A formalized approach to can raise the success of an organization. It ties together front-line sales and marketing plans with back-end supply and operations plans. As such, S&OP is sometimes referred to as aggregate planning, with the goal of improving interdepartmental coordination, policy optimization, operating efficiency, and profitability. All of this is possible, but it requires that department heads meet regularly to develop integrated policies, plans, and decision processes to optimize overall organizational performance. Herein lies the problem; most organizations don’t do this, or at least not wholeheartedly.
How everyone benefits from S&OP excellence
“…even companies that have been using S&OP for years may not be reaping all the benefits it can offer.” PWC
S&OP excellence can benefit the entire organization and beyond, including employees, senior management, investors, supply chain partners, and customers. Effective S&OP helps organizations minimize errors and inefficiencies, align goals and objectives, spot new opportunities, and respond more quickly to changing market conditions.
To maximize S&OP effectiveness, organizations should take care to ensure the following:
- Break down silos.
- Integrate disparate data sources.
- Collaborate across functional departments.
- Engage what-if testing and scenario planning to optimize supply and demand planning.
These steps help management get a clearer picture (in real time) of internal ops, and of the supply chain as a whole. Supply chain managers cut downtime, speed throughput, and improve operating efficiencies. There is less time wasted on data entry and system latency, and more confidence in knowing that informed decisions come without delay or disruption, leading to optimized inventory, improved fill rates, happier customers, and a potentially substantial ROI.
To manage growth profitably, organizations need to invest time and resources in S&OP to improve inventory levels, lower operating costs, and improve cash flow and profitability.