S&OP: Cutting Through the Confusion

With all the talk of sales and operations planning, companies still can't agree on exactly what the term means. Michael Uskert, managing vice president with Gartner, offers some clarity on the topic.

Many companies suffer from a lack of understanding about what sales and operations planning can achieve, says Uskert. Those who have the greatest trouble comprehending the practice tend to view it as a discrete supply-chain practice, requiring an operational focus. Successful organizations, by contrast, view S&OP “as a facility for decision-making – a forum for profitable tradeoff decisions that extends into finance and the executive suite.”

“It’s a nuance,” adds Uskert, “but it makes a significant difference in how you talk about it.”

When it comes to integrating S&OP into the organization, he suggests, companies are aiming their sights too low. Part of the problem lies in supply chain becoming “trapped” in the organization in which it grew up. In such cases, “supply chain actually becomes its own worst enemy.” Individuals running the S&OP process might talk in terms of case shipments and inventory levels, instead of issues that are of concern to business professionals. The dilemma, Uskert says, “stunts the growth of the process.”

Companies shouldn’t necessarily think in terms of who “owns” the S&OP process. Instead, they should view it in terms of sponsorship and coordination across the business. “We define ownership as the individual who makes sure that the maturity of the process continues, providing the business value that it should,” Uskert says.

True ownership of the process, he adds, should extend to the individual who oversees the profit-and-loss statement. But only a mature S&OP effort can ensure that a company is properly managing its P&L, he says.

To view the video in its entirety, click here

Many companies suffer from a lack of understanding about what sales and operations planning can achieve, says Uskert. Those who have the greatest trouble comprehending the practice tend to view it as a discrete supply-chain practice, requiring an operational focus. Successful organizations, by contrast, view S&OP “as a facility for decision-making – a forum for profitable tradeoff decisions that extends into finance and the executive suite.”

“It’s a nuance,” adds Uskert, “but it makes a significant difference in how you talk about it.”

When it comes to integrating S&OP into the organization, he suggests, companies are aiming their sights too low. Part of the problem lies in supply chain becoming “trapped” in the organization in which it grew up. In such cases, “supply chain actually becomes its own worst enemy.” Individuals running the S&OP process might talk in terms of case shipments and inventory levels, instead of issues that are of concern to business professionals. The dilemma, Uskert says, “stunts the growth of the process.”

Companies shouldn’t necessarily think in terms of who “owns” the S&OP process. Instead, they should view it in terms of sponsorship and coordination across the business. “We define ownership as the individual who makes sure that the maturity of the process continues, providing the business value that it should,” Uskert says.

True ownership of the process, he adds, should extend to the individual who oversees the profit-and-loss statement. But only a mature S&OP effort can ensure that a company is properly managing its P&L, he says.

To view the video in its entirety, click here