Digital Transformation Reality in Manufacturing Companies and Traditional Sales and Operations

Volatility and variability have become part of the manufacturing industry’s reality, transforming this into a dynamic and fragile macrosystem. Moreover, these two aspects have obligated manufacturing companies to raise their interest in adopting digital solutions as part of the transition from traditional approaches to improved and modern processes, impacting the overall business. According to Jones, M.D.Hutcheson, S. and Camba, J.D. (2021, p.937) competitiveness is nowadays resumed as the appropriate usage of digital innovative solutions to transform and improve business processes allowing companies to supply customers with higher response rates and better efficiency.

Authors Bonnet, D. and Westerman, G. (2021, pp.83-84) emphasize the significance of companies acquiring the so-called “digital masters”, terminology to achieve the expectations of the most competitive businesses which are driven by digital transformations. The terminology “digital masters” refers to companies capable of using innovative technologies and parallel, own leadership capabilities to drive companies with a clearer future vision. However, these authors note that to realize the expected state, companies must consider a series of elements as part of their digital capabilities such as the transformation of the customer experience, operations, business processes, and employee experience.

It is evident that manufacturing companies are required to bet and invest numerous efforts in guaranteeing that the business increases their competitive advantage and the possibility that business processes are being reengineered with the help of digital solutions, signifying that the digital transformation in this industry is a reality.

Inside the manufacturing macrosystem exists the overall arching departments such as sales and operations, that control and cover a series of fundamental processes along the value chain that encompasses complexity needed to be managed. Planning as separate entities increases the challenges of achieving exemplary results. For this reason, sales and operations planning (S&OP) became a well-known practice in manufacturing companies.

Authors Kjellsdotter Ivert, L. and Jonsson, P. (2010, p.661) state that the traditional S&OP processes are emphasized in 5 fundamental activities:

1. Sales and marketing forecast
2. Demand planning (future sale volumes)
3. Preliminary productions plans (supply plans) for a certain planning horizon
4. The consensus within all parties on delivery plan
5. Delivery plan proposal

Actors participating in S&OP activities have transitioned to own the core functions and have, if not the most important roles, the power to take the most influential decisions that affect the whole value chain. Notably, the planning and collaborations of these two parties are decisive and essential to accomplish a high level of coordination.

Coordination appears to be easy to perform, nonetheless, manufacturing treats highly complex activities under the influence of volatility and massive deviations in demand and supply, resulting in obvious challenges to grasping harmonization in this assignment (Jonsson, P., Kaipia, R. and Barratt, M, 2021, p.553).

For instance, several weaknesses have been identified such as struggle in capturing data from multiple data sources and its processing, limited technology, low S&OP process maturity within organizations (Jonsson, P., Kaipia, R. and Barratt, M., 2021, p.553), specific difficulties in demand and supply coordination (Kristensen, J. and Jonsson, P., 2018, p.20), individuals along the value chain make decisions on inventory, capacity, and pricing without taking into consideration the effects to be generated in either side (Grimson, J. A. and Pyke, D. F, 2007, p.322) evidencing the lack of S&OP culture, unsuccessful information exchange, and no collaboration (Zare Mehrjerdi, Y., 2009, p.129).

The cost reduction potential and a rise in profit optimization are the expected outcomes in an ideal S&O execution scenario (Grimson, J. A. and Pyke, D. F, 2007, p.323). The effects of an unengaged S&OP culture and other factors negatively impact operations excellence and generate constraints in sales processes. Hence, only very few manufacturing companies have been able to master this practice.

By implementing Salesforce Manufacturing Cloud you can connect production, sales, and planning across manufacturing companies’ ecosystems to keep the business on track. Leverage AI-driven data, automated sales processes, and field service innovation. Manufacturing Cloud as the tailored solution for the manufacturing industry, offers features that improve sales and operational efficiency. It will allow your company to increase transparency into the run-rate business through tools like Sales Agreements, allowing you to consolidate and track agreement details for better visibility into the sales pipeline and revenue forecasts.

Also provides your company with a comprehensive 360-degree view of customers, empowering account teams with real-time visibility into key sales and service activities. With the most recent technological requirements AI-driven insights and collaboration tools, manufacturers can engage with customers, channel partners, and employees in real-time, facilitating effective decision- making and driving business growth.