“Sales and Operations planning”, “S&OP”, “SOP”: is this just a new branding of what I’m already doing? Probably a little bit of both “yes” and “no”. But there really is something new that anyone that’s involved with these processes should be well aware of. Do you know what I’m referring to?
Companies have to plan for their demand and how they plan to meet that demand with their supply. There are different levels of sophistication in each area that vary from company to company and vertical to vertical. However, the basics have to be done to have any measure of business success. So yes, you’re probably doing some form of sales and operations planning out of necessity. Now it comes down to your level of maturity.
The analysts at Gartner research (primarily Noha Tahomy and Tim Payne) have developed a four stage life cycle model:
■ Stage 1: Operational-focused
■ Stage 2: Planning-focused
■ Stage 3: Profit-focused
■ Stage 4: Value-focused
Stages 1 and 2 can be accomplished by process and some basic tools, most commonly, MS Excel. However, to achieve the key business benefits around a one-number forecast, profit optimization, and value chain optimization, a robust S&OP software suite is a must.
It starts with the most accurate forecast you can achieve. This can only be accomplished by simultaneously taking into account not only typical historical information, but also your customer information such as POS, leading indicator information, and not-so-intuitive causal factors. From this most excellent forecast J, the results can be achieved only if the forecast is properly utilized. This encompasses the supply side processes such as distribution requirements planning, inventory management, and purchase planning to name a few. Again, nothing new here. S&OP Stage 1 and 2 are a description of what most companies do now. The new piece are the integrated dashboards and reports layered on top that truly are a big addition to the enterprise-wide visibility of the demand side and supply side that allow decision making for bottom line impacts
Gartner research shows that 67% of implemented S&OP processes are in Stage 2 maturity.
The newer exciting areas are in Stage 3 and 4. This is where you take your S&OP process and make it a true corporate asset. Imagine having the ability to make decisions on maximizing your profits instead of just having product on the shelves. Which customers, with which promotions, with which products should we service first in order to increase OUR gross margins, all while not impacting overall customer satisfaction? The time is now and this is just one example. This does require companies to have more data available to the S&OP process than they have had in the past. But it’s not data they don’t have somewhere.
Our Demand Commander S&OP suite provides the capabilities to achieve these innovative levels of Stage 3 and 4. We offer them in a modular fashion so that you can add the various modules as you need them. Our platform enables a crawl, walk, run approach that supports an organization’s process as it evolves through various levels of maturity. Other vendors make it sound like black magic and charge accordingly. Our approach is transparent and allows you to understand its outcomes. The ROI is very compelling.
Are you looking for an affordable way to make your S&OP process a strategic asset?