Executive Briefings

Involving All Aspects of Supply Chain in S&OP Can Lower Inventory Carrying Costs

Sales and operations planning (S&OP) has the potential to promote visibility within the enterprise and foster collaboration among business functions. Given that S&OP can affect demand forecasts, inventory levels, raw material purchase projections, production plans, and forecasted labor utilization, it is worth considering whether the involvement of all supply chain-related functions in S&OP could have a positive effect on supply chain performance. APQC compared the cost of supply and demand planning and the inventory carrying cost of organizations that involve each of these groups in S&OP to the costs of organizations that do not involve the groups.

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Sales and operations planning (S&OP) has the potential to promote visibility within the enterprise and foster collaboration among business functions. Given that S&OP can affect demand forecasts, inventory levels, raw material purchase projections, production plans, and forecasted labor utilization, it is worth considering whether the involvement of all supply chain-related functions in S&OP could have a positive effect on supply chain performance. APQC compared the cost of supply and demand planning and the inventory carrying cost of organizations that involve each of these groups in S&OP to the costs of organizations that do not involve the groups.

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