Sales and Operations Planning (S&OP) has been around for a long time. It’s been called “old hat” and “the new kid on the block.” Both are true. And despite having been around for decades, S&OP continues to gain momentum and grow in maturity.
Most of us in the supply chain industry have a conceptual and common understanding of what S&OP represents, however the variety of ways in which S&OP is executed demonstrates that it can mean very different things to different organizations.
A typical/traditional Sales and Operations Planning (S&OP) process is primarily:
- Operations led
- Mainly focused on satisfying revenue and margin goals
- Aimed at attempting to meet a forecast for a discrete planning horizon, usually 6-24 months
- Sequential and involves isolated planning activities consolidated at a high level and then pushed up to management for approval, and pushed down to manufacturing for execution
And most experts agree that S&OP has four ingredients:
- People: the cross-functional teams involved
- Process: the way you make decisions and manage meetings
- Information: the data from your demand and supply chain
- Technology: the systems that support planning and decision-making
Not everyone agrees on the correct proportions of these ingredients, but everyone agrees that S&OP needs all four. Knowing exactly what is required for each of these areas, and potentially most importantly, finding the right balance between them is the key to effective and efficient planning cycles that drive maximized value for the enterprise.
As I was presenting at the European Supply Chain and Logistics Summit last week, the overriding memory I’ll take away was the number of people that were nodding and pointing at the screen when I talked about how unplanned supply chain events that occur need to be addressed immediately and that they cannot wait to be included as part of a new S&OP cycle.
Traditionally, an S&OP cycle is a process geared towards taking a medium/long-term forecast, balancing with aggregate level resources and generating questions/answers to establish preventative action. Usually it’s seen as a monthly process that follows this cycle:
- Collate actual data and perform performance analysis
- Start demand planning cycle
- Establish supply status
- Perform balancing and establish variances
- Agree on corrective action and present solutions
- Executive decision and commit to the business
However, this process makes several broad assumptions:
Today’s Friday post is to let you know that we have posted the on-demand version of last week’s webcast on “Continuous S&OP for Life Sciences – Breaking the Mold” (registration required). In this webcast, learn about the unique S&OP challenges for Life Sciences companies, the importance of changing S&OP mindsets, and how to break the S&OP mold from both a process and technology perspective.
You can also view the slides that we’ve posted to slideshare…
Just a quick post to let you know of our upcoming live webcast, “Continuous S&OP for Life Sciences – Breaking the Mold“, which we will host this Wednesday, November 19th at 11am EST.
Trevor Miles, VP of Thought Leadership, Kinaxis, will present on the following topic.
Business realities have changed so tremendously in the last thirty years that the traditional ‘plan then execute’ S&OP model has become highly ineffective. It is unable to facilitate decision making amid acutely complex supply chain networks, or within the time horizons required. This is particularly true for Life Sciences companies faced with varying regulatory requirements and aging product portfolios.
In response, there is an emerging recognition that operational information must be accessed and evaluated on a continuous basis, whereby decisions that may have once only been considered as part of a scheduled S&OP process can be made as needed throughout the cycle. In this capacity, process execution evolves into operational orchestration.
In this webcast, learn about the unique S&OP challenges for Life Sciences companies, the importance of changing S&OP mindsets, and how to break the S&OP mold from both a process and technology perspective.
We recently produced a newsletter which includes complimentary access to a Gartner research report titled “Elevate your S&OP Process from Traditional to Demand-Driven” (T. Applebaum, J. Kohler, 5 July 2012) The original S&OP process, as has been implemented by many companies, has proven to lead to ineffective and inefficient planning cycles that drive less than […]
In my last post, I presented some problems with traditional S&OP systems. I then pondered what if you could… Create a new demand plan (or several) and instantly see how this new plan would impact your supply chain down to the smallest component? Drive your supply plan from any forecast stream (Sales, statistical, marketing, customer, […]
I presented a couple of sales and operations planning (S&OP) workshops at our Kinexions user conference this week. One of my sessions focused on how the ability to “connect” supply and demand planning in S&OP can result in faster and more accurate S&OP planning cycles. Let’s think about the traditional S&OP world. Most companies have a demand […]
I have been following the debate about the use of the terms IBP (Integrated Business Planning) and S&OP (Sales and Operations Planning) over the past few months with a lot of interest. It is with much trepidation that I step into this proverbial hornet’s nest after Lora Cecere wrote a blog titled “What Happens in […]