The technique is allowing companies to achieve greater visibility and make more intelligent decisions about how to respond to real market demand, says Karin Bursa, vice president of marketing with Logility.
Why the sudden surge of interest in sales and operations planning (S&OP)? Bursa says it's because companies are viewing it as a potent tool for breaking down organizational silos, an age-old problem. They see the possibility at last of getting everyone to focus on a common plan, while harmonizing high-level corporate strategy with operational and tactical measures.
As a concept, S&OP is far from new. But Bursa says it has evolved "significantly" in recent years. Technology is a major reason. For the first time, companies can get access to clean data, giving them the ability to model various scenarios. Even more important, though, is the changing attitude of executive leadership. Top managers know that S&OP can help teams throughout the organization make "the best decisions for the business."
S&OP initially came out of the manufacturing sector, but it isn't just about optimizing a manufacturing plan, she says. It can guide companies toward achieving other key goals such as entering new markets, and opening or consolidating distribution centers. The evolution of S&OP tracks the desire of companies to fully understand demand and get closer to end customers. Sometimes, Bursa says, that might mean not producing at 100-percent capacity.
In all cases, an executive leader must be assigned to oversee the S&OP effort. "It really is 60 percent process, 30 percent data and only 10 percent technology," Bursa says. "There has to be a process champion, with the goal to drive the best visibility for the business. The discipline from which that individual hails depends on the culture of the company, she says.
Bursa counters objections that S&OP is a laborious process. "If you're hearing that," she says, "it's because it's disconnected." A successful effort entails a streamlining of data gathering "in one time-phased plan, to model multiple scenarios." Such a goal, she says, "cannot be done efficiently and effectively with spreadsheets."
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