S&OP Remains The Key

Manufacturing and Supply Chain leaders say they are doing S&OP, but are they?

As risks mount daily in recent years, COVID, Ukraine invasion, shipping delays, economic stress with rising interest rates, inflation, rising fuel costs, and now Hamas invasion, we face ever expanding landscape of potential or continued supply disruption. We cannot afford to take short cuts on the planning activities.

Those who learn how to deploy S&OP, Sales and Operations Planning with integrated financial accountability are consistently the top performers. The trap many fall into is that they think S&OP is operational, production updates, order fulfillment performance and becomes the measure of quarterly revenue objectives. This is only a small part of why a firm should learn how to execute S&OP fully and effectively. Skipping steps, i.e., not fully developing each level of planning, is akin to buying new smaller size pants with the expectation of looking great, but not getting to the gym to lose weight. We can only realize the gains if we do the process with commitment and clarity.

S&OP is a process for better decision making, not software or spreadsheets per se. S&OP is about strategically managing the business proactively, identifying opportunity, risk, and setting into action specific plans to leverage your insights. Not fully executing S&OP is taking short cuts that miss the critical signals, always reactionary, always costing more and delivering less with far more stress than otherwise needed - and not competitive. Firms that learn this will quickly realize lower cost of supply chain management by up to 50%, up to 75% improved profitability and these firms tend to land in the top 10% for customer satisfaction, which equates to market share.

S&OP facilitates operational plans, when driven by strategic priorities.

When we understand Corporate Strategy, we can avoid becoming the Blockbuster video rental company overcome by Netflix streaming entertainment company.

When we rationalize product lines, we maximize profitability while aligning better with customers and delivering value.

When we have a cohesive, collaborative S&OP process, we make better team decisions supporting proactive activities that avoid more of the risks, realize more of the profits, and reduce the organizational stresses. We avoid silo thinking that suboptimizes business and reduces competing operational costs.

When we target the monthly S&OP agenda with clarity, transparency and commitment, we function with a Single Plan of Record, all hands-on deck with a forward-facing game plan, more prepared for the next challenge and in a healthier position ready to act when surprises come again.

Before we can reach these kinds of results, we first must understand our current state. Begin with a supply chain maturity assessment to realistically pin down strengths and weaknesses, opportunities and threats. Then we can begin working on change.

Learning to perform this process well is not difficult when we have strong leadership committed to the process with high priority for results. We learn to look at business end-to-end instead of from the silo lens. We make better decisions based on data and customer values. We mitigate or avoid risks more effectively which becomes competitive advantage.

If you would like to review a simple maturity assessment, drop me an email for a free resource to see how you are managing your business.

www.SupplyChainPro2Know.com