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Sales & Operations Planning

What Makes an Effective Sales & Operations Planning (S&OP) Strategy?

Sales and Operations Planning (S&OP) is the cornerstone that supports efforts to drive shareholder equity, provide exceptional customer service, support innovation, and drive alignment from strategy through all of operations. Leveraged well, the S&OP process enables teams to perform their best, most value-added work. Teams are able to have robust conversations with appropriate outcomes that drive actions to support opportunities and mitigate risks. S&OP should be the guiding light that keeps organizations on the path to success while we do what we do. It’s key to agility, stability and opportunity.

Common Sales & Operations Planning MistakesSales & Operations Planning

Yet, the S&OP process often struggles to perform on its promise, and to be leveraged as an asset. Instead these are common mistakes:

  • Rather than driving the cadence of activities, it’s a mad rush to meet the monthly report out to senior management
  • Mistrust in the #’s, everyone operating from a different sets of #’s, and often using #’s from 3 weeks ago
  • It’s not a cross-functional conversation where ideas are exchanged but instead its someone reporting out their plans to an audience
  • Great deal of information shared but don’t know what supposed to take from it
  • Don’t see actions coming from the decisions that are made in the meeting across all of functional areas, instead everyone continues to follow their own plan

Maturing S&OP into an asset is not easy. However, it is possible, and beyond possible, it is necessary.

How to Avoid Mistakes in S&OP

Adapt and thrive.
In an age of volatility, uncertainty, complexity and ambiguity (VUCVA) it is imperative to be able to adapt in order to thrive. Agility comes from scenarios, which means looking at a range of possibilities, evaluating confidence levels and planning for risks. To understand risks, we need to understand our customers, our suppliers and our manufacturing resources or capabilities. We also need to understand our financial position and outcomes which helps to know not only what we could do, but what we should do.

However, as business conditions have continued to evolve, the challenges are greater. On one hand, the amount of information available to us is extensive and the awareness that aligning our strategy with operations keeps us driving for success is there. On the other, we still have difficulty in focusing on the relevant information to drive our decisions, and with the speed of signal. We still have trouble producing scenarios for evaluation or driving vetted insights in an efficient manner. Finding facts isn’t a problem, knowing what they’re telling us still sometimes is. S&OP is the framework to build those skills to the benefit of the entire organization.

How to Make Your S&OP Process Better

S&OP is that well-lit path forward that drives appropriate actions in the appropriate time horizons that considers not only what we could do, but what we should do. When it goes well, we are in a position to anticipate a range of outcomes for how our tactical horizon may play out and we have agreement in place for how we will react and respond. There is bi-directional feedback that supports evaluation, analysis and improvement.

SAP offers tools to support S&OP in ECC, in S/4HANA, and in the comprehensive, purpose-built SAP IBP. At Reveal, we empower organizations to level-up their S&OP process. By aligning business rules with business behaviors and focusing on the relevant data to support decisions, we will improve the alignment of supply chain activities. We will help you put SAP to work in a reliable, sustainable way that meets business objectives. We will mature your S&OP process to address volatility, while still remaining agile and responsive to ever changing customer demands. By establishing appropriate ranges, information and success criteria for effective decision-making, S&OP will lead to actions that drive value and alignment across the organization.

Benefits of Sales & Operations Planning (S&OP)

  • Yields a realistic path forward capable of achieving the company’s objectives
  • Clarity around levers to manage changing business conditions
  • Robust decision support framework that drives the right conversations based on relevant data
  • Cross functional alignment with bi-directional feedback
  • More stable production/service rates
  • Improved ATP and OTIF with less WIP
  • Faster and more controlled new product introductions
  • Improved planning and control of Inventory/WIP/Obsolescence
  • Shorter customer lead times
  • Clear signals that show where things are going well, where help is needed and what should be done
  • Far more effective and efficient teamwork in and between functions
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