“Intelligence is the ability to adapt to change” by Stephen Hawking.
An essential element in enduring competitive advantage in today’s global business environment is a successful Sales & Operations Planning (S&OP) process. Supply-chain concentrated companies use S&OP to evolve a business-wide game plan to enhance their overall business performance.
S&OP Process prospers on collaboration & sincere communication among main organizational players. S&OP is a strong decision-making tool for business executives.
What is S&OP?
S&OP stands for Sales & Operations Planning which is a process that combines demand, supply & financial planning into one business plan. Sales & Operations Planning is the process by which we bring together all the plans for the business (Sales, Customers, Marketing, Development, Manufacturing, Sourcing, and Financial) into one unified set of calculated plans. It relates strategic plans to operational plans and focuses to develop the apt product portfolio and mix to amplify sales & profit.
Few Points Regarding S&OP
- S&OP’s role is to balance supply & demand at the volume level.
- The general objective of S&OP is to come at a business “Game Plan” to help manage & assign condemning resources to meet the needs of the consumer at the lowest cost.
- S&OP is generally managed by executive-level management professionals every month & permits them to better align their plans with company-wide goals.
- Sales & Operations Planning analyzes customer purchasing habits to make sure a company is capable to meet the predicted production, distribution, and purchasing demands.
- Positive outcomes obtained by companies using S&OP include:
- Improved customer service.
- Better decision making.
- Lower inventory.
- Improved teamwork.
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Must-Haves of Sales & Operations Planning (S&OP)
There are a few must-haves of next-generation SOPs for Successful Implementation;
1. Integration
As SOP processes mature, there’s a huge requirement for planning systems to assist the integration of the planning processes themselves. S&OP is about people cooperating to execute & course-correct plans to attain corporate, departmental & trading partner goals. By offering an integrated workflow solution, companies enable enhanced internal collaboration & control. It ensures that S&OP decisions are communicated, established, and practiced as part of regular, weekly & monthly processes of Lean Transformation.
Companies are realizing that improving planning doesn’t lead to benefit without tying the improved plan to the execution systems that enable those actions. So, there’s a dire need for planning systems & processes to have a direct tie to the systems.
2. Visualization
S&OP Transformation planning systems have taken steps to move planners away from silos & spreadsheets. Organizations are progressively looking for more enhancement beyond table-based planning systems, into visual dashboards that assist integrated views of supply-chain processes & operations. This development increases the performance of supply-chain professionals and the pace of decision-making eventually leading to Supply Chain Transformation.
3. Plan
The demand plan is essential to SOP and to obtain the most out of it, the plan should take into consideration granular-level detail, including geographies, products, components, & customers. Companies are looking to extend collaboration by examining how their planning processes in Business Transformation can better involve suppliers, distribution partners & customers. This results in better forecasts & improved ability to react from the supply side.
4. Align & Execute
One of the biggest challenges of getting SOP to work is obtaining agreement among stakeholders. As a result, this activates a series of additional actions, including testing the practicality of the proposed plans & modifying those plans collaboratively in a timely fashion. Once the S&OP stakeholders agree to a plan of record, it can be smoothly executed. Now the financial, operational, and commercial plans can be in accord so that all teams work unitedly to attain corporate goals.
5. Mobility
As Sales & Operation Planning case study activities reach a wider and distributed user base, there’s a huge need for mobile availability of information. It permits the user community to always be connected and promptly offers inputs and feedback.
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Technologies used in S&OP
- Technologies enhance and run the processes smoothly. Cloud computing and collaboration tools are broadly used technologies in the S&OP process.
- To progressively merge any technology, Supply Chain Leaders will require to explain use cases, preferences & possible implementation blockades.
- These technologies introduce big benefits at a minimal cost. One of the main strengths of cloud computing is the ability to amplify storage & processing power on demand without delay and the expense of acquiring hardware that is often only required for short periods. Cloud also assists organizations to integrate data from disparate sources, therefore improving the transparency scalability of S&OP.
- Collaboration tools like Basecamp and Office 365 are also famous technology enablers for sales & operations planning. These tools improve productivity and give leaders faster insight into resource availability.
- Analytics is also gaining traction in Sales & Operation Planning Analytics tools modify “big data” into a practical vision for price management, demand forecasting, inventory management, and market trend analysis. IoT & Artificial Intelligence take this a step ahead by tracking expenditures, inventory, key performance indicators (KPIs).
Final Word
S&OP is a process to help you deliver better customer service, lower inventory, shorter lead times, more stable production rates, and better management of an overall business. Lastly, it gives an awesome team building and communication mechanism in VUCA.
Frequently Asked Questions
1) Is S&OP part of Supply Chain?
S&OP stands for Sales & Operations Planning which is a process that combines demand, supply & financial planning into one business plan. Sales & Operations Planning is the process by which we bring together all the plans for the business (Sales, Customers, Marketing, Development, Manufacturing, Sourcing, and Financial) into one unified set of calculated plans. It relates strategic plans to operational plans and focuses to develop the apt product portfolio and mix to amplify sales & profit.
2) What are the steps of S&OP process?
There are a few must-haves of next-generation SOPs for Successful Implementation:
- Integration
- Visualization
- Plan
- Align & Execute
- Mobility
“4 Best Supply Chain Books”
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- Made in Future: A Story of Marketing, Media, and Content for our Times
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