HOW TO IMPLEMENT AN EFFICIENT SALES & OPERATIONS PLANNING (S&OP) PROCESS?
Why is it crucial to optimise the Sales & Operations Planning (S&OP) process?
Markets are moving fast, and demand is volatile. Agility, reactivity, adaptability: these are some key qualities competitive companies must have. The global strategy must be closely monitored and confronted with the actual performance and results.
Implementing an S&OP process is the best way to bridge the gap between the plan and reality. It allows the efficient deployment of an-end to-end integrated supply chain strategy consistent with the sales objectives and financial targets. The benefits are numerous and go beyond the inner supply chain circle.
KEY PERFORMANCE INDICATORS (KPI)
RETURN ON CAPITAL EMPLOYED (ROCE)
OVERALL EQUIPMENT EFFECTIVENESS
What are the challenges companies are facing when optimising their S&OP process?
Involve all the stakeholders
In most organisations, efforts are siloed throughout the different departments and sometimes even within the same department.
Sales, marketing, finance, supply chain, all try to push their way into having the final say on the strategy. However, having a complete end-to-end view and understanding of your supply chain and all the risks is critical to good decision making. Otherwise, the executed plan can be counterproductive.
Companies failing to include all the relevant stakeholders in the S&OP process will not have the end-to-end view needed to run the process effectively. The challenge is to make sure to get the complete overview from the correct perspective.
The end-to-end supply chain view should not be limited to just your supply chain (production, inventory, distribution network). It should also include your upstream and downstream partners: your suppliers and subcontractors (factors including capacity, lead time, price), your third-party logistics providers (again, factors including capacity, lead time, price), and your customers (factors include business trends, stock levels, order frequency, reception capacity).
Speak the same language
Now that stakeholders from all relevant departments are involved, the next challenge is to find a common language. One of the biggest risks is wasting time and energy on useless semantic debates because, let’s face it, we often do not all speak the same language within the company. Supply chain people are not marketing experts and vice versa. One pre-requisite is to agree on the data, KPIs, dashboard and templates used to run the process, so they are not challenged during the meetings. The focus must be set on addressing the alerts and discussing the risks and business opportunities.
Often, objectives are not consistent enough across the organisation. Why would sales and marketing be willing to work on optimising stock level, when it is seen from their perspective as a risk of increased stockouts, while their objective is to develop sales “at any cost”? Why would the supply chain agree on multiple air shipments for a strategic product launch when a significant part of their incentive is based on transport cost reduction?
Conflicts of interest are one of the biggest threats to the effectiveness of the process. Objectives should be aligned and consistent so that everyone aims for the same goal and gets rewarded for achieving that goal.
Download this full Best Practices white paper and discover
the 3 Key Pillars of an efficient S&OP process journey!
In this white paper, you will also learn:
- Who’s concerned by implementing an efficient S&OP process?
- Why is it crucial to implement S&OP? What are the Benefits?
- How to optimise your S&OP process? The journey towards optimised stock – The 5 Key Pillars
- How FuturMaster can help you to implement an efficient S&OP?