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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.
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.
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!
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. But with finance, it’s “show me the money”.
Reason #6 Not effectively managing inventory. 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. There can be multiple reasons.
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.
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.
Over the last six years, we studied the connection between business results (growth, operating margin, inventory turns and Return on Invested Capital (ROIC)) and the link to company characteristics. Let’s Start with Definitions: One of the difficulties in supply chain is the lack of common definitions. What did we find?
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.
” I think it is the most complete assessment of the S&OP value proposition I have seen in the industry. While many consultants argue on the name–the debate rages with strong arguments of “Should it be Integrated Business Planning (IBP), Sales Inventory and Operations Planning (SIOP), or consensus planning?”–the
Unfortunately, the definitions of S&OP and IBP are often confusing as they seem to be both distinct and overlapping processes. Sales & Operations Planning is, as it was originally defined, a process that focuses on the operational aspects of the business: orders, material, capacity, inventory, etc.
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.
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?
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.
An efficient supply chain strategy is one that takes every aspect of your supply chain into account, from inventory management and warehouse design to freight tendering and transport optimisation. Let’s look at some of the best ways to make your supply chain more efficient. What is Supply Chain Efficiency?
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. Inventory down 7%. Service up 8%.
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.
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.
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.
Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. More advanced supply chain leaders model the role of complexity (product and customer), the impact of risk, and opportunity of innovation as well as product shipping and manufacturing locations, and inventory policies.
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. Supply Chain Design.
While there was always passionate discussions on companies and metrics, the end goal was to raise awareness of supply chain as a practice. While other “lists” use ROA, Inventory Turns and Revenue Growth, I find Lora’s science very objective. They are a supply chain that I very much like, especially from an S&OP practice.
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. They also cut inventory levels, grew sales and resolved capacity issues. Their S&OP program, however, was only the beginning.
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.
But the sheer complexity of supply chain networks, and the impact design decisions have on operational performance, makes supply chain inventory management aligning inventory investments with on-time customer delivery and margins a major challenge. Implementing inventory optimization. It’s certainly no walk in the park.
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. Support Long-Term Strategy.
By using data to stock items with higher forecasted demand, they can reallocate cash that would normally be tied up in poorly performing inventory, avoid margin erosion from markdowns and dead stock, and increase overall on-shelf availability metrics. Engineer Profit.
Tom, the colorful warehouse manager, constantly heckled Frank for the increasing inventory levels while Ed, the quiet material/logistics manager, constantly questioned if there was a better way. As a result, we shelved Ed’s idea. Testing Ed’s idea was beyond my circle of control. Strength in S&OP.
Supply Chain Insights recently published a Metrics That Matter report covering both the Semiconductor and Hard Disk Drive (HDD) industries. Semiconductor is poised to consolidate, which will have huge impact on the metrics. Understanding inventory planning will take on a new dynamic. by CJ Wehlage.
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.
Let’s explore nine in this blog. Today’s supply chain leaders have a fascination with Artificial Intelligence (AI) but are blind to the advantages and capabilities of Web 2.0 Software built on graph technology can model flow, but the transactional paradigms of historic practices hold development team’s hostage.
It could no longer be just about inventory levels. This analysis needed to be completed monthly and fed to newer forms of inventory optimization technologies. The advanced Llamasoft user has a model on a computer tablet (Sherpa product) that enables the visualization of S&OP trade-offs within the S&OP meeting.
In today’s uncertain times, a clear vision and strategy of where you need to be is the key to rally the company and propel your business forward; forward into new markets, new geographies and ahead of your competition. One of the key challenges to a successful global S&OP process is the language barrier. ” *.
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.
Frequently, I get asked the question, “What is the value of S&OP?” In 2005, I engaged with Sonoco Products, a packaging products and services company, to initiate some work on Sales and Operations Planning (S&OP). Alignment on a Metrics Portfolio. ” When I get the question, I smile.
Colgate outperformed P&G in Return on Invested Capital (ROIC), and P&G exceeded Colgate in inventory turns. ” So, I started work with Arizona State University to take balance sheet data from 2003-2007 to analyze which combination of metrics drove the highest market capitalization. The question was, “What mattered?
The companies with the strongest year-over-year performance (placing in the winner’s circle for six more times in ten years) are Apple, L’Oreal, Nike, Paccar, TJX, and TSMC. An average margin of 21% with inventory turns of 1.58 The group’s response is, “Are these supply chain metrics?”
Frequently, I get asked the question, “What is the value of S&OP?” In 2005, I engaged with Sonoco Products, a packaging products and services company, to initiate some work on Sales and Operations Planning (S&OP). Alignment on a Metrics Portfolio. ” When I get the question, I smile.
ABC Analysis for Inventory Planning : Clustering products that behave similarly highlights issues, challenges, and opportunities for serving customers better. Price index and price elasticity are useful metrics on their own, and a combination of these can help determine the right price point to maximize revenue and profit.
Over the course of the last two years, we at Supply Chain Insight s have worked on a methodology to gauge supply chain improvement. We have found that supply chain metrics are gnarly and complicated.During Resiliency is the tightness of the pattern, or the reliability of operating margin and inventory turns results.
In Part 1: An S&OP Q&A with SCM World’s Kevin O’Marah we discussed the drivers impacting S&OP, the value of the process and the changing rhythm of S&OP meetings. What is in your conversations with them that is different from those who are just starting and S&OP process?
And the impact doesn’t stop there, since trade-off decisions will be required to answer questions like which customer is most important to satisfy with the limited bolts in inventory and if production capacity should be reallocated. And then decisions on these questions will in turn affect other customers in your rattled supply chain.
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