best-in-class companies also are placing more emphasis on demand planning and forecasting as an additional means of ensuring optimal inventory levels.

9. Establish appropriate levels of control and minimize risk. Supply chain management policies and procedures should follow an appropriate sequence and structure, and it is important to review them frequently (if not constantly) and bring them up to date. Keeping them realistic and easy to understand and follow will help to ensure compliance.

It is certainly possible to go too far in establishing policies and procedures, however. That is why bestin- class companies periodically review their policies and controls to ensure that they are not creating bottlenecks. Their objective is to streamline them without sacrificing the ability of those controls to deter theft, fraud, and other problems.

Risk mitigation goes hand-in-hand with policies and controls, and best-in-class supply chain organizations integrate risk-mitigation methodologies into their sourcing decision process. This is a complicated subject that we can touch on only briefly here, but in short, these organizations are adopting sound methodologies that include: (1) identifying all of the risk elements, (2) determining the probability of the risk event occurring, (3) assessing the dollar impact on the sourcing decision if the risk event actually takes place, and (4) prioritizing risks for monitoring and prevention.

10. Take "green" initiatives and social responsibility seriously. Reducing a supply chain's carbon footprint is no longer a "nice but not necessary" practice. It's likely that a carbon- trading regime will be established in the United States at some point. But here's another reason why best-in-class companies "go green": buyers and consumers are taking environmental impact into consideration when they choose suppliers. That is why organizations such as Dun & Bradstreet now produce reports that evaluate "green" companies. We're also seeing more and more requests for proposal (RFPs) that ask suppliers and service providers to provide information about their green initiatives.

IBP: The Next-Gen S&OP Solution

Demand forecasting also plays a key role in long-term S&OP processes. Integrated Business Planning (IBP), the next generation of S&OP solutions, extends S&OP processes from within a company’s four walls to include downstream customers. These customer-level demand forecasts provide additional inputs to drive to a consensus forecast.

Effective IBP also includes upstream suppliers to provide better insight into planned demand changes to feed rough-cut capacity planning; production scheduling and other sourcing; assembly; and manufacturing processes. Once a consensus long-term forecast is chosen, direct integration with tactical demand forecasts is critical to ensure demand planning and purchase order recommendations are updated. This is especially critical for communications to suppliers with extremely long lead times to avoid inventory shortfalls.

Modern Tools Support Collaborative Planning and Forecasting
These three key scientific techniques combine to improve IBP process outcomes and supplement collaborative and effective sales operations planning across a company, downstream to customers, and upstream to suppliers. This is especially important in the face of increasing supply chain complexity. Distributors face an even greater challenge as they increase assortment sizes while combating the “Amazon effect” rapidly entering distribution.
Applying Price and Revenue Optimization for Demand Shaping
In our first post on optimizing supply and demand through demand shaping, we expanded upon the traditional definition of demand shaping to mean a process where the optimal demand and supply decisions are made by using all available supply and demand information.

What-if Analysis in Price and Revenue Optimization
As you may have noticed, the what-if analysis and price/revenue optimization methods are two different approaches to help organizations move beyond demand manipulation. However, both approaches use different models and answer different questions.

What-if analysis allows users to evaluate alternative strategies and policies to maximize their revenue and profit performance while considering risks and supply chain constraints. Typically, the demand options are developed by running an econometric model. Those demand options are then used in an optimization model to determine proper resource allocation.

This means that what-if analysis focuses on the ability of the supply organization to support the presented demand, which is a resource allocation problem. It answers questions such as, “Can we fill this order?”

Fresh produce supply chain planning, demand forecasting
And yet many distributors are not only surviving, they’re thriving in this new competitive landscape. What differentiates success from failure right now is not just the ability of an organization to understand how each disruptor will affect their business. Companies succeed when they’re able to incorporate a disruptor into their current commerce strategy, and use it to their advantage.

Five primary disruptors have emerged that distributors simply cannot ignore. From an increasing demand for pricing transparency, to customer experience expectations, the following areas within B2B e-commerce can create a massive competitive edge when handled effectively.

1—Pricing Complexity. Some experts say we’re currently facing a pricing war within distribution, while others argue it’s a “value” war. Actually, both of these statements are true, but let’s start by talking about pricing. B2B researchers and buyers prefer to complete low-value tasks online, in a self-service fashion. We also know that transparent pricing offered outside the portal can lure potential buyers looking for the best deal on commodity products.