S&OP; Sales and Operations Planning, whilst not necessarily as exciting a subject as some of the technological trends and advances being explored by many of our clients, remains one of the most impactful and essential elements of supply chain management.Summarising for the Supply Chain Review, Mark Moon states:
“S&OP………the process designed to take demand information, match it up against supply capability and financial objectives, and make both tactical and strategic decisions about what to do in the future”.
Certainly, businesses that have strong, mature S&OP processes embedded and routinely followed are far more likely to be meeting their strategic goals and objectives. The link between strategy execution and the major business process, S&OP has been explored extensively in industry articles in recent years. Some of the latest commentary now suggests S&OP can play an essential role in organisational culture and behaviours, and as a result, objective realisation.
Mark’s Supply Chain Management Review article sets out a view that S&OP processes are all about integration; multiple functions within an organisation all working together to achieve a single set of goals. A view confirmed by the Institute for Supply Management which defines it as:
“working cross-functionally with internal business units to forecast anticipated demand, inventory, supply and customer lead times based on the sales forecast, actual demand and capacity forecast.”
And so, could it be that Sales and Operations Planning is actually doing far more than balancing the trade-off between the sometimes incompatible needs of the supply and demand side of the supply chain? Could the execution of a fully integrated S&OP plan really create new ways of working, improve communication and harness a more effective culture?
Niels Van Hove writing for Forecasters.org supports this view and states:
“the S&OP process can provide valuable input to a corporate communication plan. With an S&OP communication plan in place and through the facilitation of feedback, S&OP will more effectively support the communications”
In many companies, demand functions are working at odds with the supply and finance sectors, and so cultural alignment can seem almost impossible. Breaking through the embedded behaviours in any business requires a skilful approach to management, and it is important to consider the cultural focus when developing these essential processes. It is now even more crucial to take the time to appreciate conflicting metrics, understand the challenges each function faces in S&OP, and demonstrate the commitment to a common goal.
Our Supply Chain Consultants at Bis Henderson have first-hand experience of helping organisations to enhance performance across the supply chain, specifically considering S&OP communication, enhancing productivity and developing business wide cost savings. Give our consultants a call on 01604 876 345 to see how we can assist you in improving your supply chain processes.