Sales and operations planning (S&OP) can be a “hugely valuable” process, says Pukkila. But many companies are failing to realize its full potential because they are “stuck in an internally focused view.” They struggle with the traditional challenge of balancing the picture of upcoming demand with their ability to fulfill it.
Instead, he says, companies need to become more demand-driven in their planning and supply. A common problem among Pukkila’s clients is the failure to align financial decision-making with operations. Organizational silos prevent them from gaining insight to underlying demand patterns. Even when finance is in attendance at monthly S&OP meetings, it rarely is drawing numbers from the sales and commercial team.
Often the calendars within an organization will not be aligned. Companies must commit to their supply plans months in advance, meeting a deadline that comes well before the S&OP process wraps up.
“The true business decision-making process is when you have all departments, and all senior leadership present,” says Pukkila.
The lack of coordination among departments extends to procurement and various “outward-facing parties,” he says. As a result, suppliers and logistics providers are forced into a reactive mode, generating many small shipments to meet the needs of the moment.
Misaligned calendars are only part of the problem. S&OP needs to become more of an input for decision-making throughout the organization, says Pukkila. The top supply chains have made some progress toward this goal, although few have achieved the highest level of coordination.
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Keywords: supply chain, supply chain management, inventory control, inventory management, logistics management, supply management, supply chain planning, retail supply chain, sourcing solutions