Why is S&OP Software Adoption in Japan such a Tough Sell?

Sales and Operations Planning (S&OP) software is a powerful tool designed to bring sales, supply chain, production, and financial plans into harmony. It helps businesses balance demand and supply, optimize resources, and enhance decision-making across the board. Some of the key features include:

• Demand Forecasting: Predicting and planning sales.
• Supply Chain Planning: Aligning production schedules with demand forecasts.
• Financial Integration: Projecting revenue, costs, and profitability based on sales and production plans.
• Control Tower Functionality: Setting KPIs, running 'What-If' analysis, and aligning processes.

The idea is to break down silos between departments and drive a more integrated supply chain approach. But in Japan, the road to adopting S&OP software is anything but smooth, especially for small and medium-sized enterprises (SMEs).

Adoption in Japan: The Lay of the Land

In Japan, large corporations with global operations are leading the charge in adopting S&OP software. As Japanese companies have become more reliant on international markets, the need to manage these markets in a compliant and consistent manner has grown. In the past, Japanese HQ’s could simply tell its countries and operating companies what and how to report, but ESG is forcing companies to implement greater visibility, governance and control of their extended supply chains.

Key Trends:

1. Big Players Are All In: Major corporations like Toyota, Sony, and Panasonic are increasingly adopting S&OP software to manage their sprawling, complex supply chains. They tend to favor solutions that seamlessly integrate with their existing ERP systems.
2. Manufacturing and Supply Chain Heavyweights Are Embracing It: Sectors like electronics, automotive, and heavy machinery are seeing a significant uptake of S&OP software. Retail and consumer goods companies are also jumping on board, using these tools to manage inventory, reduce stockouts, and stay in tune with consumer preferences. Click for examples.
3. SMEs Are Hesitant: Small and medium-sized enterprises are slower to adopt S&OP software. Concerns about cost, limited resources for change management, and a perception that these tools are for larger or foreign companies are holding them back. However, more affordable, cloud-based solutions are beginning to catch their attention.

Barriers to S&OP Success: What’s Holding Japan Back?

One of the biggest hurdles is Japan's fractured digital landscape, which is not as mature as it could be, particularly when it comes to ERP systems. Many companies are still using outdated ERP systems with limited functionality and integration capabilities. These legacy systems don’t play well with modern data-sharing standards, leading to fragmented data and inefficient S&OP processes.

But it’s not just about technology. Human factors play a big role too. Implementing S&OP systems requires significant organisational effort. Getting buy-in from multiple departments, especially when it involves radical process changes, is a massive challenge. Resistance is high in companies where processes have been in place for years, and where manual planning methods still dominate. But as the benefits of S&OP software become more apparent, this resistance is slowly starting to fade.

The Importance of Localization

Japanese companies often prefer S&OP software that is localized to meet their specific business needs, including language, compliance with local regulations, and compatibility with Japanese business practices. This has led to the adoption of solutions like Fujitsu GLOVIA, which is tailored to the Japanese market.

Customization is another big factor. Companies often require significant modifications to S&OP software to fit their unique processes, which can drive up costs and slow down adoption.

But There’s Hope—Digital Transformation is Gaining Ground

As part of the broader push towards Industry 4.0, Japanese companies are starting to recognize the importance of integrating advanced technologies like S&OP software into their operations. The shift towards data-driven decision-making is also driving interest in these tools, which offer advanced analytics and real-time insights to boost operational efficiency.

S&OP vendors are doing their part to make adoption easier by offering localized support, training, and consulting services. Many global S&OP software vendors are partnering with local Japanese IT service providers to offer more tailored solutions and provide the higher level of integration support needed.

In Conclusion

Adopting S&OP software in Japan isn’t easy. It’s a tough, costly journey, especially for SMEs that struggle with patchy systems and the significant investment required in time, money, and organizational energy. But as digital transformation gains momentum and more localized, cost-effective solutions become available, broader adoption is slowly but surely on the rise.

Simon Truss | Managing Partner | Top Transport Talent

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