Executive Briefings

S&OP Is Key Enabler for Managing Complexity within Global Supply Chains

Analyst Insight: S&OP is no longer a supply-chain-driven process - it is purely a business level process. The sales and marketing organizations, with their responsibility for revenue generation and business expansion opportunities, also play a key role.  Where revenue growth and expansion opportunities are scarce, senior management is looking to sales and marketing to enhance margins and prevent share erosion, at the very least.  These objectives are tied both to extended supply chain costs/efficiencies and new product infusion.

-Nari Viswanathan, vice president & principal analyst at Aberdeen Group

Sales and operations planning (S&OP) is the key integrated process that the supply chain organization (specifically the chief supply chain officer) can leverage to achieve visibility and transformation across the entire organization and throughout the value chain. Aberdeen's recent S&OP study highlights the results of over 196 companies involved in S&OP-related initiatives. Fifty-nine percent of respondents indicated that improving top line revenue in 2010 (versus 45 percent of respondents in the July 2009 Sales and Operations Planning: Integrate with Finance and Improve Revenue report) was the top pressure driving attention and resources toward S&OP initiatives. The other key pressures that companies are facing with respect to S&OP processes include the need to reduce supply chain operating costs (53 percent) and the management of increasing demand volatility (49 percent), which creates the need for balancing these mutually exclusive business pressures.  All of these pressures are competing against each other amidst an increased complexity of supply chain processes and the global nature of these supply chains.

The Outlook

In 2011, expect to see a more rapid adoption of technology for automating S&OP-related processes. We still see rampant usage of spreadsheets across all the categories - 84 percent of overall respondents indicate that they are using spreadsheets to support the enablement of the S&OP process. Fifty-two percent of respondents indicate the usage of integrated ERP modules. Twenty-one percent of these respondents indicate the use of best-of-breed solutions whereas 31 percent still utilize custom legacy systems. Thirty-eight percent of respondents utilize business intelligence solutions. The variety of technology adoption approaches is due to the fundamentally inter-disciplinary and customized nature of the S&OP process for each organization

Analyst Insight: S&OP is no longer a supply-chain-driven process - it is purely a business level process. The sales and marketing organizations, with their responsibility for revenue generation and business expansion opportunities, also play a key role.  Where revenue growth and expansion opportunities are scarce, senior management is looking to sales and marketing to enhance margins and prevent share erosion, at the very least.  These objectives are tied both to extended supply chain costs/efficiencies and new product infusion.

-Nari Viswanathan, vice president & principal analyst at Aberdeen Group

Sales and operations planning (S&OP) is the key integrated process that the supply chain organization (specifically the chief supply chain officer) can leverage to achieve visibility and transformation across the entire organization and throughout the value chain. Aberdeen's recent S&OP study highlights the results of over 196 companies involved in S&OP-related initiatives. Fifty-nine percent of respondents indicated that improving top line revenue in 2010 (versus 45 percent of respondents in the July 2009 Sales and Operations Planning: Integrate with Finance and Improve Revenue report) was the top pressure driving attention and resources toward S&OP initiatives. The other key pressures that companies are facing with respect to S&OP processes include the need to reduce supply chain operating costs (53 percent) and the management of increasing demand volatility (49 percent), which creates the need for balancing these mutually exclusive business pressures.  All of these pressures are competing against each other amidst an increased complexity of supply chain processes and the global nature of these supply chains.

The Outlook

In 2011, expect to see a more rapid adoption of technology for automating S&OP-related processes. We still see rampant usage of spreadsheets across all the categories - 84 percent of overall respondents indicate that they are using spreadsheets to support the enablement of the S&OP process. Fifty-two percent of respondents indicate the usage of integrated ERP modules. Twenty-one percent of these respondents indicate the use of best-of-breed solutions whereas 31 percent still utilize custom legacy systems. Thirty-eight percent of respondents utilize business intelligence solutions. The variety of technology adoption approaches is due to the fundamentally inter-disciplinary and customized nature of the S&OP process for each organization