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In my recent Mea Culpa post, I mentioned my prior work on Sales and Operations Planning (S&OP), and the importance of leadership. Leadership and S&OP? How aligned do you believe your organization is to drive these metrics? My observation was that Mondelez’s processes were worse than Kraft’s.
The journey for S&OP is a road with many ruts and potholes. In my twenty years of following the progression of S&OP as an analyst, I am amazed at the number of “experts” with so little expertise. For most companies, building a great S&OP process is a missed opportunity. Governance.
S&OP Slip Slidin’ Away. This week, as I worked on my Sales and Operations Planning (S&OP) report, I found myself tapping my foot to the same music in my head, as I asked myself the question, “Why are companies getting worse, not better in managing their S&OP processes?”. My conclusion?
Sales & Operations Planning (S&OP) as a process has been around since the 1980’s. While the terminology evolved, the underlying thesis of S&OP has stayed the same, i.e., bridge the divide between sales forecasts and operational plans while respecting the budget.
But by monetizing Sales & Operations Planning (S&OP), supply chain planners can speak the language of finance while developing S&OP into a more mature process. This isn’t just aligning financial planning with S&OP. Value-driven S&OP is about “what’s important”.
In fact, it’s become internalized to a degree that companies often have several (competing) S&OP pro cesses in different geographies & business units. Why is it that despite its popularity, only 42% of companies rate their S&OP process as effective? . Your S&OP solution should: .
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. The average company has seven S&OP processes, but a global chemical company averages over 30. Metrics Definition. Businesses are different.
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. Today, the average company has seven S&OP processes, but a global chemical company averages over 30. Each defining S&OP differently.
Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric. Why do companies focus on reducing a specific metric? Sound ridiculous?
I wrote my first report on Sales and Operations Planning (S&OP) while sitting on the floor in the Atlanta airport in 2005 when I was an AMR Research analyst. The model in Figure 1 became the foundational model for the Gartner S&OP model. Sales and Operations Maturity Model from 2005-2008. Figures 2 and 3.
I will also pen my 95th report for this week’s Supply Chain Insight’s newsletter. It is one that is often asked: “S&OP How Do I Get Started?” ” S&OP: How Do I Get Started? I asked, “Why is S&OP important to your business?”
We consistently see that companies focused on functional excellence–a focus within a functional silo like manufacturing, transportation or distribution– or singular metrics– like inventory or costs– underperform against their peer groups. Reward teams for cross-functional metrics. This is the goal of this post.
Sales and Operations Planning (S&OP) is over thirty years old. With the rise of the global multi-national, S&OP increased in importance as a way to align and drive organizational balance. Today, companies do not have one S&OP solution. Our journey to better understand S&OP continues.
An effective S&OP plan is the goal of many, but there is no clear industry definition of an effectiveness. To better understand the characteristics of an effective S&OP plan, we just completed a study of seventy-three companies. 2) Tie the S&OP Plan to Execution. This is a maturity factor.
” I think it is the most complete assessment of the S&OP value proposition I have seen in the industry. Building S&OP maturity takes time, discipline and focus. As shown in Table 1, one of the distinguishing characteristics of an effective S&OP plan is the time for planners to plan.
Unfortunately, the definitions of S&OP and IBP are often confusing as they seem to be both distinct and overlapping processes. Other activities, such as S&OP, still take place but as a second level of the overall process.
Supply Chain Metrics That Matter: A Focus on Aerospace and Defense. In Supply Chain Metrics That Matter: A Focus on Aerospace and Defense , Supply Chain Insights benchmarks A&D companies against other industries and dives into data from five top A&D companies over the last decade. Get the research.
Use of Supply Chain Descriptors Most organizations are locked into functional silos driven by functional metrics. Stuck in a rut, supply chain leaders try to punch their way through a set of conflicting metrics and priorities each day. The metrics defining success in manufacturing and procurement do not align.
Sales and Operations Planning (S&OP) is in a renaissance. With growth slowing and complexity rising, S&OP is more important than ever. It is not sexy, and it requires hard work; but the greatest value of S&OP is profitable growth. S&OP is moving to the cloud. The reason?
In fact, it’s become internalized to a degree that companies often have several (competing) S&OP pro cesses in different geographies & business units. Why is it that despite its popularity, only 42% of companies rate their S&OP process as effective? . That was a big eye-opener for us.
This turbulence sends ripples through their sales and operations planning (S&OP) process, adding complex layers and challenging the essence of effective decision-making. As these factors become increasingly prevalent, S&OP — the vital nerve center of an organization’s supply chain strategy — is being stretched thin.
Ultimately, what KPIs, as metrics and indicators derived from the set of plans are taken into account and prepared for each scenario. Dashboard with scenario comparison and KPIs for decision making in S&OP. Technology for Effective Planning. Figure 1 shows a dashboard that exemplifies this concept.
Sales & Operations Planning (S&OP) is an established industry process that aims at finding a balance between demand and supply and streamlining cross-functional collaboration. Procurement People should learn the Sales & Operations Planning (S&OP) Process. Click here to learn more and register today!
Puricelli A few weeks ago, I launched a new blog series on sales and operations planning (S&OP ). To make sure everyone is on the same page, I want to review the basics, the foundation, which is… what exactly is S&OP? S&OP is so much more than a process or a meeting.
by Alexa Cheater As Gartner Research Director Matthew Spooner noted in his recent presentation at the Gartner Supply Chain Executive Conference, advanced sales and operations planning (S&OP) is like a hotel. In fact, Spooner says S&OP isn’t a supply chain process at all. What exactly does that mean?
Let us explore how one can go about making the business case for a proposed S&OP project. Building the Business Case for Sales and Operations Planning (S&OP) was first posted on February 22, 2021 at 8:05 am.
by Lori Smith In a previous post , I talked about the ineffectiveness of Excel, ERP, and legacy planning for S&OP. A modern pilot embarks with a general flight plan, but then monitors a continuous readout of key metrics, which he uses to make numerous small course corrections to arrive at the proper destination on schedule.
KPIs are essential in S&OP as they provide a quantitative framework for gaining visibility, aligning efforts, supporting decision-making, and driving continuous improvement across the business. Ideally, your S&OP KPIs should consist of a mix of strategic, tactical, and operational metrics.
It is tough because operations and commercial teams are not naturally aligned, and the implementation of an S&OP process is not a quick fix. The processes of S&OP are now over 35 years in evolution. They are different because in today’s organization, there is not one S&OP process.
Over the last five years, I have helped two companies, Sonoco Products and Owens Illinois (OI) with their selection of technologies to improve Sales and Operations (S&OP) planning. Their journey to be more market driven with a strong focus on Sales and Operations Planning (S&OP) is now seven years old.
Effective, efficient sales and operations planning (S&OP) means you can respond to changes faster, spot opportunities earlier and better align your organization around a common set of goals. But the benefits of S&OP extend beyond that—they help to simplify the day-to-day work of nearly everyone in your company.
IBP vs S&OP. Organizational metrics are important. S&OP plans often focus on objectives like on-time in-full (OTIF) , inventory turns, and resource utilization. S&OP vs IBP, they have distinct time horizons that are not in alignment with one another. Financial Planning IBP vs S&OP.
For organizations layered in functional metrics and driving a cost agenda, this is a tough nut to crack. S&OP is too slow and cannot achieve the needed alignment. Process latency, the time for an organization to make a decision using a traditional S&OP process, is two-to-six weeks.
To entice you to participate let’s look at the data more closely. These gaps cannot be closed by a simple focus on S&OP or the implementation of a technology. Functional Metrics. If you answer the survey, I will gladly give you a custom analysis of your organization against the peer group.
Puricelli Last month, I launched a new blog series on sales and operations planning (S&OP). Building upon the last post about foundational elements behind S&OP, I want to consider a question I get all the time from executives: “who really owns, or should own S&OP”? Team Composition.
While there was always passionate discussions on companies and metrics, the end goal was to raise awareness of supply chain as a practice. They are a supply chain that I very much like, especially from an S&OP practice. Their S&OP is great across these business units. So, drum roll please….
To understand supply chain excellence, Abby and I have been studying pattern recognition for industry peer groups at the intersection of the metrics in the Supply Chain Effective Frontier of growth, profitability, cycles and complexity. The links are listed below: S&OP: A State of the Union. Does S&OP improve agility?
by Lori Smith In a previous post , I discussed the sometimes surprising technology choices some organizations are making to manage their S&OP process. We know that successful S&OP must be fed by solid and complete information from across the extended supply chain and supported by robust advanced planning analytics.
Integration of corporate social responsibility metrics in planning. Sales & Operations Planning (S&OP). There is a lack of clarity on what drives value and metrics are functional. Planning data is often debated and participation in S&OP decisions is often ad hoc. Functional metric orientation.
Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. Technology applications in this space include demand planning, tactical supply planning, procurement planning, multi-tier inventory optimization and Sales and Operations Planning (S&OP). Metrics Alignment.
In the last 30 years S&OP improved performance in many businesses. However, S&OP has not yet substantially delivered on its ultimate promise of enterprise wide resource management, rolling financial forecasting and strategy deployment. Worse, overall S&OP development and progress seems to have stalled.
I have read your report on S&OP technologies, and I have some questions.” His company made parts for the mining industry, and he was leading an S&OP process. He wanted to build depth in the S&OP process; but, he had not been able to convince his management team to purchase an S&OP technology.
Having a strong Sales & Operations Planning (S&OP) strategy ensures that your forecasts, raw materials availability and production capacity all match up and that the factory floor can meet its defined deadlines. But simply putting an S&OP strategy in place isn’t enough.
In the first phase Mohawk overhauled its own internal operations, implementing a centralized Sales and Operations Planning (S&OP) process to manage its business in a more demand-driven way. Their S&OP program, however, was only the beginning. They also cut inventory levels, grew sales and resolved capacity issues.
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