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Advanced S&OP Performance

Updated: Apr 25, 2023

An effective sales and operations planning (S&OP) process guides business decisions, provides key problem-solving strategies, gives executives greater control over the enterprise and drives overall business success. Establishing and sustaining high-functioning S&OP processes within an organization can be extremely difficult

What is S&OP?

Sales & Operations Planning(S&OP) is a framework that enables your business to collectively make decisions that will ensure your business can ride supply chain volatility and risk via cross-functional teams that break traditional silos. The framework allows the business to connect operational gaps commercially with a strategic alignment of direction within the business.

How does it work and what are the benefits?

The goal of S&OP is to ensure the business has no commercial gaps versus targets either in gross margin or net profitability related to supply chain issues. One of the other popular benefits is inventory optimisation. This is achieved via a series of sessions that have clear goals, each session driving inputs into the next.

Subsequently, these sessions culminate into a final session where executives across multiple functions within the business including sales, marketing, commercial, product management, suppy chain and manufacturing come together to align on the best plan of attack in order to circumvent future supply chain risks. These sessions are innovation-focused where a solution could come from anywhere. As an example, if a large chocolate manufacturer is struggling to meet chocolate demand, the marketing team may suggest boosting an ad campaign for alternative substitutes of their own making to replace lost demand with chocolates with abundant stock, alternatively, product management may suggest increasing price in order to make up for lost volume.

All of those discussions are business-driven and led, in addition, most businesses need plenty of advanced notice in order to plan coherently across the company.

This is where the supply chain team comes in, they provide all the data, insights, trends, risks, and opportunities in the near future to help facilitate those sessions and help the rest of the business make calculated strategic decisions.

Sounds simple to us, so why do so many implementations fail?

1) Lack of top-down support : A lack of interest from the senior executives across the business means eventually the framework remains within supply chain, hence, it remains in a siloed perspective.

2) Lack of interest across cross-functional leaders : This can be driven by the mentality that supply chain is not their problem, however, it's important to highlight the financial impact of supply chain for the business. A product can't be sold if there is no stock.

3) Complicated process design: This one is something most of our competitors and other general consultants do that restricts and ultimately kills the implementation. Almost all consultants come in with a fixed schematic of how S&OP must be implemented and executed with clear rules, guidelines, and templates. However, they fail to realise that companies have a unique culture, identity and ways of working. This is where a level of pragmatism and practicality needs to balance a textbook solution. Partially why we offer a solution that works once implemented ensuring your staff own the new solution and build on it.

4) Poor technology implementation: A lot of businesses focus too heavily on the technology, in our opinion, technology can cost a ridiculous amount and ends up adding more roadblocks for end-users to actually enjoy using their tools. In the 10 years of our experience, most end users stop using some complicated software because they feel excel is quicker. We can bridge this gap by offering low-tech solutions whether it is via excel or another one of our partner technologies, allowing the end-user to be flexible and not be locked in with a legacy solution.

5) Poor forecasting: this comes down to setting up the right processes to ensure the right people are accountable for poor forecasting. Sometimes this requires a top-down approach and alignment of processes during implementation.

6) Unable to measure the value of S&OP : Many people struggle to understand how S&OP can help their business even after the framework has been implemented, for months. A non-supply chain person feels this is not telling them why we didnt hit a specific sales target or net margin. The art of communicating what really matters to the right audience, we feel this one comes with hands-on experience in delivering successful S&OP.

Apologies for the long worded article, however, this topic is large and there is a lot more involved than what's stated. We offer services to implement S&OP in your business in a cost-effective manner. We also offer the services to run it within your business with expected returns within a year.

We do this differently from typical consultants in the market by really understanding how your business works, understanding the work culture, and identifying what will truly be dial movers. We then work out an approach to implement and deliver tangible results.

If you have reached the end of this article and are still hesitant about giving us a call for your business, how about we sweeten the deal, reach out to us and tell us you read this article, we can develop an entire business case for you for S&OP implementation and execution for free. Furthermore, we are happy to setup a payment plan that suits your business(Daily rates, capped pricing or entirely commission-based).

If you feel you can give it a crack yourself, you can refer to the attached article that gives a decent overview of S&OP. Find out more here. It just hurts to see an inefficient supply chain. This report collects insights from APICS research, APICS Body of Knowledge, and APICS magazine as a resource for optimizing S&OP.


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